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

To: Scott Meyer who wrote (167328)	7/2/2002 1:55:11 PM
From: GVTucker	Read Replies (2) \| Respond to of 186894

Scott, RE: 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. I'm not getting anywhere with this, so I'll let it drop after this. The actual loss in your case is not at all tiny. The market cap of Intel has declined by $400 billion. That was paper money, yes, but it was paper money with which you could do a number of things. It serves as collateral for loans. The drop in market value means that the loans must be called. In extreme cases, the debt disappears and the lender is out that money. The decline in total market value of the market forces a similar deleveraging of the economy. There is less collateral for loans and less opportunity for leverage.