Do we benefit off the foolishness of other?

I just came upon a sudden realization:

The only reason we can buy low and sell high is that someone else out there is selling low and buying high.

Unless a company is actively putting more shares out there, there is a static number of shares to buy and sell from.  This means that in order to buy, there must be someone selling at the same price and in order to sell, there must be someone willing to buy it at the same price.

So, if we’re doing well in our investments, perhaps it’s because someone else isn’t doing quite as well and when we’re buying and selling at the wrong times based on emotions or bad information, then someone else is relishing their good luck.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: