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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (167295)	7/2/2002 10:55:13 AM
From: John F. Dowd	Respond to of 186894

GVT: Everyday you hold you buy. There are those who are selling in the meantime. They are also selling short. Shorters develop cash all the way down. Sellers generate cash all the way down. Now if you look at one person then you could have a point but we are looking at the sum total of assets plus cash throughout the US. When it was all in stock there was less cash. Of course if you looked at monetary aggregates during AG's tightening there was even less cash. What you can say is that as far as financial assets are concerned equities have lost there value while fixed income instruments outside of junk have gained enormously. The only time $ disappears is when the Fed siphons it off. JFD

To: GVTucker who wrote (167295)	7/2/2002 1:05:02 PM
From: Scott Meyer	Read Replies (1) \| Respond to of 186894

Imagine that one person had all of Intel two years ago. She was worth $500 billion But that is an oversimplification. No one bought all of Intel at the current market price. Since Intel had been going up, most owners had purchased the stock for considerably less than the current price. If you buy Intel at $10 and it rises to $50 and then sinks to $40, no wealth has been destroyed, you've simply made a little less than you might have. Only the unfortunate who bought at $50 and sold at $40 has actually lost money. In order to figure out how much money has actually been lost you'd need to know the history of each share. Only shares that were sold for less than they were bought for (perhaps adjusted for inflation) constitute an actual loss. Without knowing that history it would be hard to tell how much money was actually removed from the economy. Think of the extreme case where all but 1 of the shares are not traded and the stock price is set by day traders flipping a single share back and forth until they go broke from transaction costs. You could be showing enormous paper losses but the actual loss (money removed from the economy) is tiny relative to the market cap. -Scott