IPO for dummies. Part II: stock price, stock exchange, the best way to trade potatoes, and who can be met on the stock exchange
Start and table of contents, see the first part .
And what exactly is a “stock exchange”?
Imagine a store that sells potatoes. Presented, yes? Sacks of potatoes are being carried from a large warehouse somewhere inside the store, the price tag is “50 rubles per kilogram”, how much is it sold ... Come, say “I have four kilos, please,” you are weighed 4 lots of potatoes, you pay and leave.
')
Such a store is obviously not an exchange.
Now imagine the market. Fifty tables and for each - a few bags of potatoes. Farmers brought the harvest. On one table - the price tag of 45 rubles per kilogram, on the other - 46 ... Yes, imagine, they did not agree on a price among themselves.
At the market entrance is Clara. She wants to buy new shoes and walk in them in the evening. Therefore, on the bags with her potatoes pasted price tag: 51 rubles per kilogram. It is already the third hour and no potatoes are taken from her. Therefore, she sometimes crosses out the price on several sacks of potatoes and signs the number 48 with a felt-tip pen. For 48 potatoes they sometimes take. But she still hopes, suddenly some large customer will come to the market and buy all the potatoes in general, including for 51 rubles. Therefore, on the remaining bags, it still leaves the old price.
On the second row Kolyan trades. He has only 30 kilograms left, and in the morning he agreed to go to the movies with his girlfriend Zina. The film begins an hour later, Kolyan is nervous. He has already sold almost all the potatoes and looks impatiently at the watch, then at the remaining 30 kilograms. Then he waves his hand, removes the old price tag and writes a new one: “42 rubles per kilogram, 30 kg left!”
Such a market is not a stock exchange either.
Now imagine a big table. Potato sellers crowded behind him, and each of them laid out a piece of paper on the table: how many kilograms of potatoes and how much would he sell. Papers sorted by price, combined pieces of paper with the same price into separate piles and left to customers. Something like that:
46.00 812
45.00 260
44.00 50
43.00 47
42.00 30
If you want to buy, you’re probably looking at the lowest price (what other selection criteria could there be? .. —God, it's potatoes, it’s all the same, I hope there are no potato-masters, there are 15 different varieties that taste like boiling potatoes) choosing soft water, rinsing the pan with boiling water and carefully keeping the temperature on a stopwatch ?) , decide how much you need, and say that you take so many kilograms.
Or if you suddenly need exactly 35 kilograms, and 30 (Kolyanov) kilograms of 42 rubles each will be small, you take them, and then from the next handful, 43, you buy another 5 kilograms. Whose is 5 kilograms? Anyone who put up their bids for sale at a price of 43 rubles. It could be a few people, and whose potatoes you get will be lucky.
(But Kolyan will be lucky: you will redeem his entire application at a time, and he will run to the cinema).
Idyll, right? Directly dream that in the nearest market was this?
Still, it's not a stock exchange yet.
Now imagine that next to this bunch of applications from sellers, there is also a similar bunch of applications from buyers. Obviously, they want to buy cheaper ... Therefore, their handful looks something like this:
41.00 44
40.00 847
39.00 983
38.00 785
And all together looks like this:
46.00 812
45.00 260
44.00 50
43.00 47
42.00 30
41.00 44
40.00 847
39.00 983
38.00 785
If you come to such a market, you can buy potatoes in two ways.
The first one is obvious, as in the previous market. Go to a bunch of applications sellers and buy the cheapest. Buy potatoes at market price . For 42-43 rubles, and then the price may still rise. And it may fall if no one buys for 45-46 rubles.
Or you can write your application and put it in a bunch of customer requests. And hope that someone wants you to sell potatoes. Maybe Kolyan is very impatient and he will not wait for him to buy potatoes at the lowest price, and he will sell his potatoes at the market price .
By the way, did you notice that we are again talking about the "market price"? Here it is, in all its glory. Instant, non-constant value. The price of the last completed transaction.
Now imagine that not only farmers-sellers and cooks-buyers live on the market, but also a lot of speculators who are trying to buy potatoes for price increase, then they sell ... In particularly advanced cases, the “smartest” speculators can sell potatoes which they do not have, having taken it on bail from someone (this is called a short-deal ), create derivative financial instruments like contracts for the supply of potatoes in a certain period ( futures ) or the right to bearer to buy or sell potatoes before and after fixed constant price (stock options). I am drawn from a civilized story about corporate finance somewhere into trading , everything, I am silent.
So, when we allowed anyone to submit bids both for the sale of potatoes and for its purchase - this is in fact an exchange.
