Who buys to stock when the stock is worthless?

[givemychildabetterlife]

I'm doing some reading on the great depression and the collapse of the wall street market.
I do not understand who was buying this worthless stock? If its worthless and everyone is desperate to sell, who are they selling to?

Let's say John and Jack have $10 dollars worth of A and B stock. Market os crashing they sell their stock to Fred who buys it for $1... why is Fred buying it? It couldn't be worthless even if it only costs a dollar now because Fred bought, so he sees potential? why didn't Jack and John sit tight? Does anyone know?
It's always said that the market crashes and everyone sold their stock for a fraction of the price it should have fetched but WHO BOUGHT IT ALL??!!

Lots of people chase the market down. I.e. they've already lost a shed load of money on their XYZ shares, but take a punt on buying loads more XYZ shares at low values in the vain hope that the share price goes up, so even if they don't get back to where they used to be, they'll still have made a profit on the ones they bought at the bottom of the market.

There are also speculators who buy lots of different shares at the bottom of the market in the hope that some will increase in value enough to cover the losses on the ones that don't.

Jack and John probably would have sat tight if they could.

many people borrowed money to invest in stocks and shares and then had to sell at low prices because they needed to make their loan repayments.

the “people” should bought were cash investors, pension funds etc who didn’t owe money and could afford to wait out the downturn.

Buy low/sell high.

A lot of investors see it as a bit of a calculated gamble, so not every trade will work out. But if you have available spends (there will always be people with accumulated wealth) then buying the $1 stock today and being able to sit on it could mean it’s back to $10 or even become $20 if you time it right/the markets go your way.

People have varying degrees of risk aversion so some are comfortable speculating and others prone to panic.

I believe a huge amount of the buying was down to mega rich individuals like the Rockefellers trying to calm the markets down, but it’s a long time since I did Economics A level!!

Especially fund/portfolio managers who are investing other peoples' money will take a balanced risk with a small proportion of the value of the funds they're managing.

the trick would be to be able to distinguish stick of companies which are underlying healthy, have good machinery and markets, suffering short term issues such as reduced credit lines

from…

stock in ‘junk companies’

is the truck. If you have sufficient funds and the knowledge of which will thrive then the market rises again, you can sell high and then buy the shares back at less than you sold them for, and sit back and wait for the rise.

even better if you have insider knowledge and know when the government will act to bring confidence back to the market. And you have to be sure you can survive until then.

It's a form of gambling - people hope that they can make a big 'win' by buying low value stocks/shares & hoping that the value will increase.

Much the same as betting on the 200-1 horse in a race.

It absolutely is gambling. Pure and simple.

I believe Wall Street took over ten years to recover to pre crash levels. A lot of people wouldn’t have the assets or nerve to hold on that long.

people during a depression are wanting to sell anything hoping for cash, after all you can't eat stocks in kansas city rail line. likewise people who are wealthier can spot some good deals like oil or household goods (proctor and gamble/johnson and johnson etc).
so although many lost money some families were okay and able to buy potentially good stocks at a bargain price.

Trump’s billionaire mates made a killing overnight when he crashed the markets when he was fucking about with tariffs.

Investing is a form of gambling and if you have the money that doesn’t have to be touched soon then you could probably make some guesses of your own. For example would Tesla stocks recover once Trump removes Musk from the White House? You can bet on that both ways and make money.

It depends what you are buying. A and B stocks might be low value currently because of market uncertainty, but you are still buying the same proportion of a business.

Say someone owns 1% of business A. That's valued at £100k. The share drops to £10k. Fred buys at that value and is still getting 1% of that business. The share value is based on what people are willing to pay, which doesn't necessarily connect to how much profit the business makes. Dividend returns can provide income in some cases. But also once markets recover Fred has 1% of a business for far less money and can sell when it's worth more.

The question really is why so many people sell and cement their losses after crashes.

Speculators buy it.

It won't be people who are on their last £5 with a family to feed but it may be a few % of someone's wealth who knows that over time the markets seem to just go up and up, people who are making slightly intelligent gambles with an amount of their assets that is not going to destroy them if it goes wrong. Frankly it's how the rich get richer because they can take more of these risks than the rest can and more often than not, and particularly if they spread it, they will get a decent return.