When stocks crash where does the money go??

carolinakid · 03-18-20, 06:30 PM

a lot of people use puts to offset their losses and to make money.......

MinnesotaFats · 03-18-20, 06:59 PM

The "money" wasn't real until you take it off the table.

So, if you bought 4 shares of XYZ for $100 ($25 per) today, you paid the owner of those shares $100. He has either profited or lost from when he purchased, but now he has real money...you have certificates of stock, which have a market value at the exchange based on many factors including the companies revenue, growth, profit or loss, dividends, debt, assets. Typically, in phenomenal times, good publically traded companies trade at say 25xs EARNINGS PER SHARE (XYZ nets $1 per share, you bought it based on a value of 25xs that)

Now, when several of those factors decline like the current situation (declining growth, declining profits, dividend reduction, etc) the exchange value, that is the value that another person is willing to pay, declines. XYZ lowers guidance to $0.50 per share, suddenly you r stock is worth $12.50 per share. If you sold, you'd receive $50 in real money.

The $50 you lost doesn't disappear because it never existed. You never took the money off the table...in theory if you liked XTZ you'd buy more shares at this price, thus lowering your total dollar cost averaging.

Same theory many apply to bitcoin when buying the dips.

jjgold · 03-18-20, 10:06 PM

There has to be a time when you can come back in it can’t keep going down forever

Auto Donk · 03-18-20, 10:14 PM

JIBBBY · 03-18-20, 10:18 PM

asiagambler · 03-18-20, 10:21 PM

Stocks aren't money

Imagine you have a T206 Honus Wagner card that's worth millions of dollars. You have something that's very valuable but you don't actually have any money until you sell it

Now imagine you mishandle the card and it gets ripped and crumpled. Well not it's worth way way way less than a million dollars. Money didn't go anywhere because there was no money in the first place. That's kind of like what's happening with stocks

Mike Huntertz · 03-18-20, 11:23 PM

I shorted the Dow a week ago, some of the money the people lost is in my bank account.
If the market went up they would have my money.

jjgold · 03-19-20, 05:45 AM

rich will get richer off this disaster like usual

Slurry Pumper · 03-19-20, 06:49 AM

Originally posted by jjgold

rich will get richer off this disaster like usual

That's right, it's called shorting, you borrow somebody's stock and sell it behind their back then after some time you are required to buy back the stock and return the stock to its rightful owner. You keep the difference in price. Most people don't short because they scare you off by saying your risk is infinitely more which is very unlikely.

PAULYPOKER · 03-20-20, 07:57 PM

Thx for your thoughts men....

If you get a chance maybe you could watch this new movie that just came out today....

It was getting a solid 9/10 at the US/Can. film festivals......

If you do,Id like to here your thoughts on it as well......

Liev gets ripped on a $300k stock buy.......

8.7/10 score after 1.6k votes on imdb.