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
Lots of people answering your title question and first paragraph, but as to the second:
> ALSO: what is the simplest way at to explain how stock prices increase then?
The stock market works by supply and demand. You can only buy the stock at a price that someone else is willing to sell it for. Similarly if you own the stock, you can only sell it for what someone else is willing to pay.
Thus stock market pricing works like a basic supply and demand feature, if there are more people who want to buy the stock than there are people who want to sell the stock (i.e., high demand and low supply), the price goes up. If there are more people who want to sell the stock than there are people who want to buy it (low demand and high supply), the price goes down. If there are relatively equal numbers of each, the price stays flat.
As to what makes more people want to buy a stock versus sell a stock or vice versa, that can be lots of things, and why the prices do fluctuate. In general, if a company is exceeding their projected targets for revenues and profits, their stock price tends to go up over the long term and if a company is failing to meet those targets, the stock price will go down over the long term. Especially if these trends happen quarter after quarter and year after year.
However these earnings announcements only happen quarterly, and the stock prices change every day. This will typically be driven by news. If there is positive news about a company, again, prices tend to go up. If there is negative news, prices tend to go down.
But understanding exactly what makes any given stock go up or down in the short term is something that if you figured it out, you would be rich, and not on Reddit.
So back to all of the other comments with this in mind, if you own stock in say Target, and you shop almost exclusively at Target, then sure, you are helping somewhat. But given that Target reports roughly $25B in revenue per quarter last year, then even spending $1000 per month there, then you would be accounting for about 0.00001% of their revenue, and thus wouldn’t be much more than a rounding error. Even with someplace smaller, like say Sephora, they made about $2.5B in revenue per quarter last year, so you would still just be at 0.0001% of their revenue.
But if it makes you feel good about shopping at wherever you own the stock versus a competitor, then it doesn’t hurt anything to shop there either.
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