Economy crash =/= stock market crash?

Linton

GSP said:

InvesterJones said:

FTSE 100 is in the green today, FTSE 250 up 1.73% as I type. Or do we not get commentary on green days?

Seems to be notable movements in just about everything on a daily basis.
All this money lost or down since November, where has it gone? Down a big black hole? Who has got it, or was it never there?

The money never is in the markets.  You buy a share from person A for £100.  -£100 in your pocket and £100 in A's.

You then sell the share for £50 to person B, -£100+£50=-£50 in your pocket, £100 in A's pocket and -£50 in B's pocket.  No net gain or loss, Just a transfer between you, A and B.

If B had been willing to pay £150 you would have made a profit, but you chose to agree to B's offer of £50.

Type_45

FTSE 100 closed down 0.41%.

masonic

Type_45 said:

VWRP closed 4.07% down.

Type_45 said:

FTSE 100 closed down 0.41%.

I can't imagine why you picked VWRP yesterday and FTSE100 today.

Nebulous2

masonic said:

Type_45 said:

VWRP closed 4.07% down.

Type_45 said:

FTSE 100 closed down 0.41%.

I can't imagine why you picked VWRP yesterday and FTSE100 today.

Well - I'm going to put my mouth where my money is.....

I've been building up some cash, mainly in a SIPP, since the middle of last year, and this morning I spent about a third of it on VWRP. 

k6chris

GSP said:

InvesterJones said:

FTSE 100 is in the green today, FTSE 250 up 1.73% as I type. Or do we not get commentary on green days?

Seems to be notable movements in just about everything on a daily basis.
All this money lost or down since November, where has it gone? Down a big black hole? Who has got it, or was it never there?

The money is never there.  The valuation of a company (and so the value of the index they are in) at any time is based on a calculation of the number of shares, multiplied by the value of the last trade (the current share price).  It would clearly be impossible to sell all the shares of a compnay at that 'last trade' value. So when the press says "billions wiped of share index today" it does not mean that #billions# were actually lost, just that a meaningless headline number got a bit smaller. The same nonsense happens when housing markets 'crash'.  Still the same number of houses!

Ho hum.

GSP

k6chris said:

GSP said:

InvesterJones said:

FTSE 100 is in the green today, FTSE 250 up 1.73% as I type. Or do we not get commentary on green days?

Seems to be notable movements in just about everything on a daily basis.
All this money lost or down since November, where has it gone? Down a big black hole? Who has got it, or was it never there?

The money is never there.  The valuation of a company (and so the value of the index they are in) at any time is based on a calculation of the number of shares, multiplied by the value of the last trade (the current share price).  It would clearly be impossible to sell all the shares of a compnay at that 'last trade' value. So when the press says "billions wiped of share index today" it does not mean that #billions# were actually lost, just that a meaningless headline number got a bit smaller. The same nonsense happens when housing markets 'crash'.  Still the same number of houses!

Ho hum.

So if I have invested £100 in a company and it’s price/value falls 50%, and I cash what’s left and I receive £50.
Who’s got my other £50?

Cus

The person you bought it from for £100 and then sold back to him for £50.

GazzaBloom

GSP said:

So if I have invested £100 in a company and it’s price/value falls 50%, and I cash what’s left and I receive £50.
Who’s got my other £50?

The same person that gets the 25% drop in value as a brand new luxury car rolls off the forecourt. It just evaporates!

The person you brought the £100 stock from gets your £100. When the value of that share you hold drops by 50% and is only worth £50 you haven't lost anything...until you decide to sell, then you have lost £50 in realised asset value, not £50 in cash.

Prism

GSP said:

k6chris said:

GSP said:

InvesterJones said:

FTSE 100 is in the green today, FTSE 250 up 1.73% as I type. Or do we not get commentary on green days?

Seems to be notable movements in just about everything on a daily basis.
All this money lost or down since November, where has it gone? Down a big black hole? Who has got it, or was it never there?

The money is never there.  The valuation of a company (and so the value of the index they are in) at any time is based on a calculation of the number of shares, multiplied by the value of the last trade (the current share price).  It would clearly be impossible to sell all the shares of a compnay at that 'last trade' value. So when the press says "billions wiped of share index today" it does not mean that #billions# were actually lost, just that a meaningless headline number got a bit smaller. The same nonsense happens when housing markets 'crash'.  Still the same number of houses!

Ho hum.

So if I have invested £100 in a company and it’s price/value falls 50%, and I cash what’s left and I receive £50.
Who’s got my other £50?

That's the thing - you don't have £100 invested in a company. You gave someone else £100 a while back to own a share of the company. That £100 is long gone. You then sold it to someone else for £50. The original seller gained £100, you lost £50 and the person you sold it to lost £50 (but got a share of the company too which may or may not be worth something)

GazzaBloom

Nebulous2 said:

masonic said:

Type_45 said:

VWRP closed 4.07% down.

Type_45 said:

FTSE 100 closed down 0.41%.

I can't imagine why you picked VWRP yesterday and FTSE100 today.

Well - I'm going to put my mouth where my money is.....

I've been building up some cash, mainly in a SIPP, since the middle of last year, and this morning I spent about a third of it on VWRP. 

I too am buying lumps of a US equity index fund each month but we should be mindful that this could last a while and have a way further to go. if you are a buy and hold investor with a 10-20 year window then the sun will once again shine but this next year or two is where that 2-3 year cash buffer or alternative source of income will come in for retirees...

Charts for S&P500 bear markets

We're only 111 days into this one...



And only 22% down so far...



And US stock valuations are still relatively high