If people make money in stocks and crypto by buying low and selling high, who is buying the stocks from they are high, and why?

Question

Let’s just say for example, I bought a stock at $10. Then it goes up to $500

I can obviously make a profit, but why would someone buy it at such a high price?

Is it like the person who buys it at $500 is hoping that it will go up to $1000, then the person who buys it at $1000 hopes it will go up to $1500, and so on?

In: Economics

Answer 1

For a fellow trader, they are just flipping for a profit, sometimes it works, sometimes it doesn’t.

For an investor, they have their own reason to buy at a certain price and a certain time. Maybe for dividends, diversification, or just seeing the potential gain, or even something else.

It is basically a secondary market. A flipper will always looking for something undervalued. A user will have different reason to buy.

Since it is very liquid, there is a potential of huge price movement (this is what flipper/trader looking for).

This is what I know so far about this world.