If you have stocks, can’t you just wait until they go back up again?
Who’s actually losing money, and why?
I am financially illiterate 🤷‍♂️
If you have stocks, can’t you just wait until they go back up again?
Who’s actually losing money, and why?
I am financially illiterate 🤷‍♂️
Comments
The gamblers lose money.
A lot of finance relies on the stock market, like retirement funds, businesses, banks etc. So usually there is less money about to hiring, so pay often drops and hiring happens less, retirement becomes harder as you have less left to retire on.
Yes, there are investors who people don’t care about, although I find that a bit short-sighted because you should be investing any amount you can to give yourself a decent life later.
There are a lot more to it. but essentially it boils down to the whole country/world gets poorer because less money is available as those spending money stop spending to secure themselves.
There are people who will be directly negatively affected because their investments were how they planned to fund their retirement or a big purchase, and now they have a lot less value to draw on. That includes a lot of very normal people, not just the very wealthy who are able to ride it out.
It’s also bad for the businesses whose stock price has fallen, when they need to raise funds. Whether that’s by selling new stock (which now fetches a lower price) or borrowing money (where they now look more risky to lend to). Which can mean they have to scale back their activities, reduce their workforce, charge more for goods/services.
There’s also an extent to which the stock market is an indicator of bad things rather than a cause. Stocks fall when the consensus expects the company to be less profitable in the future, or more likely to go bankrupt. A crash doesn’t cause reduced profits, but some external thing is expected to reduce profits, which causes a stock crash as a side-effect.
Cause then you have to wait. What if you were planning on having the money now?
A lot of working-class people invest in mutual and retirement funds for their life savings (some even directly buy stocks). These funds have “fund managers” who use the money to invest in stocks. If the stock market is crashing, people’s savings and retirement funds are crashing. Investors like the fund managers scramble to take their money out before losing too much, thus contributing to even faster crashes (stock prices go down if there are too many sellers, and go up when there are too many buyers).
Low investor confidence from this panic means they won’t put money on stocks as much, meaning businesses run out of funds and can shut down, meaning people could go out of jobs. Out of jobs, out of money, out of savings too as the market is down.
Stocks aren’t guaranteed to go back up. Just look at Tulip mania as an example.
Something becomes popular and trendy -> people invest money -> prices go up so people buy more -> bubble pops as craze fizzles -> investors sell investments quickly -> prices plummet leaving shareholders penniless or in debt -> craze dies completely and investments are dead.
Some companies can take years to come back up after falling, some can start with a bang and never be able to replicate it, and others can yo-yo up and down. This is why investing is a form of gambling usually.
It’s not really….it’s more the emotional component tied to it. The market needs to crash to keep people’s ego’s in check….nobody wants to take small losses anymore….and if nobody takes a small loss, then everyone takes a big loss. Pretty much everyone has the ‘it ain’t gonna be me’ attitude. yeah…yeah it will. In my mind, a bad market is a reflection of people not willing to agree or compromise with each other. The higher it goes, the more it shows that people are being stubborn or “bull headed”…..the magic number is 0
To put it plain simple.
Imagine you have 1000 dollars, and suddenly that 1000 dollars is worth 900.. 800..700 what do you do?
You quickly sell to prevent losing everything.
And when everyone does that at the same time, its a problem.
People who are retired get their income from withdrawing their investments / retirement funds. They don’t have a choice, they need to take the money out to live, and now it’s worth a lot less than it was before, so they have less money to live off of.
Because stock falls prises rise… my wallet is not liking it… and millionairs who could carry the deficid will gladly let you do it.
Depends on age when it comes to retirement accounts, IRA or 401k. Timing isn’t good if you’re drawing down which you legally have to do at 62 or 65 or something. So you’re down 25% – 50% and you saved your whole life depending on it. At this point you need to live off it and it’s not fun to have 25% of what you did a week before. Very scary actually.
