It’s not real. It’s just gambling for rich people. Occasionally they use it to steal from our retirement.
Agreed. It wasn’t real when it was there and it isn’t real now that it isn’t.
You’re like a top poster of c/stocks, shouldn’t you of all people know?
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.
You just crashed the entire stone futures market.
I’ve got a rock with gold paint on the outside, worth $5000. Could I interest you in buying it for $30, instead of the lame dull rock that other guy has ?
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.
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’s nothing “supposedly” about it. It does represent a part of the ownership. If you own all the pieces of paper then you own the company.
However much you paid for it and how much it’s worth are completely different stories, but the stock is indeed the ownership.
It’s literally hypothetical money
An example might be helpful.
In the 1800s, aluminum was more valuable than gold. It was very difficult to produce and it was valued very highly. Then someone figured out a way to extract it from the ore much more efficiently, making it much easier to obtain and much more common. If you had owned a $500 chunk of aluminum, it had that value because of its rarity; other people recognized it as being more valuable because it was more difficult to get. When it became more common, its value could have dropped to $50 (I don’t know how much the price actually dropped, but it was a lot).
Where did the $450 go? Nowhere, because monetary value is based on how much people are willing to pay, and unlike a physical substance it is not necessarily conserved; it can be created or destroyed. This is also how stocks work.
You can also create monetary value by transforming materials into a worked product (think knitting a sweater) or destroying something that took work to make (burning that same sweater). Unlike the stock market though, the price of physical goods is often based on their usefulness rather than speculation, so it tends to be more stable.
It didn’t go anywhere, because it was never real. Market cap is not the same as cash. The fact that Apple stock multiplied by its price is trillion, doesn’t mean you can sell trillion worth of apple stock and get trillion dollars in exchange. At that point price starts to respond to your transaction
because it was never real. Market cap is not the same as cash
btw cash is no more real than company shares. both are paper and numbers in a database.
Are we going down the gold standard discussion path here?
Gold standard is just moving the arbitrary holder of value down the line.
Shiny rock also has no intrinsic value
Cotton eye Joe.
Monopoly money is real and exists. That $1.8 trillion never did.
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.
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.
Musk would definitely still be a billionaire.
He sold $1.2 Billion in SpaceX stock just 4 months ago. He sold $22.9 Billion in Tesla stock in 2022, partly to fund buying twitter.
He’s 100% diversified some of that at the very least, even if he’s just parked some of it in the S&P and bonds. He also owns a couple hundred million in real estate.
He wouldn’t be worth over $800 Billion, but he’d absolutely have at least $1 Billion.
God, wouldn’t that be a dream!
I think it’s absurd the argument gets made that rich people aren’t rich because their assets aren’t real like cash, meanwhile they leverage those assets into loans that are absolutley real and tax-free.
The value is real. The absurdity needs to stop. You can’t say “tax the rich” out of one side of your mouth and then turn around and say “their wealth isn’t real” out of the other. This manipulation of terminolgy to obfuscate how wealth and assets work is pushed by the wealthy themselves to avoid anything that might increase their chances of being taxed. Seriously, if they came out and said “I’m rich as fuck thanks to my assets that I leverage into tax free loans!” How long do you think they’d last? Instead we argue over how “real” things are and say things like “The rich don’t actually have a lot of money…”
Oh, you’ll get no disagreement from me on that.
If the stock valuation is enough that it can be leveraged to get loans that can be paid off with the accrued gains ON said value, yeah, it needs to be taxed as if it is earned income.
Just reading on how Elon Musk secured the capital to buy Twitter brought that one home.
The angle I was going for isn’t that they’ve poor, it’s that they are locked into a system that means they don’t use or need liquid capital - like you or I do - to get what they want.
Given that when one has billions, the banks charge YOU to hold it, this is why the private equity groups have become so pernicious.
All that untaxed wealth with nowhere to go, so it becomes a powertool for real estate investments to leverage more money out of the working and middle classes or to buy out publicly traded businesses and run them into the dirt.
We’re back to the 1980’s again, an echo of the Michael Milliken/Ivan Boesky scandals - only this time the targets are wildly larger and hitting main street.
deleted by creator
I think it’s absurd the argument gets made that rich people aren’t rich because their assets aren’t real like cash, meanwhile they leverage those assets into loans that are absolutley real and tax-free.
The value is real. The absurdity needs to stop. You can’t say “tax the rich” out of one side of your mouth and then turn around and say “their wealth isn’t real” out of the other. This manipulation of terminolgy to obfuscate how wealth and assets work is pushed by the wealthy themselves to avoid anything that might increase their chances of being taxed. Seriously, if they came out and said “I’m rich as fuck thanks to my assets that I leverage into tax free loans!” How long do you think they’d last? Instead we argue over how “real” things are and say things like “The rich don’t actually have a lot of money…”
I have it
Could I have tree fiddy for an impossible burger, please?
I’ll think about it.
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.
It didn’t go anywhere, that money was “unrealized”. It’s quite literally just what people think the shares are worth and a dollar amount associated with what people agree to pay for owning it.
Imagine if I own a priceless antique. I can value it myself at $1,000,000,000. That doesn’t make me a billionaire, except maybe on paper or insurance documents perhaps. It also doesn’t mean that people are out there buying billion dollar antiques from me, that’s just what I think it’s worth, although I’d be unlikely to sell it if someone wasn’t going to pay me at least close to what I thought it was worth.
If I get the antique appraised and they tell me that, actually, it’s only worth about $100 fair market value, then $999,999,900 was just wiped out. But the rest of that cash valuation isn’t floating around in the ether somewhere, the true value of the item simply did not match my own valuation, and the antique market shifted to correct for my gross overvaluation.
That’s essentially what happened yesterday.
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.
An elongated muskrat made off with it
It’s unrealized money that disppeared
