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

It’s straight gambling, with the key difference being that it’s not a negative sum game, it’s a positive sum game. On average different groups of stocks have yielded 7-10% growth vs casinos which take 3-5%. The rest is speculation: someone will buy at 500 thinking it will go to 510… or 550. Someone will sell at 500 thinking it will not grow fast enough or is overvalued or they just need to be more liquid.