Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Book Nook -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (31)	3/20/2001 2:35:13 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 443

CB - OK, stock prices aren't money but stocks are wealth. I believe the country didn't just lose $6 trillion of wealth, but it did lose something. Trillions of purchasing power, whatever you call that. Stocks are wealth, but the question is how much. If you hold the stock, you have a claim on all the future cash flows of the company and its future liquidation. To a first approximation, this is not affected by the day to day stock price variations. This is equally true for stock in a private company, not traded on the public market. What the public market allows you to do is trade limited amounts of stock if you judge that the market price is either too high or too low in comparison with what either the DPV of the future cash flows will be or what you expect the public market price will be in the future. However, to complete a trade, there must be a counterparty with an opposing judgement. Regards, Don

To: Ilaine who wrote (31)	3/20/2001 2:41:57 PM
From: GraceZ	Respond to of 443

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.