I found this article rather fascinating as I got to thinking where do your losses go when the stock market plunges. The short answer is the money disappears. Yes, it pretty much evaporates into thin air. Unlike sports betting, where there is a winner and loser, when a stock goes down from $100 per share to $95 per share, there's really nobody on the other end receiving that specific $5 that the investor has lost. Sure, people ultimately benefit by buying low but I'm speaking of each single transaction. Conversely speaking, the same goes for upticks in a particular stock.
https://www.investopedia.com/articles/ba...060603.asp
I know what you mean, but no money is disappearing. If you buy $100 worth of stock and the value goes up to $150, you didn't make any money until you sell it because you aren't just given $50 as soon as it goes up, the value is based upon supply and demand and the fair market value that someone out there is willing to pay you $150 for it.
Same notion goes for when a stock goes down. It's not worth to other people who want to buy at the time what it was when you bought it. The same really could be said for when you buy any asset. Think of a house, for example, the exact same concept applies, we just don't have a marketplace or exchange that actively tracks the value of your home in real time on a daily basis with active traders like we do with the stock market.
(03-06-2020, 12:54 PM)KingIngram052787 Wrote: [ -> ]I know what you mean, but no money is disappearing. If you buy $100 worth of stock and the value goes up to $150, you didn't make any money until you sell it because you aren't just given $50 as soon as it goes up, the value is based upon supply and demand and the fair market value that someone out there is willing to pay you $150 for it.
Same notion goes for when a stock goes down. It's not worth to other people who want to buy at the time what it was when you bought it. The same really could be said for when you buy any asset. Think of a house, for example, the exact same concept applies, we just don't have a marketplace or exchange that actively tracks the value of your home in real time on a daily basis with active traders like we do with the stock market.
Agree. All examples are not liquid assets and only represent the FMV of what someone is willing to pay but it blows my mind that $3.4 TRILLION DOLLARS were wiped out of the stock market last week and probably about $2 Trillion this week.
poof ---- gone
(03-06-2020, 01:54 PM)HURRICANE!!! Wrote: [ -> ] (03-06-2020, 12:54 PM)KingIngram052787 Wrote: [ -> ]I know what you mean, but no money is disappearing. If you buy $100 worth of stock and the value goes up to $150, you didn't make any money until you sell it because you aren't just given $50 as soon as it goes up, the value is based upon supply and demand and the fair market value that someone out there is willing to pay you $150 for it.
Same notion goes for when a stock goes down. It's not worth to other people who want to buy at the time what it was when you bought it. The same really could be said for when you buy any asset. Think of a house, for example, the exact same concept applies, we just don't have a marketplace or exchange that actively tracks the value of your home in real time on a daily basis with active traders like we do with the stock market.
Agree. All examples are not liquid assets and only represent the FMV of what someone is willing to pay but it blows my mind that $3.4 TRILLION DOLLARS were wiped out of the stock market last week and probably about $2 Trillion this week.
poof ---- gone
I completely understand what you're saying, it is truly remarkable (and sucks for most of us - lol).
(03-06-2020, 12:45 PM)HURRICANE!!! Wrote: [ -> ]I found this article rather fascinating as I got to thinking where do your losses go when the stock market plunges. The short answer is the money disappears. Yes, it pretty much evaporates into thin air. Unlike sports betting, where there is a winner and loser, when a stock goes down from $100 per share to $95 per share, there's really nobody on the other end receiving that specific $5 that the investor has lost. Sure, people ultimately benefit by buying low but I'm speaking of each single transaction. Conversely speaking, the same goes for upticks in a particular stock.
https://www.investopedia.com/articles/ba...060603.asp
That's an interesting question. Think of it this way: you have $5, and your friend has an apple. You think the Apple is worth $4, so you buy the apple for $4. How much money is there? $5. You have $1 and your friend has $4. Then, the value of the apple falls from $4 to $2. How much money is there? Still $5. What if your friend buys the apple back for $2? How much money is there? Still $5. You now have $3, and your friend has $2. The apple "lost value," but where did the money go? It didn't disappear. It's still the same. $5.
