The assumption worth losing
Beginners arrive believing a trade means one person is smart and the other foolish — that for every winner there must be a loser who misjudged the company.
Sometimes that is true. Far more often the two parties are not even answering the same question. One is investing for ten years and one is closing a position before a deadline. One has a view on the business and one is rebalancing a portfolio. Neither had to be wrong for the trade to happen.
One price, four reasons
Every one of these people traded at ₹500 today. Tap each to see what they were actually doing.
Only the first of these was expressing an opinion about Bharat Foods.
The price is one number agreed by people who do not agree on anything else.
What the price therefore is, and is not
It is the one number at which the buying and the selling balanced at that instant. That is a real fact, and it is all of it.
It is not a considered judgement of what the company is worth. It contains forced sellers, mechanical buyers, people trading around a deadline and people who never read a page about the business. Their orders count exactly as much as yours.
This is why 01.01.05 was careful to say market capitalisation is a price being asked, not a value being proven. Everything in this chapter is the reason that distinction was worth making.
You buy at ₹500 and the price falls to ₹460 that week. What is the most defensible conclusion?
You now know what a share is, what it is worth, where it comes from, and who is on the other side of it. What you have not seen is the machinery that puts the two of you together.