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 $10 difference should everyone come back and cash out their shares?
In: Other
If it helps, you can think of shares as a currency. One day, the Deutschmark is at 3$, a few years down the line, Germany lost a war an it’s at 15 cents. Where did the value in the Deutschmark go? Well, maybe Germany has made some dubious strategic choices in the past few years that put it in a situation it cannot really produce anything of value. Investors around the world think the country is doomed to remain in the 3rd world forever and aren’t investing there.
Same for companies. It’s not that money has disappeared. Simply that the company is felt as less valuable than before by investors.
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