Noob Questions

Subscribe Search This Thread

Start a New Thread

post #1 of 3

8/25/11 at 3:15am

Thread Starter

3 Posts. Joined 8/2011
Karma: 1
Select All Posts By This User

I'm relatively new to the stock market and I always have questions and nobody to turn to.

So I would like to say THANK YOU ahead of time for everyone on this site, and the creators.

I have a two Noob Questions:

1. What does a company gain when they buy back their stock? Does it add value to it later? Or does it just look better to the public and seems more trustable?

2. When looking at a stock chart, the volume shown, is that the volume bought or sold? or both? Or do I not understand volume correctly, it's something totally different

Thank you for all your help, it is appreciated.

Andy

Featured Stories on HotStockMarket

thinkorswim Trading platform

e-mini S&P Futures Trading

Stonerangers forum

post #2 of 3

8/25/11 at 3:24pm

Gil Oren
Trader Feedback: 0
Executive Editor
offline

36,059 Posts. Joined 4/2002
Karma: 5416
Select All Posts By This User

Hi Neophyteinc!

A company's market cap (the value of the company) is calculated by the last price of the stock multiplied by the amount of shares outstanding (how many shares there are out there).

If a company feels their stock is cheap, they can buy back their own shares, its usually a sign of confidence, or in the case of small cap stocks, an attempt to gain more control over more of their shares, also in an attempt to get the price up.

Volume represents a trade, that is where a buyer and a seller agree to execute a transaction.

If you want to buy a car = zero volume

If I want to sell a car = zero volume.

If you buy my car, volume = 1, ie 1 car has traded.

post #3 of 3

8/28/11 at 4:40pm

Thread Starter