When I am buy stock at a lower price point than it was trading a 1 day or week, month or year later, does it mean that somebody during that same time frame is losing the difference?
In: Economics
Not necessarily, no. For example, in the simplest scenario you could have a stock which just keeps going up.
New company launches stock at $10. Someone buys it, then sells it to you later on at $20: they’ve made $10 on each share they had.
Then you sell your shares at $30 to someone else. You’ve also made $10 per share.
A drop doesn’t necessarily mean losing money, either. Supposing I had also bought some of those shares at $10 when they launched. I watch the price go up: $20, $30 – but I don’t sell, because I think it’s going to go further. I was wrong, though: it slips back down to $25.
Now, I haven’t actually *lost* money: I’m still up $15 from where I started – I’m just not up by as much as I was at another point.
The person you sold to at $30 might get scared now, and sell at $25 in case it drops further – in which case, yes, they have lost $5 – or they might hold their nerve and wait, and it goes back up to $30 or $35, and nobody has lost anything.
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