I just don’t understand how it works…when I hold shares in a company and I spend money there, am I technically making a very very small amount of that money back?
ALSO:
what is the simplest way to explain how stock prices increase then?
In: Economics
Profits do, indirectly, affect stock prices. Not because there is any direct relationship/formula, but because a company that made good profits during any particular quarter tends to look good to investors, who then buy more shares and push the price higher.
As for making a tiny bit of that money back, if you are a shareholder of a company that pays dividends, yes. You technically get a tiny bit of that money back, but it’s minuscule, and the profits from your sale also have to get split among millions of other shares. You do, however, get a share of the company’s profits overall, which can add up if you have enough shares.
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