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
One transaction isn’t going to make a material difference (unless you were like an airline buying a dozen aircraft from Boeing). But your $100 trip to Target or buying a new iPhone isn’t going to move the needle for Target or Apple’s stock. Combined with millions of other customers, it would. The profit Apple makes of your one iPhone, divided among the almost 16 billion of shares is infinitesimal. The profits Apple makes off all the iPhones, computers, etc. they sell does climb into the billions of dollars. Share price is typically a multiple of the annual earnings, so as the company’s earnings (profits) grow, so too does the share price.
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