Bidding Up - Securities

  

Underneath the stock prices that you can look up on any stock quoting site, there's a dynamic process of bids and asks. A bid is the amount someone is willing to pay for a stock. The ask is the amount the seller is willing to accept.

Regular folks just go to their Ameritrade accounts and pay the market price for the stock at any given time. Wall Street players get into the weeds with the bid/ask, trying to get the best possible price (when you're dealing with millions of dollars, those fractions of a cent per share start to add up).

The phrase "bidding up" has a couple connotations. In its more general sense, it just means something like "sending the stock higher," as in "investors are really bidding up shares of Apple today."

On a more technical level, the phrase can refer to a strategy for acquiring shares at a time when a stock is rising quickly. Basically, if you try to get too cute with your bid when a stock is skyrocketing, you could end up under-bidding the market and not getting any stock at all.

Bidding up means that you take the fact that the stock is rising into account when you place your bid, over-bidding to make sure you find a matching ask. Of course, this process helps fuel the upward rise in the stock, which can last until people finally start saying to themselves, "This is stupid. I'm just going to go buy bonds instead for a while."

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Finance: What is a hot issue?2 Views

00:00

Finance allah shmoop What is ah hot issue All right

00:07

Well it's one that has demanded more than it is

00:09

supplied One that is loved more than it is hated

00:13

One that is hot more thin it's gold Well the

00:16

most common hot issue in the press You read about

00:18

all the time Yeah It's an aipo that everybody wants

00:22

Why Well it's basically free money to the investors Price

00:27

talk has been ten to twelve dollars a share And

00:29

well then it looks like it's moved twelve to fifteen

00:31

and out price doc's fifteen to eighteen a share And

00:34

traders are mumbling that the first actual traded print will

00:38

be something like forty dollars a share So anyone who

00:41

buys at that eighteen dollars price or really any price

00:44

upto thirty thirty two thirty five something like that Well

00:47

they'll make a massive return for one day's work just

00:50

flipping their stock Tio you no longer term holders I

00:54

think about the real estate show where they flip houses

00:57

you know Well they have to do a whole lot

00:58

of work to flip a house on stocks are a

01:00

lot easier Well why do hot issues even happen Well

01:03

often banks purposely underprice i pose to quote pay the

01:08

street unquote for taking risk and buying that aipo handsomely

01:13

like they price it low Lots of people are going

01:15

to buy it have a low cost basis and remember

01:17

it fondly Well cos generally play along instead of selling

01:21

say thirty forty fifty percent of themselves to the public

01:24

in there i po well they only sell ten percent

01:27

and later on they'll sell more when the stock is

01:29

popped and traded and settled and has a buying public

01:32

and all the other good things that go with it

01:34

so and only a tiny amount of shares out there

01:36

trading even modest demand can drive prices to the sky

01:41

and this phenomenon happens Ah lot ebay snap facebook A

01:45

whole bunch of others essentially created hot issues by offering

01:49

very tiny fractions of ownership of themselves to the public

01:52

in there i po so that the enormous buyer interest

01:55

almost guarantees more demand than supply of the security being

01:59

sold and hot issues as you guess our great well 00:02:03.51 --> [endTime] until they're not

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