Mr Potter has the money.
Posted on 03/16/2009 4:58:28 AM PDT by central_va
Have you ever wondered what happened to your socks when you put them into the dryer and then never saw them again? It's an unexplained mystery that may never have an answer. Many people feel the same way when they suddenly find that their brokerage account balance has taken a nosedive. So, where did that money go? Fortunately, money that is gained or lost on a stock doesn't just disappear. Read to find out what happens to it and what causes it.
(Excerpt) Read more at finance.yahoo.com ...
ML/NJ
It only “exists” if you take it out before it disappears. If you don’t, it never existed, except as a potential.
Works the other way, also: if the price doubles, it only doubles if you cash out. Otherwise, it doesn’t exist either.
Paper profits...never really existed until you took it out.
Disappearing Socks
No one really knows why socks go into the dryer and never come out, but next time you're wondering where that stock price came from or went to, at least you can chalk it up to market perception.
Not exactly true. The author is making it sound as the the stock market and its investors operate in a vacuum. They do not. The markets may be very favorable, but if you have a president who despises the free-market system and the stock market, investors will pull their funds out, which causes a decrease in value when it reaches a critical mass.
As far as the market making or breaking wealth, it does not. It is the people exercising their economic freedom in a market system that makes or breaks the wealth. The market is merely the vehicle.
Why do I bother to mention all this?
Obammie the Commie does not like capitalism or the market system. In fact, he blames it for economic injustice. The more he can punish the market and those who invest in it, the better. But he must do so very carefully because he knows it is still the nutrition of our economic system.
Part of Obammie the Commie's plan is to paint the market as a separate entity that absorbs peoples’ earnings and investments and gives them to the rich. That it is an entity that needs to be so regulated it can never harm another person's earnings again.
His tact is the same as those who blame “evil SUVs” for killing people and destroying the environment.
As Alinsky taught his good disciple Obammie, name your enemy, freeze it, demonize it.
It's similar to the relative value of houses during the recent housing bubble. I tried to warn some flippers I knew that the wealth they thought they had created by buying up homes was only real wealth if they sold it and got actual money for it, that if they didn't, they would eventually be stuck with houses worth nothing and a large debt obligation (or possible bankruptcy).
Incidentally, as I told them then, this is what happened in the 1920s with the real-estate boom. People went into a frenzy buying real estate (all on paper) because they kept bidding each other up. The first few sold and made some money. But when the rest tried to sell en masse, there were no buyers and they were all stuck with relatively worthless real estate. Many bankrupted themselves to buy that real estate. This was a small contribution to the “correction” of 1929.
I'd have to research it more, but I suspect the 14,000 mark in the stock market was at least partially caused by an unrealistic appraisal of the national economy and its place in the global economy because of, first the tech bubble, then the housing bubble (largely caused by Jimmy Carter and Bill Clinton's forced creation of “toxic assets”).
I like it!
As Curtis Sliwa says every time he refers to Ron Kubi, “who's Mommy was a Commie” also applies to O.
I thought money goes to the same place it comes from when the market soars...
What happens if you borrow real money against this paper gain?
Then you are a banker!!
Seriously, bankers actually use their liabilities as “assets” that enable them to borrow more. Figure that one out.
As an individual, you’d better close the deal before the “perceived” value of your stocks tumbles. If that happens and you have borrowed money against it, not only did you lose your “perceived” value, but you are now left holding a bag of debt that you will somehow have to “really” pay off (or declare bankruptcy).
That is what they call “leveraging” your “assets,” and it is very risky. The more you leverage, the greater your risk. Part of the economic problem we have today was caused by those agents in the market who gave in to greed and over-leveraged their “assets.”
Jusr try to foreclose on somebody’s portfolio. LOL. At least with real estate it is a tangible asset..
Just quote George Bailey:
“It’s gone! The money’s gone!”
Know when to sell, no when to run. The markets gave all the classic signs of the end of a cycle last year when commodity prices, like oil, starting going up to the sky.
That’s when you take your newly created wealth and run. Before everybody else cashes in their Bernie Madoff funds.
Mr Potter has the money.
Was going to post ... always wondered where
that money went. Just as I thought .. poof.
Ping for later
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.