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Can we bail ourselves out?

 
 
dufkat1
 
Reply Wed 19 Nov, 2008 12:06 pm
What would happen if tomorrow, everyone in the US with the means to do so, bought 10 shares of Ford Motor Company at it's current price (@ $1.26). Would it help Ford at all? If so, for how long? Would the stock value increase steadily based on the company merits, and not because of supply/demand of stock available?
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Type: Question • Score: 1 • Views: 1,255 • Replies: 6
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maporsche
 
  1  
Reply Wed 19 Nov, 2008 12:33 pm
@dufkat1,
It wouldn't help Ford at all. Once Ford sells stock to the public, only the public benefits or is hurt by rise/decline in prices. Ford the company is not directly hurt from the stock price (nor is any company directly hurt, there are indirect problems with a low stock price though).

If Ford were to release NEW stock and people bought that money, then Ford would benefit.
hamburger
 
  1  
Reply Wed 19 Nov, 2008 06:01 pm
@maporsche,
or we could all send a "charitable donation" to ford .
actually GM and chrysler need it more - ford isn't doing quite as badly ... yet .
hbg
roger
 
  1  
Reply Wed 19 Nov, 2008 08:25 pm
@hamburger,
I would call that a reason to support Ford, but by being more inclined to buy the brand, rather than charitable contributions. Like stock portfolios, cut the losers and support the winners.
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dufkat1
 
  1  
Reply Wed 26 Nov, 2008 10:26 am
@maporsche,
Thanks for your answer.
Since I don't remember much college economics, does buying a companies' stock benefit them in any way (aside from making the share price go up) ?
maporsche
 
  1  
Reply Wed 26 Nov, 2008 10:51 am
@dufkat1,
It benefits the company during the initial public offering (IPO) and anytime they release more stock after the IPO. The company also owns shares of it's own stock which it can sell to raise funds. This is a large funding method for any publically traded company.

Buying non IPO stock or not buying newly created shares does not benefit the company in anyway.

If you went out and bought 1000 shares of Apple stock today the company would not get any additional funding because you are not buying the shares from the company, but instead you're buying the shares from other investors who are looking to sell their shares.

Make sense?
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dufkat1
 
  1  
Reply Wed 26 Nov, 2008 11:10 am
@dufkat1,
absolutely. Thank you very much.
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