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

People here forget that stocks pay dividends. If you own stock there are also many other ways to cash out. One is the company buying back it’s stock which is just returning cash back to shareholders (just a fancy dividend). Another is a buyout by a different company.

Remember that a share entitles you to a share of a companies equity (assets minus liabilities).

Crypto is 100% greater fool theory.