Mark Cuban assumes you and the seller are the only people in the market. If there are lots of traders, then the trade price is set by some average assessment of the stock value. Cuban also assumes that you want to buy the stock because you think it’s undervalued, and the seller because he thinks its overvalued. But maybe the seller just needs cash, or you just want to invest.
A paradox of economic equilibrium theory is you shouldn’t have to do any research: the “invisible hand” of free market should guide all prices to their correct value. The paradox is the theory assumes everyone is fully informed and rational, which seems to conflict with the ability to avoid doing any research. The reality is a more complicated and nuanced picture, which is why I’m surprised how forcefully some people defend free market fundamentalism.
Mark Cuban assumes you and the seller are the only people in the market. If there are lots of traders, then the trade price is set by some average assessment of the stock value. Cuban also assumes that you want to buy the stock because you think it’s undervalued, and the seller because he thinks its overvalued. But maybe the seller just needs cash, or you just want to invest.
A paradox of economic equilibrium theory is you shouldn’t have to do any research: the “invisible hand” of free market should guide all prices to their correct value. The paradox is the theory assumes everyone is fully informed and rational, which seems to conflict with the ability to avoid doing any research. The reality is a more complicated and nuanced picture, which is why I’m surprised how forcefully some people defend free market fundamentalism.