But I love swede. Swede where to buy?
As there are many types of vegetables on the market, a large number of shares are drawn on any stock exchange. Potatoes, cucumbers, rutabagas, turnip - you can trade one thing, you can all at once.
But exchanges, like markets, are many.
There are vegetable markets, there are manufactured goods, there are electronics or auto parts markets. Having driven the Gazelle potatoes to Gorbushka, you will, firstly, sell it for a long time (because they don’t go for potatoes), and secondly, you will receive Pendels from the administration for non-compliance of products (potatoes) with formal requirements (electronics).
There are retail markets, there are wholesale markets. A company that wants to buy radio tubes and relyushek in sufficient quantity to assemble a GLONASS receiver for each Priory will not buy them in the nearest radio market. And if you want to sell such a batch, you will not go to it either.
Therefore, iPhones do not trade in vegetable markets, and Yandex is not located in Russia :).
Potatoes with turnips are kind of understandable. And if the company's shares are traded on the stock exchange, and the company is so promising, then they probably all want to buy them. Who then will sell them?
And what shares of a promising company are better than potatoes? Everyone wants to buy potatoes too ...
... and yet, someone sells it. And the aforementioned pile of speculators resells and resells. On the real stock exchange with the shares the same thing happens that on our potato stock exchange.
Huge numbers of participants with a variety of trading strategies are constantly running in the market. Extremely opposite points can be called “large investors” and “high-frequency traders”.
Everything, in fact, very connected. The larger the investor, the larger the volume of shares he works, the more money he spends on one operation, the more he influences the market with this operation, the more he loses on operations compared to the ideal case, the more long-term plans he has he expects a bigger profit from the stock.
A conditional player with the nickname "InvestBank" immediately buys one hundred thousand shares for three and a half million dollars; A conditional player with the nickname “- = HFT-VaSyA-bot = -” buys one or two or three stocks (maybe more, but under the shoulder , using a loan) for 35 bucks.
After InvestBank performed its operation, the market noticed this (“Oooh, a big buyer came”) and raised the stock price for a couple of bucks (InvestBank tritely bought all the shares sold on the market at prices ranging from $ 35 to $ 37). Remember how we bought 35 kilograms of potatoes, and bought all the potatoes for 42 rubles? And no one noticed the entry to the Vasin bot market.
Vasin bot bought his share in fact at the sale price. Suppose that at the time of his arrival, 700 shares were sold on the market at a price of 35.00 and 400 were bought at a price of 34.95. Vasin bot bought the stock at 35.00 and ... everything. The investment bank had to buy a hundred thousand shares at a high price. At this very moment, 700 shares were traded on the market at a price of 35.00 (although not, after Vasya - already 699) and the bank bought them all. I bought all the shares put up for sale at 35.01, at 35.02, ... at 36.00, ... I bought everything that was sold to collect my hundred thousand shares. At the same time, the worst purchase price was already 37.00. Therefore, it turns out that after its entry, the market price has risen by as much as 2 bucks.
Since Vasya wrote a smart bot who earns profit on the smallest fluctuations and does it often (high frequency!), He bought the stock due to an estimate that in the next 5 minutes (yes even a minute, but at least 5 seconds!) -chut grow up. When the estimate is justified, Vasin bot will sell the stock and earn his own penny. Due to the fact that he performs such operations in a very large number, a decent amount will come out on a day (or not, if Vasya wrote a bad bot). Investbank is not chasing pennies and is counting on long-term profit. Perhaps he considered that in six months, these shares would be worth (or would be profitable with dividends) $ 50. And even 100 (after 9 months). Or 250 (in one and a half year). He frightened the market enough with his bid for the purpose of buying and in the near future he would not be pulling at the market (for the purpose of selling).
Why am I doing all this? The market is full of both “washin bots”, and “investment banks”, and traders of all intermediate gradations between them. There is always someone to sell or from whom to buy a share, if you offer him the appropriate margin from the operation. Even InvestBank can be persuaded to sell one hundred thousand shares, even if he had just bought them.
(And yes, another disclaimer: the names “InvestBank” and “Vasin HFT-bot” are completely conditional and describe only the trading strategy on the stock exchange, and not specific entities. Vasya himself can easily invest with his hands, buy a dozen other Yandex shares - on He doesn’t have any money anymore - and leave them for a year.And surely there is a good HFT trading department in any investment bank trying to keep track of everything and play any market unevenness as quickly as possible, even insignificant.)
In the next part : the IPO process, its benefits for the company, the founders and owners, and why the company’s management has such a tortured look when opening trades.
