What happened to the stock market money?
(I was told that that money that everyone lost on IRA’s and Stocks went into someone’s pocket. It was real money when I put it in there.. Now over 1/3 of it is just gone. My s-in-law lost 65,000 from her mutual funds.. Who has it? Surely it couldn’t have just vaporized!)
Answer:
According to stock market rules, the official price of a stock is the last price at which it was sold on the stock market. Which means that the stock price changes for all shareholders, even when only one investor sells a few of his shares at a lower or higher price than before.
And just like for the house, there is no money in stocks. Stocks or shares are property just like any other. They are simply official certificates representing part-ownership of a company. And anyone who buys these shares becomes a part-owner of this company.
Mutual funds represent people’s investments as money by multiplying the share prices by the number of shares they own. And they report the result in dollars and cents. But this doesn’t mean that you actually have this money. Because there is no money until your mutual fund sells your shares to someone else at the price he or she is willing to pay and gives you the money from that sale.
Posted: August 9th, 2010 under US Stock Market.
Tags: stock market money