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$1.15 trillion was wiped out from the US stock market today. (feddit.uk)

submitted 2 days ago by [email protected] to c/[email protected]

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[–] [email protected] 77 points 2 days ago (1 children)

I don't think it's entirely true:

Let's suppose there are 500shares trading at $10. The market capitalization is 5000$.

One person now trades one share for 9$. There are still 500 shares around (if the company didn't do a buyback) and now the market capitalization is 4500$. Where did the $500 go? Nowhere. The market cap just represents the perceived value of the company

[–] [email protected] 28 points 2 days ago (2 children)

This is the correct take.

There are not $1.5T worth of cash sitting around. What happened was a bunch of people tried selling their stock for $10, and when nobody would buy it for that, they sold it for $9. And when nobody would buy for that, they sold for $8. The market cap just dropped by 20%, but only $17 was made, not the $1000 the market cap "lost".

[–] [email protected] 7 points 2 days ago

I consider myself schooled.

[–] [email protected] 2 points 1 day ago

Also, $17 was made, but $17 was lost by the buyer. It doesn't generate money. It's all speculation.