Say you are a big mutual fund and you own 1,000 shares of Stock X and you want to sell. You meet a pension fund that wants to buy 1,000 shares of Stock X, the pension fund comes to your office to negotiate a trade, and you agree on a price of, say, $14 per share. The pension fund reaches into its bag of cash, pulls out $14,000 in crisp $20 bills and hands them to you. You open up your vault, pull out a stock certificate that says “1,000 Shares of Stock X” and hand it to the pension fund. “Pleasure doing business with you,” you say; you shake hands with the pension fund and it walks out of your office holding the shares.

This is not quite an accurate description of how you trade stocks in 2024. For instance, in reality, you negotiate this trade anonymously and electronically on the stock exchange,1 the “stock” consists of an entry in an electronic database rather than paper certificates, and the “$14,000” consists of an entry in a different electronic database. But those distinctions are not particularly important, and let’s ignore them for now.

QOSHE - Trading Stock Takes Time - Matt Levine
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Trading Stock Takes Time

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28.02.2024

Say you are a big mutual fund and you own 1,000 shares of Stock X and you want to sell. You meet a pension fund that wants to buy 1,000 shares of Stock X, the pension fund comes to your office to negotiate a trade, and you agree on a price of, say, $14 per share. The........

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