Just saw a post that the stock market lost $3Trillion in value. Where did that money go…
Investors lost it… companies lost it… is it the bank? Did the bank get the money? Did the money vanish into pixels? Was it even real to begin with?
Just saw a post that the stock market lost $3Trillion in value. Where did that money go…
Investors lost it… companies lost it… is it the bank? Did the bank get the money? Did the money vanish into pixels? Was it even real to begin with?
Comments
The money was spent already. The product bought with that money became less valuable after Trump damages the economy. Kind of like if you buy an orchard and then there are fires that make the orchard less valuable
Imagine you buy a car for $50,000, then you drive it off the lot and it’s value goes to $25,000, where did the other $25,000 go?
It didn’t, it never existed in the first place.
I get confused with this as well. My understanding (which could be very very wrong) is that a company is valued at X amount which has to do with the money they have now and future revenue. The more it is worth the more the stock is worth and now things have gone to shit so these companies aren’t worth as much I’m guessing because future money/growth isn’t there.
It didn’t go anywhere. The value just disappeared.
Say I have an old baseball card. There’s an auction, and someone buys another copy of the same card for $1,000.
So now I have an asset that’s fairly valued at $1,000. I can try to sell it to someone, maybe use it as collateral for a loan, etc. If I was making a balance sheet, I’d put that card on it as a $1,000 asset.
But now there’s another auction, and this time a copy of the card goes for $500. Uh oh, now it’s only half as valuable. My balance sheet has just dropped.
No money has gone anywhere, but I now have less wealth than I did yesterday. It disappeared.
It wasn’t real… it was unrealized value.
If you have a baseball card and I offer you $100 for it to day, but you turn me down, and tomorrow you reconsider but I’ll only pay $80 that other $20 doesn’t go anywhere — it’s just a change in what value I am willing to put on it. Same for stocks, on a larger scale. Investors say a share of a company is only worth $90 today instead of $100 yesterday, the $10 change is just an amount one might be willing to pay for it, not actual money that goes anywhere.
Dollars are a measure of value, not a material. Think of dollars in the same way as you think of speed or length or volume. Consider the concept of an over valued stock. Say Tesla. It has a price to earnings ratio (P/E) of about 130. That means that the stock is trading at 130 times what the company earns. The value of that stock represents the hopes and dreams of lots of people.
A lot of the $3T that the market lost were hopes and dreams. Some of it will be real impact to firms all over the US and the world that will take weeks to play out. It will play out in the form of higher prices, less liquidity and longer lead times.
So, stock value is based on a number of pieces of financial information such as the amount of money the company has, their strategic actions in their market, expected future performance and so on.
Really, it’s a vibe check on how rich people feel about the stock.
Due to some decisions made by President Trump, the mood among rich people has fallen. This leads to people thinking companies are not as well positioned (for good reasons in this case). And therefore lowers how much people think the company should be “worth”.
This decrease in value, added up across the entire stock market, is the figure you cited in your question.
The money never existed.
While hard cash, or numbers in a bank account, both exist in a material sense, the value of that money is predicated on concensus. I.E. it’s a communal fiction. When a company loses some of its value, what’s happening is that the exact nature of that communal fiction has changed.
He put tariffs on countries (ie Switzerland) that didn’t even have tariffs. Just didn’t like the fact that we bought more of their stuff (chocolate, watches etc.) than they did ours. Stupid.
Yah Its all the migrants fault and eggs
It never actually existed. That’s one of the worst parts about these indices – it’s all theoretical “power” expressed as monetary value.
Stock market is almost entirely speculation meaning its no better than a sanctioned ponzi scheme.
It goes to the short sellers. They’re called bears. The bears have been betting on this happening for awhile and so enough of the scales get tipped into their favor and more stocks get sold then bought. And goes into some other investment instruments. Treasury bonds. All kinds of things the hedge funds can decide to put their now capital into. By selling the stocks, they increase the supply of shares hence making them less valuable. It most definitely doesn’t just disappear. The SnP was up 138% in the past five years. Capitalism is just merely stealing as much money as possible for the few at the top and leaving the peasants to kill each other. It’s tale as old as time. It’s all rigged by the ones pulling the strings. Retracements have to be built into the system or else it simply will be found out how rigged it really is. All they needed was something/someone to blame to make it look like something bad is happening. All these trillions get transferred to someone else. They will now start to get some new bills passed through congress and make all the sheeple believe that one particular party is saving the country from the other side destroying it. Shares in general are just a bunch of made up nonsense to begin with. Tesla at one point was worth more than all the other car corps combined. Does that makes sense to anyone? For a long time they weren’t even profitable and yet their share was enormously overpriced. And yet more and more investors just sorted their money in that particular corps shares. It was only just that the wealthy ones making these decisions agree to put their capital into one particular corp shares. It’s all fugazi
In a deep sense, it’s future economic production that’s now gone.
Just pixels on a screen, numbers on a computer monitor.
“Value” isn’t tangible. It’s an imaginary concept based on what you(or anyone) thinks something is worth. Nothing more.
Its value. Imagine you had an item worth $100 yesterday and you woke up today and it was only worth $25. That’s what was lost. Value.
But also now imagine that a pawn shop that would have loaned you $70 against your item yesterday will only loan you $10 today. These assets are used to secure capital from banks. When their value goes down, the bank is upside down on a repo. It’s like the pawn shop getting screwed if he gave you $70 for an item he can only sell for $25.
