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
Every share has an agreed-upon value. If everyone thought all of your stock shares were trash tomorrow, worth nothing, they would be. There’s nothing backing the value up beside the company’s valuation. But that is fundamentals and does not dictate price alone. If a biotech company goes bankrupt developing a drug and gets denied by the FDA, the shares will crater. It hasn’t gone anywhere, you were just owning something that everyone thought was worth about “this much”.
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