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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: MythMan who wrote (82503)3/20/2001 2:11:54 AM
From: Ilaine  Read Replies (4) of 436258
 
>>Clown Free Zone sorry no Upbeat Thoughts Allowed<<

This is the part I don't get, and I don't mind admitting I don't get if there is someone out there who has a handle on it. When you are talking about the bubble bursting, how do you quantify the amount of actual loss?

Some people point to market cap, and say, the total market cap of securities traded on US stock markets is down $6 trillion so the American people have lost $6 trillion. There are a number of problems with that way of looking at it.

1. All the people who bought a stock at $10, watched it go to $400 and sold it at $50 are actually ahead.

2. All the people who bought it at $400 and sold it at $10 are screwed.

3. All the people who bought a stock at $10 and sold it at $400 are ecstatic.

Someone who is better than me at math might be able to figure this out but I can't. If someone bought a tulip bulb for $1 and sold it for $10, and the person who bought it for $10 sold it for $100, and the person who bought it for $100 sold it for $1000, and the person who bought it for $1000 sold it for $10,000, and the person who bought it for $10,000 sold it for $1, isn't the economy a little bit ahead?

How in the world do you figure out where everyone is now?

I do know this - taking the total loss of market cap and treating it as if that's the actual loss of money to the economy in the aggregate is just plain stupid. If 100,000 shares of stock trade at $400 does that mean that the millions of share of the same stock that never traded that day were also worth $400? Try selling them and see what happens.
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