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
It hasn’t gone anywhere.
I have an “item”. You want it. I agree to sell it to you for $1.
The next day, a report is released saying that having this “item” has been conclusively shown to cure and prevent cancer. That was the last “item” I had; I desperately want it back. I negotiate buying it back from you for $1,000 to keep it on my person.
A day later, the news announces that the released report was a fake. Nobody wants my “item” anymore except for $1 again.
Where did the $999 come from? Nowhere. It was us agreeing that such and such thing was worth $1,000 instead of $1. We didn’t create any actual money, we just paid each other different amounts to acquire the “item” at different points. Where did the $999 go? Again, nowhere. We would only be able to agree that it was worth $1 again. If I had kept it the first day I would have been able to sell it for $1,000 the next day and *realize* $999 in gains. If I had sold it the first day then bought it back the 2nd day, then sold it the 3rd day, I would be *realizing* $999 of loss. If I had kept it the whole time I would have gained or lost nothing, realized or unrealized.
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