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
The best way to think about it is that a share is a percentage of a company, moderated by what people think will happen to that company. Basically if you buy 1% of a company valued at (not necessarily “worth”) a 10K, you’ll have to pay a hundred bucks for it. You don’t own a $100 share; you own 1% of the company. If the valuation (again not necessarily the actual “worth”) of the company drops, then 1% becomes a smaller amount.
Your 10 dollars didn’t exactly “go” anywhere, it’s just that the people willing to buy that 1% share (again not a “$100” share) think that the company is worth less and therefore are willing to pay less for 1% of it.
Edit: in a strictly financial-logic sense, the company lost your money through some miscalculation or accident
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