what does it mean by $2.9 trillion wiped away due to losses in Stock market. Where did it go?

Question

Where did the money actually go? Are these small startups or individuals that have gone bankrupt that totalled this amount ?

In: Economics

Answer 1

It didn’t go anywhere.

It exists just on paper, in theory.

Let’s say you have a cool chair. I offer you $100 for it.

Do you have $100? No, you have a chair. A chair you COULD sell to me for $100.

But then I go buy another chair and I’m all set for chairs. Now I don’t want to buy your chair, but another guy offers you $50 for the chair, what do you have?

Still, just a chair.

You didn’t really “have” $100, and you didn’t “lose” $50. It’s just that the thing you own is now worth less on the market that it was before.

That’s all stock is. Something you can sell, for whatever someone is willing to pay. The theoretical value goes up and down, and that’s the money they are talking about.