hh = hh - Let's say I have 100K in equities and I decide to sell and put the 100K under my mattress. That is 100K taken out of the equities market. The person who buys my 100K position does not take 100K from under his mattress to purchase my position. If he did it would be a zero sum gain for the value of the markets. 100K in and 100K out. The 100K the market maker uses to purchase my position is already in the market. He sells something and buys my position. He is only interested in making a little spread as he moves his money from position to position. He hedges with options to cover any losses. He bobs and weaves and doesn't lose money. If someone wants to buy my position he can sell it for a little less that he paid me and still make money if he hedged, The more who do as I did the more money is taken out of the equities market. Prices spiral downward as money leaves. Same number of shares being bought and sold for less and less because less and less money is available in the markets. QE pumps money into banks that eventually ends up in equities. That is money going into the markets. The money is produced out of thin air. Equities go up in price because more money is available to buy them. There are more buyers than sellers so stocks demand higher and higher prices to pry them loose from sellers. Here is an explanation of where the money goes when one person takes a loss. It goes somewhere. If you can follow this you are da man.
It's all about what you as investor are willing to pay, or not pay for a companies furure earnings on the stock they issue. Each company is part of the divisor of some index. When investors bid up the price of there stock. They issue more shares to capitalize projects and keep earnings growing. So yes money came out of the market. The value of stock increases based on earning potential, The company % of divisor causes increase in index.
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