30 January 2010 ~ 39 Comments

How Stockmarket Works

Playing in the Stockmarket is a crazy thing to monitor and learn. While this image is more of a fictional one, the real truth is somewhere in the middle.

How does the stockmarket work?




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39 Responses to “How Stockmarket Works”

  1. Alex Watson 7 February 2010 at 12:45 am Permalink

    Pretty awesome and oh so accurate. What most people don’t understand about the stock market is that the people make and break it. If everyone decides to sell, the stock market crashes. If everyone decides to buy, it goes up. Very nice example of this.

  2. PH 7 February 2010 at 4:53 pm Permalink

    I love this one.

  3. Tess Elliott 7 February 2010 at 5:36 pm Permalink

    This is just a hoot! There is not always a lot of rational thinking at the foundation of how things work in our country. I try not to think about that a lot–feels like a house of cards if we keep pretending the free market concept does not always create the best economy. Look at our small hand-made businesses that serve children: being forced to submit their wares for expensive testing because Mattel’s suppliers cheated is insane. Allowing Mattel to do their own in-house testing is absolutely insane!

  4. Xamuel 7 February 2010 at 6:29 pm Permalink

    Hey, remember when the stock market was supposed to be about investing in companies with long term profitability…

  5. alonsohenry 7 February 2010 at 7:00 pm Permalink

    Funny no wonder they got American economy in so much trouble…lol.

  6. Robert M 10 February 2010 at 6:05 pm Permalink

    Haha so funny and sad at the same time.

  7. Iain 11 February 2010 at 12:25 am Permalink

    Copyright, the Economist magazine.

  8. איביי 11 February 2010 at 6:24 pm Permalink

    SO, what do you say buy or sell….which is it ,make up your mind….lol
    Very Nice if feel like that from time to time.

  9. Y. Zabarah 12 February 2010 at 8:36 pm Permalink

    Stock trading is not an exact science and is practiced “at least partially” based on traders instinct and educated guess, therefore stock market will always be prone to overreactions and human influences such as profit maximizing “GREED” and stocks value manipulation . The bottom line is we should not be surprise when we get hit with such market disasters, after all who is really dictating the market moves?, big banks and stocks manipulators and of course they have the best intentions for us and also they know “How Stock market Works”.

  10. Dragon Blogger 27 February 2010 at 3:20 am Permalink

    Really funny, it isn't far from the truth either when people panic and offload stock.

  11. tom 11 May 2010 at 6:25 am Permalink

    This would be true if all investors are in close contact with each other. Most times this is not the case. The market reflects the sum of all sentiments- rational and irrational, studied and fancied, pertinent and irrelevant.

  12. unbound 11 May 2010 at 12:10 pm Permalink

    Xamuel – that was a fairy tale told to grown up kids in college

    tom – actually, the cartoon is closer to the truth…not that your statement is wrong. Just that there is far more irrational, fancied and irrelevant input into the market than rational, studied or pertinent…

  13. Millenion 14 May 2010 at 12:51 pm Permalink

    that’s what happened to the Dow the other week. some miss a few letters in the market and now a big drop in it

  14. Mathman 18 May 2010 at 12:19 am Permalink

    But if you purchase a company based on its intrinsic value (i.e. NPV of estimated free cash flow for a foreseeable period), you should be golden. Granted, you don’t take part in overvalued stock run-ups and don’t make the fantastic gains so long as the next fool will go in.

  15. SK 18 May 2010 at 4:20 am Permalink

    Buy low and sell high?

  16. Aussiedude 19 May 2010 at 2:57 pm Permalink

    I think nearly every financial crisis was caused by that.

    Someone tells the media, or the media comes up with it on their own, saying “There could be a financial crisis coming.”. Then people sell everything they have in a panic.

    And the media then says, “There is a financial crisis! Stock prices are falling!”. And then those who didn’t panic and sell everything they had, do so!

    Then the whole world goes to hell because of a rumour. :-\

  17. Mike 19 May 2010 at 9:25 pm Permalink

    This cartoon is a fairly accurate description of how some of the market sometimes works. However, this isn’t what causes the stock market to crash… For one thing, every sale of stock requires a seller AND a BUYER! People overlook this basic fact all the time. For every person selling, there has to be someone else who’s buying… Sooo obviously we can’t sell ourselves into a stock market crash. The greater principle to understand here is that consumption doesn’t produce wealth. Period! Anyway if you want to know the real answers to our problems read up on Austrian School economics.

  18. Jo 19 May 2010 at 9:37 pm Permalink

    Yup, one thing that fuelled the house pricing crash were the rumours of a house pricing crash.

  19. Anthony Pittarelli 19 May 2010 at 9:48 pm Permalink

    The telephone game form grown men

  20. Good Forex 20 May 2010 at 9:42 am Permalink

    nice! Yes, i also really like to visit new place,your idea is good. :D

  21. Wdrane 23 May 2010 at 2:48 am Permalink

    Nailed it!

    Whenever I hear someone say, "the market is rational", I know I have just heard an idiot speak.

  22. amr 23 May 2010 at 8:53 am Permalink

    انا عاوز فيفا 2007

  23. neonblue120 2 June 2010 at 7:13 pm Permalink

    The more i read it the more hilarious it becomes.

  24. Renato Doliveira 16 June 2010 at 6:02 am Permalink

    Hey what theme are you using for your website? Im jealous. Looks wonderful.

  25. Rob 21 June 2010 at 5:21 am Permalink

    Love your site it looks really good.

  26. Kurtis 28 June 2010 at 4:22 am Permalink

    Everything a stockbrocker needs to know he/she learned in kindergarten including the telephone game.

  27. Ivan 6 July 2010 at 3:19 pm Permalink

    haha, really hilarious! ;)

  28. Miami Web Design Fir 6 July 2010 at 5:53 pm Permalink

    made me smile :) . Love the stock exchange hahaha

  29. Nathan 6 October 2010 at 11:25 pm Permalink

    Quite accurate. This is why you will often hear them say on the news that "market sentiment push the market up/down", because most of the time there's really no rhyme or reason for it.

  30. Rusty 8 October 2010 at 3:53 am Permalink

    The stock market is an emotional guy. I love how true this sort of thing is. A rumor can lead to ridiculous consequences on Wall Street.

  31. Newthinktank 9 October 2010 at 1:30 am Permalink

    What most people don't know is that the Dow only has an average return of 3.7%. Also only one company has been a permanent member, being general electric

    • TheFlintSkinny 10 August 2011 at 2:55 am Permalink

      Plus it's comprised of only 30 stocks and is improperly weighted. The S&P index should be the one people most often reference, but unfortunately, WSJ makes that impossible.

  32. Shrikrishna Meena 23 December 2010 at 5:33 am Permalink

    Interesting… And very much Useful…. It's not only in stock market but Happens at much more places in real life….

    Thanks.

  33. TOMS Shoes 17 January 2011 at 8:24 pm Permalink

    Real nice design and style and excellent content material , nothing else we need : D.

  34. Stock Market Crash 29 May 2011 at 12:53 am Permalink

    Hey, remember when the stock market was supposed to be about investing in companies with long term profitability

  35. TheFlintSkinny 10 August 2011 at 2:51 am Permalink

    Too bad no one really trades in the pit anymore and most large moves are caused by either algorithms triggering buys/sells or people having to dump their position because they've hit their risk limit.


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