And what exactly is a “stock exchange”?
Imagine a store that sells potatoes. Presented, yes? Sacks of potatoes are being carried from a large warehouse somewhere inside the store, the price tag is “50 rubles per kilogram”, how much is it sold ... Come, say “I have four kilos, please,” you are weighed 4 lots of potatoes, you pay and leave.
')
Such a store is obviously not an exchange.
Now imagine the market. Fifty tables and for each - a few bags of potatoes. Farmers brought the harvest. On one table - the price tag of 45 rubles per kilogram, on the other - 46 ... Yes, imagine, they did not agree on a price among themselves.
At the market entrance is Clara. She wants to buy new shoes and walk in them in the evening. Therefore, on the bags with her potatoes pasted price tag: 51 rubles per kilogram. It is already the third hour and no potatoes are taken from her. Therefore, she sometimes crosses out the price on several sacks of potatoes and signs the number 48 with a felt-tip pen. For 48 potatoes they sometimes take. But she still hopes, suddenly some large customer will come to the market and buy all the potatoes in general, including for 51 rubles. Therefore, on the remaining bags, it still leaves the old price.
On the second row Kolyan trades. He has only 30 kilograms left, and in the morning he agreed to go to the movies with his girlfriend Zina. The film begins an hour later, Kolyan is nervous. He has already sold almost all the potatoes and looks impatiently at the watch, then at the remaining 30 kilograms. Then he waves his hand, removes the old price tag and writes a new one: “42 rubles per kilogram, 30 kg left!”
Such a market is not a stock exchange either.
Now imagine a big table. Potato sellers crowded behind him, and each of them laid out a piece of paper on the table: how many kilograms of potatoes and how much would he sell. Papers sorted by price, combined pieces of paper with the same price into separate piles and left to customers. Something like that:
46.00 812
45.00 260
44.00 50
43.00 47
42.00 30
If you want to buy, you’re probably looking at the lowest price (what other selection criteria could there be? .. —God, it's potatoes, it’s all the same, I hope there are no potato-masters, there are 15 different varieties that taste like boiling potatoes) choosing soft water, rinsing the pan with boiling water and carefully keeping the temperature on a stopwatch ?) , decide how much you need, and say that you take so many kilograms.
Or if you suddenly need exactly 35 kilograms, and 30 (Kolyanov) kilograms of 42 rubles each will be small, you take them, and then from the next handful, 43, you buy another 5 kilograms. Whose is 5 kilograms? Anyone who put up their bids for sale at a price of 43 rubles. It could be a few people, and whose potatoes you get will be lucky.
(But Kolyan will be lucky: you will redeem his entire application at a time, and he will run to the cinema).
Idyll, right? Directly dream that in the nearest market was this?
Still, it's not a stock exchange yet.
Now imagine that next to this bunch of applications from sellers, there is also a similar bunch of applications from buyers. Obviously, they want to buy cheaper ... Therefore, their handful looks something like this:
41.00 44
40.00 847
39.00 983
38.00 785
And all together looks like this:
46.00 812
45.00 260
44.00 50
43.00 47
42.00 30
41.00 44
40.00 847
39.00 983
38.00 785
If you come to such a market, you can buy potatoes in two ways.
The first one is obvious, as in the previous market. Go to a bunch of applications sellers and buy the cheapest. Buy potatoes at market price . For 42-43 rubles, and then the price may still rise. And it may fall if no one buys for 45-46 rubles.
Or you can write your application and put it in a bunch of customer requests. And hope that someone wants you to sell potatoes. Maybe Kolyan is very impatient and he will not wait for him to buy potatoes at the lowest price, and he will sell his potatoes at the market price .
By the way, did you notice that we are again talking about the "market price"? Here it is, in all its glory. Instant, non-constant value. The price of the last completed transaction.
Now imagine that not only farmers-sellers and cooks-buyers live on the market, but also a lot of speculators who are trying to buy potatoes for price increase, then they sell ... In particularly advanced cases, the “smartest” speculators can sell potatoes which they do not have, having taken it on bail from someone (this is called a short-deal ), create derivative financial instruments like contracts for the supply of potatoes in a certain period ( futures ) or the right to bearer to buy or sell potatoes before and after fixed constant price (stock options). I am drawn from a civilized story about corporate finance somewhere into trading , everything, I am silent.
So, when we allowed anyone to submit bids both for the sale of potatoes and for its purchase - this is in fact an exchange.
But I love swede. Swede where to buy?
