The Case for the Disappearing Dollar - It’s Still There!
- 21 Comment
Dollars DO NOT DISAPPEAR - Dollars shift hands and sometimes the dollars really aren’t even dollars at all. Dollars do NOT vanish when the Market plummets like we saw today.
I’ve read a few submissions on Digg tonight about how today’s action on Wall Street cost us over $1 Trillion Dollars - or more than the $700 Billion Dollar bailout would of cost.
Digg users - Where did this money go??
It either moved or it was dollars on Margin I.E fake money. If a company has 2 Billion Shares Outstanding trading at $50 a piece the companies Market Cap is $100 Billion. If all of a sudden the price drops and the shares are fetching $40 a piece the company now has a Market Cap of $80 Billion Dollars - this $20 Billion did not vanish. It shifted.
Stocks do not drop on their own, they do not plummet 20% because they feel like it, they drop when shares are sold! I.E money being taken away from it’s Market Cap. .
Many people have taken a substantial hit to their Net-Worth today but America did not lose $1 Trillion Dollars.
The money the Market lost today was not set on fire, it was not thrown in the trash - the dollars moved from one location to another.
I’ll make a case for the devaluation of the Dollar later.
21 Comments on this post
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Rocks said:
simple but clear explanation
kinda make sense. Same with our peso of course. It’s not missing. It’s in the hands of the politician. hehe!September 30th, 2008 at 3:16 am -
BM said:
@ Are you Pinoy? Because you mentioned peso
September 30th, 2008 at 4:47 am -
Online Dividends said:
That’s an interesting conclusion. But for every buyer there’s a seller. So this actually makes sense. A group of people lost 1 trillion, but then another group actually made almost 1 trillion. The group that was expected to win were the brokers who are always winning because they charge commisions!
September 30th, 2008 at 9:09 am -
Dusty said:
Investing is a zero sun game. Someone wins…someone loses.
By the way, I stumbled this post for you and joined your yahoo group.
September 30th, 2008 at 4:08 pm -
Jake said:
Thanks Dusty - I’ll add you as a friend when I get home from work.
I agree with you - when it comes to trading. Do you think the same when it comes to buying for the long term and reinvesting dividends? Well, I guess the traders still need to be active winning and losing for my approach to even be possible.
September 30th, 2008 at 5:57 pm -
Online Dividends said:
I think that traders are important for us buy and hold investors. Traders provide liquidity which lets long-term investors get a great price for the moment without paying a huge bid/ask spread. Traders also make it possible for investors to sell their positions at almost any time.
October 2nd, 2008 at 9:19 am -
Dotsky said:
@BM I’m a Pinoy
I’ve been wanting to invest on stocks long ago but I’m hesitant because of the risks.
October 2nd, 2008 at 10:43 am -
LAL said:
You’re forgetting hedge fund investors. They make big movements into and out of stocks as they see fit trying to make the biggest possible profits for investors.
I know someone at blackrock and he said they have people who only short stocks for an investment strategy and trade constantly and do well.
October 3rd, 2008 at 3:52 pm -
Pweng Bee said:
Yeah, dollars don’t disappear. It disappears because you let go of it and stop working for it. I am not sure yet if I will invest. It is scary.
October 5th, 2008 at 9:25 am -
BM said:
@Dotsky: Hhmm, Now I know
October 5th, 2008 at 12:56 pm -
LAL said:
There is also those who pull out of the market completely. Right now I cannot tell you how many whiners I read on message boards complaining.
They weren’t complaining when the market was good because of housing. Now they can only whine.
October 6th, 2008 at 8:10 pm -
Escoofield said:
Lol this is really funny.. I think that traders are important for us buy and hold investors. but now i know.. it thanks for the post.. it made it clear in my mind!
October 7th, 2008 at 5:06 am -
BM said:
Traders now buy & hold investors? Now that’s news
October 7th, 2008 at 5:13 am -
Escoofield said:
Lol my english are funny >.> i can’t watch my words because everytime i refresh the page someone is commenting….
October 7th, 2008 at 12:44 pm -
Escoofield said:
Pweng Bee That is exactly everyone is meant to say! it is true that when u not work for it it will go away
October 7th, 2008 at 12:46 pm -
BM said:
You’re becoming defensive with that 2 in a row comment….
October 7th, 2008 at 12:52 pm -
LAL said:
Another thing to consider like I stated earlier is where is institutional monies going? Places like California Pension fund is one of the largest institutional investors in the US. But CA is not paying anyone their salary, they are paying minimum wage and people are not investing.
So right there a lot of money is not going into the market right now.
October 8th, 2008 at 9:12 am -
BM said:
So it does not disappear, dollar just devaluate.
October 8th, 2008 at 9:45 am -
LAL said:
Another consideration is that people are also so fearful they are actually stashing cash! Crazy people like if you read this blog called the wastrel show. She talks about how investing is a bad idea. How she is a millionaire because of real estate but doesn’t invest at all in the stock market and it ruins you.
So some people are mattress cash stuffers.
October 9th, 2008 at 6:50 am -
LAL said:
Did anyone have Washington Mutual? I had $100 left from when we moved from CA. I guess I should see what happened to it.
October 9th, 2008 at 6:22 pm -
adazwt said:
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January 7th, 2009 at 4:52 am
