then who has the money or is it just something on paper?
Stocks are issued by corporations at a certain price. They usually accrue in value and pay you dividends every so often. When you buy them you pay the going price and you have bought an interest in a corporation. So if the company doesn’t do as well as in the past, the price of its stock goes down and the stock you own is now worth less because you can’t sell it for what you paid for it. So what people lost as the stock market went down was the ability to sell their stocks for what they paid for them. It is a loss of value but the loss isn’t real until you sell your stocks and actually lose $. That’s why many people try to convince stock owners to hold onto their stocks through slumps so that when the slump is over, their stock is worth again what they paid for it or hopefully more. Think of it like buying gold, an actual asset, and years ago you might have paid $26 per ounce. So you hold onto it and hope it’s price goes up. Now you want the money and it’s price is $102 per ounce. So when you sell it, you have a profit. If gold had become less valuable, and was selling for $10/oz., then you would have a loss. That piece of gold is akin to your stock. It is a piece of paper that represents the value of the company and it varies. That’s why the stock market is risky. You can lose but you can also win and win big. Hope that helps.
On paper. You don’t actually lose money until you sell stock. When you sell, it is possible that the seller made money, but that really has no bearing on people losing money now. The only people that are guaranteed to make money when selling stock are the original owners who created the Initial Public Offering. Everyone else either makes or loses money independently of everyone else.
My friend became a millionare in the past 6 months.
