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

Crypto is gambling. Hoping to make a 1000% return on your stock investment is gambling.

The way that rich people, and investment firms, and universities, and your 401(l) retirement plan make money on stocks is simply by investing in a spread of stocks that will reliably grow over time, at a decent rate. Like 5-8% per year. And it *is* completely possible for your whole portfolio to grow at that rate indefinitely, since the economy as a whole is growing. If/when you sell some of it to get actual cash, the person who’s buying can also reasonably believe that what they bought will keep growing in value.