As there are many types of vegetables on the market, a large number of shares are drawn on any stock exchange. Potatoes, cucumbers, rutabagas, turnip - you can trade one thing, you can all at once.
But exchanges, like markets, are many.
There are vegetable markets, there are manufactured goods, there are electronics or auto parts markets. Having driven the Gazelle potatoes to Gorbushka, you will, firstly, sell it for a long time (because they don’t go for potatoes), and secondly, you will receive Pendels from the administration for non-compliance of products (potatoes) with formal requirements (electronics).
There are retail markets, there are wholesale markets. A company that wants to buy radio tubes and relyushek in sufficient quantity to assemble a GLONASS receiver for each Priory will not buy them in the nearest radio market. And if you want to sell such a batch, you will not go to it either.
Therefore, iPhones do not trade in vegetable markets, and Yandex is not located in Russia :).
Potatoes with turnips are kind of understandable. And if the company's shares are traded on the stock exchange, and the company is so promising, then they probably all want to buy them. Who then will sell them?
And what shares of a promising company are better than potatoes? Everyone wants to buy potatoes too ...
... and yet, someone sells it. And the aforementioned pile of speculators resells and resells. On the real stock exchange with the shares the same thing happens that on our potato stock exchange.
Huge numbers of participants with a variety of trading strategies are constantly running in the market. Extremely opposite points can be called “large investors” and “high-frequency traders”.
Everything, in fact, very connected. The larger the investor, the larger the volume of shares he works, the more money he spends on one operation, the more he influences the market with this operation, the more he loses on operations compared to the ideal case, the more long-term plans he has he expects a bigger profit from the stock.
A conditional player with the nickname "InvestBank" immediately buys one hundred thousand shares for three and a half million dollars; A conditional player with the nickname “- = HFT-VaSyA-bot = -” buys one or two or three stocks (maybe more, but under the shoulder , using a loan) for 35 bucks.
After InvestBank performed its operation, the market noticed this (“Oooh, a big buyer came”) and raised the stock price for a couple of bucks (InvestBank tritely bought all the shares sold on the market at prices ranging from $ 35 to $ 37). Remember how we bought 35 kilograms of potatoes, and bought all the potatoes for 42 rubles? And no one noticed the entry to the Vasin bot market.
Vasin bot bought his share in fact at the sale price. Suppose that at the time of his arrival, 700 shares were sold on the market at a price of 35.00 and 400 were bought at a price of 34.95. Vasin bot bought the stock at 35.00 and ... everything. The investment bank had to buy a hundred thousand shares at a high price. At this very moment, 700 shares were traded on the market at a price of 35.00 (although not, after Vasya - already 699) and the bank bought them all. I bought all the shares put up for sale at 35.01, at 35.02, ... at 36.00, ... I bought everything that was sold to collect my hundred thousand shares. At the same time, the worst purchase price was already 37.00. Therefore, it turns out that after its entry, the market price has risen by as much as 2 bucks.
Since Vasya wrote a smart bot who earns profit on the smallest fluctuations and does it often (high frequency!), He bought the stock due to an estimate that in the next 5 minutes (yes even a minute, but at least 5 seconds!) -chut grow up. When the estimate is justified, Vasin bot will sell the stock and earn his own penny. Due to the fact that he performs such operations in a very large number, a decent amount will come out on a day (or not, if Vasya wrote a bad bot). Investbank is not chasing pennies and is counting on long-term profit. Perhaps he considered that in six months, these shares would be worth (or would be profitable with dividends) $ 50. And even 100 (after 9 months). Or 250 (in one and a half year). He frightened the market enough with his bid for the purpose of buying and in the near future he would not be pulling at the market (for the purpose of selling).
Why am I doing all this? The market is full of both “washin bots”, and “investment banks”, and traders of all intermediate gradations between them. There is always someone to sell or from whom to buy a share, if you offer him the appropriate margin from the operation. Even InvestBank can be persuaded to sell one hundred thousand shares, even if he had just bought them.
(And yes, another disclaimer: the names “InvestBank” and “Vasin HFT-bot” are completely conditional and describe only the trading strategy on the stock exchange, and not specific entities. Vasya himself can easily invest with his hands, buy a dozen other Yandex shares - on He doesn’t have any money anymore - and leave them for a year.And surely there is a good HFT trading department in any investment bank trying to keep track of everything and play any market unevenness as quickly as possible, even insignificant.)
In the next part : the IPO process, its benefits for the company, the founders and owners, and why the company’s management has such a tortured look when opening trades.
Source: https://habr.com/ru/post/120928/
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