Last night my man and I went to see the Cult play live–they are one of the greatest bands to watch live as they are masters of sound. When the Cult’s March 31 show tickets were available for pre-sale, we were locked and loaded and ready to buy what was available in the floor seating, which was…TWO SEATS?!? Before we could even hit “BUY,” those seats were gone. We had to be faster than, ahem, day traders to get these tickets. When the general ticket sales opened up, we weren’t crazy about the next best seating which was much higher up, but we got what we could get.
Most of the best seats are already held by the promoters and those connected to the event; the tickets for these seats go to VIPs, the media, promotional contests, fan clubbers, and the connected. The other tickets are snatched up quickly by scalpers who apply their techniques and buying programs; then these tickets are sold at inflated prices through the secondary market. These ticket prices fluctuate depending on the demand of buyers.
This sounds a lot like the stock market. Publicly traded stocks are stocks being sold in the secondary market. A new company needs money to grow, so to seek financing, it’ll go to an investment dealer, like a bank or a brokerage firm. So now, the dealer has the responsibility of finding investors at this early stage. The dealer sells shares of ownership of the company at lower prices, but owning these cheap shares often come with conditions and restrictions. This is the primary market involving the dealer and early investors, kind of like the event promoter issuing tickets during pre-sale. As the company grows, it needs more money to fund further growth, so the dealer goes to the public seeking to sell the rest of its shares. The share prices in the secondary market are often set higher but they could go down if people don’t want to pay those prices for them.
Just out of interest, here is a screenshot of Apple’s stock trading this morning. You can see the orders of bids to buy shares of Apple in the first column. In the second, it’s a list of the orders of people wanting to sell their shares. In the third, it shows the actual buy and sell orders that had just gone through and the times they were bought or sold at.
Imagine being able to see ticket sales like this! I mean, to get this feed of live information on stock orders, I have to pay through my brokerage or trade a certain number of times a month to get this for free. The truth is there are additional markets (called dark pools) where shares are being bought and sold which the public can’t access. How refreshing it would be to achieve full transparency in all the different markets out there, so buyers can see ALL the prices things are going for!
I trade stocks with my own money. I study their share prices first, and if they seem fair, I buy them. If they look like they might go down in price later, I’ll wait. I have missed opportunities waiting for cheaper prices; however, I try as a trader–and in general as a consumer–to only pay at prices that seem fair to me.
We felt severely disadvantaged by the ticket sale experience for last night’s show, but we refused to go through the secondary market and pay much more to ticket re-sellers. As you can see from the up-close photo of Billy Duffy that I took with my phone, we worked our edge and got closer seats.