facebookIf a group of millionaires decided to buy $5million worth of shares monthly + regularly for a particular company. 1. Will you buy the shares? 2. What will happen to the share price? ? - Seedly

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Anonymous

07 Jun 2019

General Investing

If a group of millionaires decided to buy $5million worth of shares monthly + regularly for a particular company. 1. Will you buy the shares? 2. What will happen to the share price? ?

Discussion (10)

What are your thoughts?

Lim Chun Long Jimmy

Lim Chun Long Jimmy

07 Jun 2019

Level 9·Co-founder at PolicyWoke (Traded Endowment Policies)

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Here’s a quick response to your answer.

Will I buy the shares? Not necessarily. Simply because millionaires decide to buy the shares does not mean that you should do it as well, since they may not be good investment decisions.

Rather, you need to determine what would be an appropriate strategy for you, which depends on your investment goals, such as how long you want to hold an investment, or how much risk you are willing to take on. Your goals therefore should be your guiding principles in terms of your investments. However, you did present an interesting scenario here. If I were you, I would probably investigate if these shares are currently being undervalued, and if the share prices will increase over time, before making an investment.

Share prices are always affected by the forces of Demand and Supply. If there is more demand than supply, then share prices will go up, and the converse will happen if demand is less than supply. Hence, we would need to analyse both demand and supply forces before forecasting whether share prices will go up or down. However, if in the scenario you provided, only demand for the shares increased by the purchase of shares by the millionaires, then share prices will go up if supply is constant.

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Jonathan Chia Guangrong

Jonathan Chia Guangrong

07 Jun 2019

Level 12·Cybersecurity Trainee at Bank in blue

Do you share the same line of thought that is compiling this group to purchase the shares? Even so, ...

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