When the stock market plunges, money doesn't disappear. Value disappears. But the money stays the same.
So what I object to about that article is that it fails to distinguish between value and money. Those are two different things.
(03-06-2020, 03:03 PM)The Real Marty Wrote: [ -> ] (03-06-2020, 12:45 PM)HURRICANE!!! Wrote: [ -> ]I found this article rather fascinating as I got to thinking where do your losses go when the stock market plunges. The short answer is the money disappears. Yes, it pretty much evaporates into thin air. Unlike sports betting, where there is a winner and loser, when a stock goes down from $100 per share to $95 per share, there's really nobody on the other end receiving that specific $5 that the investor has lost. Sure, people ultimately benefit by buying low but I'm speaking of each single transaction. Conversely speaking, the same goes for upticks in a particular stock.
https://www.investopedia.com/articles/ba...060603.asp
That's an interesting question. Think of it this way: you have $5, and your friend has an apple. You think the Apple is worth $4, so you buy the apple for $4. How much money is there? $5. You have $1 and your friend has $4. Then, the value of the apple falls from $4 to $2. How much money is there? Still $5. What if your friend buys the apple back for $2? How much money is there? Still $5. You now have $3, and your friend has $2. The apple "lost value," but where did the money go? It didn't disappear. It's still the same. $5.
When the stock market plunges, money doesn't disappear. Value disappears. But the money stays the same.
So what I object to about that article is that it fails to distinguish between value and money. Those are two different things.
Yes, ultimately it's equity (value) versus currency but it feels much different than having a home that lost value because stocks are much more liquid in nature knowing you can cash in (liquidated) at any given time M-F between 9:30am and 4:00pm.
Given the concept of so many investors losing so much money, I really don't see a V shaped rebound (to get to 29,000 in a month or two) but rather a gradual upward trend beginning in Q2 (assuming we get carona under control) that may take the next 6-9 months to get to 29,000. some people just wont have the wealth to re-invest.
You have to have no empathy to be successful in the trade and stock market. These people are soulless. Most successful Investors are soulless.
Brokers bribe the office managers. Office managers bribe regional managers. And it goes up and up from there. Even "Compliance" officers can be bought out. And that's the problem.
"Money" is just moving around in a system now. There's no real value anymore. It's all bogus until a bubble pops. And then we have to rely on the Government to beg and borrow for bailouts from the Federal Reserve.
It's a self cannibalizing snake at the end of the day. So when you say "It just evaporates into thin air". I disagree. Someone caught that evaporation off the books and stored it in a nice cloud. Literally. Probably a [BLEEP] cloud in some dweebs desktop PC or laptop and they'll just save that "lost" money for a rainy day.
They just siphon it right on out.
(03-06-2020, 08:52 PM)Caldrac Wrote: [ -> ]You have to have no empathy to be successful in the trade and stock market. These people are soulless. Most successful Investors are soulless.
Brokers bribe the office managers. Office managers bribe regional managers. And it goes up and up from there. Even "Compliance" officers can be bought out. And that's the problem.
"Money" is just moving around in a system now. There's no real value anymore. It's all bogus until a bubble pops. And then we have to rely on the Government to beg and borrow for bailouts from the Federal Reserve.
It's a self cannibalizing snake at the end of the day. So when you say "It just evaporates into thin air". I disagree. Someone caught that evaporation off the books and stored it in a nice cloud. Literally. Probably a [BLEEP] cloud in some dweebs desktop PC or laptop and they'll just save that "lost" money for a rainy day.
They just siphon it right on out.
That is complete BS.
To be successful in the stock market all you have to do is buy an index fund and hold it. Forget about all the bouncing up and down because people are trading in and out trying to get an edge. You don't need an edge. You just need to be in. Because all you're doing is buying a share in a bunch of businesses, which are mostly run by very smart people who know how to make money. Why would one not want to own a share of that?
Forget all the day to day noise. It's meaningless. In the long run, human ingenuity, ambition, intelligence, and greed will win out, and you will have a share of it. Capitalistic business will always win out. Buy into it, hold onto it, go play golf or something, and in time, you will be successful.
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