Example: if I bought $100 share of ABC company and tomorrow it’s $90, I get that I would incur a $10 loss if I tried to sell it, but I don’t understand what happens to the $10 difference ABC company still has from me.
Edit: okay so in this scenario:
1. i bought the share from the issuer
2. there is a downturn and the s&p index is down by 3,000 points
The first people to hear that the market is about to drop went ahead and cashed out their $100 share back from abc, however I was not lucky and my share is now worth $90. Wouldn’t ABC company have my $10? All the companies listed on the index, they get to keep the difference of the value of what the share was yesterday vs. today. Sure, the equity part of ABC company got smaller, but they still keep the $10 difference should everyone come back and cash out their shares?
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Every trade has two parties, a buyer and a seller. When you sell, someone buys at that price. When you buy, someone sells at that price.
If you bought $100 of ABC, someone sold it to you for $100.
If the price is $90 it means currently the highest offer in the market up for sale is $90. Or really more the last sale that happened, or depending on the listing even the close of the day prior, or an average of some kind.
It might be easier to think of them like apples.
Say everyone in the town has apples. Some have more than others. In the middle of the town is a market where people can trade apples. You would like an extra, so you go down and see how cheap you can buy some. As the buyer you want an apple as cheap as possible. As a seller they want to sell for as high as possible. You end up getting one for $1.00, meaning they sold it for $1.00. Tomorrow you go back down to the apple market and decide you want to sell the apple. You try to sell it for $1.50 to make a profit, but you notice that most of the market has lowered their sale prices. The highest sale price is someone who just sold one for $0.90. And the buyer says he’ll buy your apple for $0.90 too. You try to offer it to him for $1.50 and he laughs and just buys one for $0.90 from someone else instead.
That’s the stock market, in a highly simplified form.
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