There is real money put into and taken out of the stock market. The problem with saying 6 trillion disappeared is that it was never really there, or it disappeared after appearing is more like it.
If you have a million shares of something and the last sale is at $100 a share, then we say the stock value is 100 million. But that $100 could have been 100 shares traded, when the last sale before that is 50 dollars. Needless to say, unless everyone that owned the stock at 50 wakes up to see 100 on their screen and suddenly decides, "Hey if it hit 100, maybe it'll hit 200" (don't laugh, this was exactly what happened in many cases) then the stock is headed downtown.
Like your question with the tulips, Don demonstrated in that example that 9999 was distributed to the others in the previous transaction, so no money was lost or gained.....but what about the other people that were holding the same tulip, that thought their tulip was also worth 10k? Did they lose 9999 when it went to 1 dollar? No, because they never really had 10K, it didn't exist. They may have lost 99 or 9.....what ever it was that they paid for it, but you can't say they lost 9999. Only the guy that paid 10k lost the 9999.
So real money was created and was destroyed in the rise and fall of the Naz, but you can't say that the amount was equal to the entire market cap of the NAZ then minus now.
This is why we do money flow studies. You can not know the internal state of a market from price. Price is very deceptive. Price can change without even a transaction, or it can change on very few transactions, or it can remain the same over millions of transactions. |
