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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (48712)	10/1/2002 11:56:02 PM
From: Bilow	Read Replies (1) \| Respond to of 281500

Hi Nadine Carroll; Re: "Investors have lost 8 Trillion. EIGHT....TRILLION -- Most of which never existed, except on paper." In a certain sense all value in the stock market is always all "on paper". That's what stock is, after all. But if you mean "on paper" as in profits are only "paper" profits, (that is, never realized), the numbers disagree with you. The turnover in the market is sufficiently high that the average share trades about once every 12 months or so. For example, MSFT has 5.38 billion shares outstanding. The average volume recently is around 44 million shares now, and was higher back during the market peak. But Nasdaq stocks end up with double reported share volume so the actual exchanges are about half that. For an example of a NYSE stock, GE has 9.95 billion shares and trades 30 million per day. The S&P500 peaked at around 1500 in 2000, but was above 1000 for most of 4 years: finance.yahoo.com^GSPC&d=c&k=c1&a=v&p=s&t=my&l=on&z=m&q=l finance.yahoo.com^GSPC&d=c&t=5y&l=on&z=b&q=l 4 years is long enough for most shares to be traded, consequently the majority of those profits were not merely paper profits, but were taken out of the market (and either spent or possibly reinvested). There are plenty of people who got very very rich off of the stock market, and that means that since it is a zero sum game (except for growth in the stock itself, which turned out to illusory), a whole lot of people lost a very large amount of money. There's huge numbers of people out there with huge losses in these stocks. It's a big deal, in an economic and political sense. I would bet that most of the money was lost by small time mom and pop investors who believed in all the "buy and hold and you will be rewarded, even at a market top" bullshit. Now all those people are stuck back in the middle class (where they belong). Their behavior in many ways will be changed by their change in fortune, and it's not going to be pretty for the Republicans. -- Carl