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Comment by 1oooqooq | Hacker News Reader

economists, educate me please.

people buy shares, the company sells shares, pay the ceo and skeleton staff, and then what? how anyone make money on that besides pump and dump?

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If the company is actually being valued correctly, the company makes a profit using the capital off of the share sales, then re-distributes that to shareholders with dividends or share buybacks, everyone wins. If not, then the company executives and employees get their salaries and bonuses for a bit longer, and anyone in the market who rides the wave correctly wins at the expense of anyone who does not.

yes yes, that's common knowledge. but in this case, gamestop is nothing. nada. you're buying a company that just hold rent to unprofitable stores. so... what's the angle here? mass hysteria?

Board decides each quarter on behalf of the stockholders whether to pay dividends or reinvest profits to increase the potential of future dividends.

we're trended towards being able to monetize attention and popularity in the last couple years.

memestocks are just a manifestation of this. you buy because you have faith in x. you sell because you lost faith.

so you're betting on a casino who takes from your betting pool to pay rent and staff for "the chips"?

Brokerages, exchanges, and market makers make money when customers are trading. Doesn't make a lot of difference what they're trading or at what price. Although, when there's a huge amount of volatility, there's maybe more risk and at least more collateral required. (Although the recent change to T+1 settlement will likely reduce that)

It's valuable for the company to sell shares when the price is high. If they don't have anything specific to do with the money, they can always do stock buy backs when the price comes down to earth.

For unrelated shareholders, yeah, it'a pretty much pump and dump, but if the company dumps while the stock is pumped, that helps your book value per share, right?

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