Now if you have cash on hand, you’re young and ready to buy in. You get something that doesn’t happen often and if you capitalize on a crash you quickly can double your wealth, re-allocate it as time goes on and do really well. So these are opportunities as well as just bad timing crashes. Mind you, those in that age group have been through crashes but timing wise it’s more scary.
because idiots think the sky is falling and sell at the bottom
The make believe fiat currency goes down so we’re all supposed to get upset over it.
Someone has saved their entire life. They have say 400k in their pension fund and it’s invested in the stock market. It’s just lost 80k. Not funny. Yes it might recover but it might get worse before that and might also take 15 years to get back to where it was. Massive changes that we’ve just witnessed aren’t advisable for any government to undertake.
It really depends on your situation. I have money in the market. You buy low and sell high. So, if it’s low, I’m buying if I can. Definitely not selling low, no matter what. Fortunately for me, I don’t need any of that money anytime soon – it was never meant to pay my normal expenses. So, I can leave it alone and ride this out.
If it lasts more than a day or two, I might pick up some additional shares. This is a way to dollar cost average things out so that when things re-balance it doesn’t take as long to recover the value of my shares.
When a company’s stock drops, the value of the company drops, when the value of the company drops, it’s credit worthiness drops, this makes it more difficult (expensive) or even impossible to get loans, this leads to companies being short on cash, which leads to layoffs, which leads to a whole bunch of other problems.
When it happens to just one company, it isn’t really noticeable….but the snowball effect from it happening to a lot of companies at the same time can be very significant.
The stock market is not the economy, but the stock market can reflect things going on in the economy. If stock prices are going down because companies have less profits (which is a big part of why they’re going down now – the fear that these huge tariffs will tank consumer spending and that companies will have lower profits due to lower sales & rising tariff expenses), and if those lower prices persist, the huge wave of layoffs comes next.
So if you’ve lost your job, run out of unemployment benefits, exhausted your severance package AND your emergency fund….you might need to sell stocks you own (whether in brokerage account or a retirement account) to keep a roof over your head and a food on your table.
When stocks tank for a prolonged period of time, there is mass economic destruction going on and many people literally will not be able to “just wait until they go up again.”
If you ask Trump voters it’s not now. 🤷🏼‍♂️
If you’re waiting then you losing part of your life. Same when somebody says, it’s only a game. No, it’s time. Time is a percentage of your life.
Well because of the stock market and its trickle down effects, every single Australian has lost upwards of 30k from thier super overnight.
A rising tide lifts all boats; the inverse is also true. If the ship is taking on water (changing metaphors slightly), it doesn’t matter if you don’t own the ship and out of all people, the billionaire or company owner stands to lose the most if the ship sinks—you’re still on the ship, so you’re harmed too.
Some of the downstream effects of a stock market crash:
At any given point in time there are a lot of people ready to retire. They’ve saved their entire lives, made retirement plans, maybe even made agreements with their employer to retire at a certain time. Their plans are often based on how much is in their retirement savings, which, in the US is often tied to the stock market.
So suddenly, mom or dad who planned to retire when they had $X saved up, has a whole lot less saved. And they see their retirement date pushed back, their plans upended, or possibly even find themselves looking for a new job at 65 years old.
That’s not good.
After the 1929 crash, there are safeguards built in. It is not fool proof as the people who invested in Enron found out, but for most people with 401(k) plans and other retirement schedules, it will bounce back. By the fall, it should have returned the losses and probably gained some also.
Give it the simmer to balance out. This is correcting 25 years of government mismanagement. Imagine buying a house you thought was move in ready, only to discover after closing that it was a hoarder’s house. Getting it cleaned out takes effort and is not at all pleasant, and you do it to save your investment plus make a profit. That is sort of a description of what is happening. Our government (looking straight at you senate & house since the 1980s) elected officials have squandered, stole, misdirected, wasted enormous sums of our monies, and although we will never recover those dollars, we can stop the flood and move those tax dollars to programs that benefit Americans.
