You’re like a top poster of c/stocks, shouldn’t you of all people know?
It only ends up being really “there” if the stake- and stockholders withdraw their shares and cash out. It’s all paper valuations.
Many billionaires are actually what is known as paper tigers in that their wealth assets aren’t real, (as in real estate) because the “wealth” is based on numbers on balance sheets and little else.
Yes, it’s something a lot of people don’t seem to understand. The “value” of a company is it’s stock price multiplied by all the shares and the stock price is pretty much just the last price someone was willing to buy a share at.
If everyone goes and sells all of their Tesla and SpaceX stock and nobody ever buys any again, Elon Musk might not even be a billionaire anymore.
God, wouldn’t that be a dream!
Nobody even HAS to sell their shares, the second part is what does all the lifting here: “and nobody ever buys the shares again”.
If overnight, everyone just said “I have no interest in buying at any price” that’s the end of it. The shares are now worthless.
Every seller needs a buyer. If “everyone sold their shares”, all that happened is the share owners changed.
I still scroll through Reddit through redlib and it’s wild how often I see reposts from Reddit making its way word for word to Lemmy.
You know what the bots think, what about people?
No stupid questions is the worst run community in all of lemmy. That place is a cancer and should be burnt with fire.
North Korea.
It’s on paper. It never existed to begin with. Just like saying the rock in a ditch I found is worth 200 million dollars. Then, when I couldn’t sell it, I revalued it at only 100 million dollars. So, the extra 100 million didn’t go anywhere. “Value” is a truly subjective thing which is encompassed by the old phrase “One man’s trash is another man’s treasure”.
Damn you got a $100m rock? I’ll give you $20 for it.
burp
You buy 10 copies of a specific collectible card for $5 each. Everybody is willing to pay $5 for each card you own, so you theoretically have $50 in the form of trading cards.
But then people want that card a lot for whatever reason. They want it so much you could sell yours for $8 each. So now, without having done anything, you have $80 in the form of trading cards.
But then people decide your cards are actually lame and don’t want to buy tgrm any more. If you were to sell them, you’d only get $1 each, so you only have $10 worth of trading cards. Thus, your cards are worth $70 less than they were, even though all the actual money is still out there and you have all the trading cards you originally bought.
To rephrase, the value of your investment fell by $70.
This is how stocks work. When the media reports that some money was wiped off the stock market, all the money still exists. It’s just that people decided some stocks are lame and not worth buying, which means the owners of those stocks can’t sell them for as much as they could have the previous day.
The point you’re missing is that the loss is real for the investors holding those assets.
If you bought ten cards for $5 each, you invested $50. When their market value rises to $80, you have an investment worth $80. If that value subsequently falls to $10, you’ve lost $70 in investment value. You can no longer sell those cards for what you could have sold them for yesterday.
And if you were someone who bought those ten cards at $8 each, you’ve now lost $70 of your original $80 investment. That isn’t hypothetical money. That’s money you actually spent and can no longer recover by selling your cards.
The money is not “still there”, the money transferred hands and you (or your retirement account) are holding the empty bag.
The thing is though you haven’t actually lost money or gained money until you sell the shares and until you do sell, you still have those shares so you could always get your money back if the stock goes back up. The only time you will lose money when holding stock is if the company goes out of buisiness
If you believe the capitalist assertion that stock always go up, sure. If you’re not close to retirement and aren’t counting on those funds anytime soon, sure.
I believe the AI circular financing bubble isn’t meaningfully going to turn a corner and become profitable enough to pay the debts already accumulated, and once it truly pops that money will never come back to the average investor trusting the financial bros to put all their eggs into that overinflated basket.
It’s literally hypothetical money
A stock is a part of a company. You still have have that part.
A stock is a piece of paper supposedly representing part of a company. You still have the paper.
There are three massive mathematical assumptions to determine the “value” of the stock market:
- The price of a stock of a company times the number of stocks of that company is the “value” of that company
- The price of all stocks of a company is equal to the price for which a stock of the company was last traded, a simple linear extrapolation
- The “value” of a company is measured in currency units.
It seems clear to me that some of even all of those are in fact wrong and do not represent reality.
In other words, the whole thing is bullshit.
Certainly it would explain why stock markets are far more about faith and things like momentum than they are about fundamentals.
I mean it is an approximation, repeatedly it has been shown that if another company wants to buy a publicly listed company they usually have to pay a premium to the market value = current stock price * number of shares so if anything that can be off by a bit more or less but is generally accurate, the main exemption to this being when a company has a very low float i.e SpaceX which only has 5% of its equity publicly tradable. Your second point is not typically what industry uses, usually we would use a optimized calculation between the current active highest bid and lowest offer. Your third point is abitrary, all things in our society are “valued” in an economic sense, by currency units of your choosing. There is often a discrepancy between public good and company value, but that is how people work. Gold was more valuable than food for peasants during feudal times or in USSR so it isn’t just Capitalism that makes this happen
My point is that it’s a horrible approximation, especially for things like “growth” stocks and during market bubbles.
Further, companies buying other companies don’t purchase them for the “value” of that company, they purchase them for the amount of money that those who own that company want to part with their share of the company. This is all over the place and even for the same person varies widely at different points in time - people can and do (it’s just good business sense) demand as much money for their stocks as they can get away with meaning that the amount paid is not necessarily the amount the company is worth.
As for your response to my 3rd point, I don’t think I’ve explained it correctly - my point is that the “value” of a company is often in things which aren’t easily quantified in money (or gold, or whatever currency token), something especially bad in “growth” “tech” stocks because there’s a double problem that to find a monetary expression of the value of the company you need to find a money value of “intellectual property” (which Tech companies are generally heavy on, much more so than capital assets which are far easier to value) which is notoriously hard and all over the place and, worse, find a money value for future market prospects and profitability (because they’re “growth” stocks, so their value is not on today’s market share and revenues for their products and services) which is even more full of la-la-land wishful thinking pulled-out-of-somebody’s ass valuations than intellectual property.
So my 3rd point isn’t about that it’s somehow wrong to translate the value of a company into monetary units, it’s that said conversion is another source of error with an error amount which can vary a lot between companies and be massive in some cases.
Valuation owes more to perception than utility. If the perception of worth shrinks, the price deflates accordingly.
So it is not actual value of anything that disappeared, but rather that prices fell.
I have it
Could I have tree fiddy for an impossible burger, please?
I’ll think about it.
It’s unrealized money that disppeared
The DoD, they just had to choose a nice round 25 years since last time. /s
Bonds, cash and other countries stock market
Monopoly money is real and exists. That $1.8 trillion never did.
Functionally, to the people who shorted stocks or sold while it was still high. But more accurately, it goes nowhere; the “market value” isn’t an actual number, it’s just a shorthand for “how much all the people currently playing the stock market are willing to spend on stocks.” They count up all the shares of every stock currently issued, multiply it by the amount people are willing to pay for those shares, and that’s the market value. When it goes down, that money doesn’t “go anywhere,” because it never actually existed to begin with; it was just describing how much confidence people had in the market.
The people who short stock or who sell high are the ones who have played the game so as to benefit when that confidence drops, so they get some actual money out of the deal; but they didn’t “make” $1.8T yesterday. That’s just how much less confident investors in the American stock market are.
