Key insights
- The author explains that market capitalization changes don't necessarily reflect actual money invested. Small trades can significantly impact market cap, driven by buyer/seller dynamics. This explains how the market can rise even without massive inflows, as increased buying pressure at each price point drives valuations higher. The author suggests this dynamic contributes to dips being bought.
Okay for some people this will be too obvious, so don't diss it and act smart. this isn't for you. but I see so much misconception among young investors that I want to try to explain it. The headlines are so misleading its downright stupid.
So when you hear $4T has been added in the market in one month, that doesn't mean LITERALLY $4T money has been invested. Or when a red day comes, same amount of money has been wiped out. NVDA is worth $5.2T, that doesn't mean there is $5.2T actual money locked up in NVDA or invested.
Let me give you a simple example
Market Cap = Current Share Price x Total Shares Outstanding Lets take NVDA's example, they have 24.19B shares and the price is $215, the market cap is $5.22T If a single person sells one share for $300, and someone ACTUALLY buys it for $300. the "market price" for all shares is now $300. Suddenly, the market cap jumps to $300 * 24.18B = $7.25T.
You see what happened? NVDA just "gained" $2T in value, but only $300 actually changed hands
so stop saying things like where is so much money is coming from, how is market always going up. Its as simple as there are more buyers at every price point than actual sellers in the market. The above example should be eye opening, that on paper even $300 has power to drive $2T in market value. So just look up how much "actual" money is on the sideline, imagine what it can do to drive the market. Thats why every dip is being bought. You don't need $2T to drive $2T in market value
I hope some people will find this useful. Good luck and stop trying to short the market