The data cleanup and the tariffs had to happen together and will be a huge benefit to America. We had this before when Clinton and Gingrich worked together and balanced the budget 6 times. Those of us remember the great economy for everyone. Reagan did an amazing job but the opposition would not allow an audit clean up, but it was still pretty good. When Obama changed the whole student loan program with a government take over is when it went to crazy costs. Hopefully that will also be corrected and leveled out again. It was a disaster for sure.
Some of you are too young to ever have lived in a really good hard working economy and you will love it.
A key concept is liquidity. Liquidity measures the ease/difficulty of converting assets(stocks) into cash. When the stock market drops, all the shareholders have less liquidity. Shareholders(which includes a lot more than just wall street traders-it includes pensioners/retirees, businesses, government organizations, and banks) want liquidity because it allows them to weather the unexpected and to be able to grow with less risk.
For example, if I own a store that’s open 5 days a week and wanted to start opening on saturday as well, I’d need some extra money to spend more on payroll and operating costs. Being open on saturday has a risk that it won’t be worth the extra investment, or maybe it wouldn’t pay off until months or years later(if I have to hire additional staff, that takes a lot of investment).
To pay for this, I might take out a loan against the businesses stock portfolio(if it has one) or from a bank-but both of those pools of money are also affected by the stock market. There’s less liquidity in my own holdings, and the bank is going to charge a higher rate because there’s more risk of them not getting they money back. Based on that, the risk of opening for an additional day may not be worth it. Factor in that same sort of simple calculus for thousands of companies and it has a chilling effect where nobody spends money because nobody is willing to take risks.
There’s a million valid reasons why the modern world’s dependence on the stock market is bad, and how capitalism’s prioritization of capital growth over everything else is a net negative for the world, but it’s unfortunately the anchor global trade is shackled with.
When stock goes down, companies layoff of people to reduce spending to try to appease investors. The stock market might not be real, but the consequences of it falling are very much real for millions of working class people.
As you get closer to retirement age you can’t just wait out market downturns as easily. If you are already retired, any decrease in value of your remaining stocks is going to be painful. Generally people should be shifting away from stocks during this time period, but not everyone does, and even cautious people might have some portion still in stock.
Further, even if you don’t realize the loss by selling the stock you have actually lost value. So if you were counting on, for example, taking out a loan against your 401k for something like major home improvements or to buy a house, the loss in value of the 401k changes how large of a loan you can take.
Its good… now kids can buy cheap and old fks can work longer
That is unironically a really smart take. This is the reason why passive Index Funds tend to perform better over the long term than actively managed funds. There are many complex factors why people ”sell” causing the market to go down, here are a couple: 1) There are many individuals and organizations that live off of loans with stock as collateral, it’s very bad news for that if the value of the stock goes down, so they sell to cut losses. (Think equity in your financed car, always good to have positive equity). 2) Futures trading is basically betting that wall street big shots do to make big bucks this causes extreme reactions in the market, because these ”bets” have an expiration date. 3) Bear markets like the one right now expose weakness and huge problems in a organizations that were generally considered reliable, when these companies go bankrupt the investors lose all of their money, so wall street moves their funds to ”boring” but “safe” alternative like bonds and cash.
So, who is losing money? An economist would tell you that everyone is losing money. But I think the right way to look at it is that the ultra rich, are taking their money and “stuffing it under their mattresses” till things are more “predictable“, so there is less money to go around for a period of time.
Banks invest the money you put in them.
When the stocks are lower then the bank bought them for, the bank cannot back up the money it owes its customers.
This makes all the money in the bank fake, and can cause a “run on the banks” where if too many people withdraw at once, the bank won’t actually be able to honor it.
It’s not. It’s only bad for the dumb people or those extremely unlucky.