Get it?
Your grandfather has a baseball card that is worth $1000 and you draw a mustache on the guy and now it is worth $1. Where did the $999 go?
they really should just turn the thing off
Former registered representative here. It didn’t go anywhere, it’s all paper value. The value of stock is the equity in the company and expected future earnings. The equity, after all debts are paid is very little, if anything. The potential future earnings and expectations that the stock will increase is where most of the value comes from. Stocks are a form of a ponzi scheme, don’t be the last to hold the bag.
Also, common shares, what most people are familiar with, are class C shares. There is such thing as A and B shares that hold different preferences. Generally, they pay interest and are paid like bonds.
Also, the stock marker is dwarfed by the bond market.
Over $9 Trillion now, this week.
Most “money” is not real in any tangible sense. It’s all debts and assets in balance sheets, stock valuations, etc. Debt is money in a very real sense, and if all debts were suddenly paid off most money in our economy would disappear. I’m oversimplifying/not explaining it well, but yeah money can just disappear, it doesn’t have to go anywhere necessarily.
Nowhere, it just stopped existing.
Money doesn’t solely represent actual existing wealth. It can also represent speculative value: Debt created on the assumption that something will be more valuable in the future. We just found out that a lot of things we thought would be more valuable in the future actually won’t be.
An arsonist burns down part of your house. Now it’s worth a whole lot less.
Similarly, a company that was created to work a certain way and generate a certain amount of future profits might now be worth a whole lot less, because it now looks like it will be less profitable, because they’ll have to pay more for any inputs they get from other countries.
As an example, let’s say a company could generate $1 million of profit every year. Adjusting for time and risk, an investor might believe those profits are collectively worth $20 million, so the company is worth that much.
Now let’s say they have to pay $100k /yr in tariffs on one of their inputs from another country (or maybe there’s a US source for that input but it’s more expensive). Now they’ll only profit $900k/yr and are now worth $18 million. Nobody “gets” that money, it’s just gone because the profit-generating machine won’t work as well now.
Why would people explain this with the example of a baseball card versus .. I don’t know .. a stock?
Some if it for sure into the pockets of the WH goons
It’s notional money. It doesn’t exist until it’s sold. Imagine you have a first edition First Folio by Shakespeare. It’s worth $1 million. Now tear it in half (no, don’t really). Now it’s worth at best half a million – so where did the other half million go?
That’s share prices. Trump has effectively torn the stock market in half.
It vanished.
It only makes a difference if the price of everything also goes down. Which it won’t. Because of “complex market situations” (aka, price gouging).
It’s coming back to reality. Stock market has been largely detached from reality since Covid. Valuations have been exponentially higher than fundamental business metrics and haven’t made much sense. Glad to see it falling into normalcy.
International trade is NOT a zero sum game where if Part X makes $1,000 then some other party Y had to lose $1,000. Instead, trade will by default benefit BOTH people, otherwise they wouldn’t trade.
The reason we don’t manufacture as much here in the US is because we are no longer the most efficient at it when compared with our other options. We make more in GDP with scientific research, pop culture (Hollywood), and educational institutions than we would if all of those individuals were working in factories.
That is where the money “went”. Suddenly the market realizes we aren’t going to have as many scientific discoveries (government grants are gone), pop-culture driven revenues (the world hates the US and won’t want our music or movies), and educational exports (foreign students are afraid to come study here and pay exorbitant prices for being foreign students). Instead, if we are all working in factories in 10 years, we will be producing a much lower benefit to the world and will all be poorer as a result.
It never existed. It was a figment of our collective imagination.
A company’s “value” is determined by it’s “market cap” which is essentially “number of existent shares” multiplied by “today’s sale price of the shares.” The ‘number of existent shares” is a real number, but “today’s sale price of the shares” is just the made up number “what are people willing to pay today.”
If the company has one billion shares, and people are willing to pay $10 per share today, then the company is worth $10 billion. If that number changes to $8 a share tomorrow, then the company will only be worth $8 billion tomorrow. And **POOF** just like that, $2 billion gone.
Imagine you are in the dessert. You have 1 bottle of water and 10 men dying of thirst. You say you will sell it to the highest bidder. Men are bidding thousands for this precious asset. You get a bid for 5000 when suddenly a truck pulls up full of fresh water. Suddenly your 5000 dollar a bottle is worth 2 dollars. Where did the 4998 dollars go?
Value is price somebody is willing to pay for it.
According to reddit, Elon stole it.
Many are cashing out instead of moving their investments. So that money goes home to grandpa.
Wherever it went in 2022. Nowhere. Just PERCIEVED value was changed, nothing else.
The $5 trillion loss represents the difference between previous and current valuations of stocks. It reflects reduced investor confidence or selling pressure, not actual cash disappearing. For most investors, these losses are unrealized unless they sell their stocks at the lower price.
It didn’t go anywhere. Shit that people paid $100 for, it’s now worth $10. But guess what, in a year it’ll be worth $100 again. By it while it’s low.
Lost down the metaphorical cushions on the hypothetical sofa that is imaginary wealth
Itt a weird amount of baseball card analogies for some reason
You have an Apple, everyone wants to buy it, you sell it for $5
You have an Apple, very few people want to buy it, you sell it for $2
^ The Apple market just “lost” $3
Fewer people want to buy American stocks than they did a month ago, so the market has “lost” $3T