Who's Paying The Bills

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I have a question about who is paying the bills. Say I have $100,000 in an investment account with a broker and I invest in funds with say, Rydex. Say I begin to make 200% earnings on my investment each year. Is Rydex the one putting the money into my account? If so, do they "lose" money if I "make" money? Also, if I'm making 200% each year, could someone with the fund family say "wait a minute, this guys killing us, don't allow him to invest with our funds anymore!" Is that possible? Just thinking about the future.........:^

Oh, I also realize that there probably isn't any "actually" money in my account until I ask my broker to send me a check correct?

Thanks,

M_M

 

[tsptalk]

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The money doesn't come from the institution, Rydex in your case, it comes from other traders or from company earnings per se. Everytime you buy, someone else has sold. This is what makes a market. Someone says I am willing to buy that stockat this price, is there someone out there who will sell it at that same price? If so, you have a trade. If not the price won't move until a new buyer or seller comes in with a price that matches.

Prices of stock go up because of speculation and because of earnings, or company worth. The company makes money, the earnings go up and the price of the stock tends to follow. The shareholder benefits. You could say themoney is coming from consumers in that case.

Rydex is simply holding your "shares" for you. They don't give or take the money from you. They give and take it to the market which dictates your account value.

Hope that helps,
Tom