It’s more like the stock market dropping is an effect and the cause is an, at least predicted, downturn in the economy. Which means stuff like companies cutting back and firing employees.
stock market always fluctuates sometimes drastically sometimes not. then you have 2 reactions people panic sell or people invest. when prices drop you invest aka buy low sell high so if something your invested in drops buy more lower your buy in point then hold. one thing history tells us is no matter how low the stock market gets it will eventually go back up. stock market is litterally just a legal form of gambling your are gambling on a company to do good if it does good you get money if it does bad you lose money. so its not really bad persay when the market drops significantly its a time to buy in at lower prices. also if i recall the stock market since about 2020ish has been overly inflated which means eventually its gonna come back down thats part of the trend your seeing now. also just remember stocks fluctuate based on supply/demand of the individual stock so if you have a ton of “panic sellers” over multiple stocks yea they will drop really fast and generally for no reason.
When companies want something, sometimes they sell stock instead of getting a loan. It doesn’t happen very often, but suddenly they can’t reasonably expect people to buy their stock, so they need loans relatively more, and the banks are seeing that they can’t sell stock to make up for the loan, so they need to increase interest to make up for the risk.
Everybody works on a deficit. So now you have more interest to pay, so you make less profit, which freaks investors more.
Some companies may actually fail due to the stock loss. Then that stock actually ends up being worth virthually nothing.
Until a company collapses or the stock is sold, nobody loses anything. But on paper there is a loss.
It depends on where you are in life. If you are fairly young then these crashes are opportunities to get shares cheaper. If you are close to retirement it may delay or prevent you from retiring. For others it impacts margin requirements, pension fund balances, etc.
Sure. You can wait, but not indefinitely.
Most people who have money invested, have it in things like mutual funds. And they’re saving for retirement. Which means eventually, it will have to be sold from the mutual fund and put into savings or someplace else that is less volatile.
So, not everyone can afford to “wait” until things get better.
Many of us are retirees , the stock in the 401k is our life savings. Trump has killed any chance I had of a decent care free retirement.
Jobs. A stock is a piece real company that employs people. When the stock market goes down, companies contract and do layoffs. More people that get laid off, the more people stop spending. Wages go down, compensation goes down. Other cracks in the economy start to form.
Companies need stability to expand and hire more workers.
The only reason companies sell their shares to the public at all is to raise funds. This allows them to invest in new opportunities, or react to changing conditions. And the aggregate allows the entire economy to invest in new opportunities and react to changing conditions quickly. Access to capital and effective allocation of capital are a big part of what makes wealthy countries wealthy.
Markets going down means that capital is more expensive. At a macroeconomic level it is similar to the FED having high interest rates. When interest rates are high there is literally less money available in the economy.
Also, there is no guarantee markets go back up in a timely manner, or at all. Americans and the West in general have benefited from peace and prosperity since WWII. And their economies have steadily grown. So most people alive today have only experienced life in an overall period of economic growth.
The only people a stock market crash is good for Is people with lots of liquid cash that can buy dirt cheap stocks at the bottom of the crash.
When the market recovers they make millions to billions of dollars. Like Musk and Trump for example.
Musk has done this before like when he pump and dumped doge coin.
And Trump is actually recorded on TV through some of the shows he used to do talking about how much money he could make at the bottom of a market and that a crash is a good investment opportunity.
If you can physically control causing that crash to happen, you can make an astronautical amount of money.
Like the way Trump can by announcing tarrifs.
All they have to do is sell all their positions. Then make an announcement that’s going to make them all crash. Then wait for it to hit rock bottom with any other announcements… Then take all that money you made and buy it all back.
And I let Congress cancel the tariffs or revert the tariffs etc. And the market recovers….
Then theyve multiplied their original investment by 500+%
This is a good question who’s selling where does the money go? I’d say it’s good for some not for others. It’s a good way for billionaires to acquire assets on the cheap. However everyday people lose pensions etc. it’s really a rich people game and the everyday people take the fallout from their scheming. The stock market is just a few institutions trying to fuck each other over really when they can.