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

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? ?

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    What are your thoughts?

    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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      Lee Jin Fei Andre

      Lee Jin Fei Andre

      14 Feb 2019

      Level 5·Financial Services Consultant at A.I.A Singapore Pte Ltd

      What I could say is the other posters are right in their responses. Personally, I would follow, because higher buy volume is also a sign that people see additional value in the company's future hence they are buying now. It only makes sense, provided the company is stable and without any red flags, but you'll never know...

      More importantly, even if you followed, would you ever know when these millionaires are going to pull out their investment? If you can't tell, and don't pull out yours in time as well, I would say you're in the run to lose big. (Assuming the trades are legal and not any ploy for manipulation etc).

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        Short answer is yes. For speculation purpose. Since usually $5M could rather push the share price up...

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