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

In essence, you have it, yes.

The thing is, people who buy at 500 and are hoping for 1000, might be sitting on a real value of 200, and it may never get to the value they want, or it may continue to drop. 

MOST stocks aren’t that volatile however. High volatility is attractive for how much you can make if you are on the right side of your prediction/guess–but dangerous because you can easily lose just as much, if not more.