The value of anything depends on buyers and sellers, and what they are willing to pay.
Let's say you found a car you really liked, and even though you knew it was overpriced at $10,000, you bought it anyway ('cuz of the cute, pink hubcaps). ;-)
You own it for a week, and then you decide you don't like it. So, you want to sell it, but nobody will give you $10,000.
Maybe you get $8,000.
So, that means that $2,000 of what you had to start with went poof and it is gone (like at the bank, on "South Park").
Where did it go?
Your bad decision made it disappear. poof
The seller of the car got the $10,000. So in reality that's where the money went.
A stock price closes at $50 on Monday. But Monday night, there is bad news. It opens at $40 on Tuesday.
poof
$10 per share is gone.
It could have also opened at $60 on good news.
poof
$10 per share is a lucky windfall for those who already owned it at $50.
The money doesn't really "go" anywhere.
It's just that assets are re-priced, due to buyers and sellers agreeing to a new price.
I think an easier way to say it is, people sell the stocks so they can get out of the market and have cash again. If a stock is priced at $60. Let's say there are 50 people buying it at $59.99 and 50 people selling it at $60.01. In this situation, the stock price stays stable because the buyers and sellers offers are not intersecting.
If all of a sudden there's good news, and 100 people decide to buy the stock for 60.01, those 50 sellers immediately get their orders filled. Now, there is no one selling the stock for 60.01 and 50 of those buyers will have to raise their price if they want the stock.
The same thing can happen if there's bad news. If people panic from bad news, and 100 people decide to cave and sell for 59.99, 50 people will get that price, and 50 people will not get their order filled and be forced to go lower because they ran out of people who were selling it for 59.99.
A shorter way to say this is there's a gap between the buying and selling price, and when the buyers cave to the sellers, the price increases because the buyers are agreeing to pay a little more to the sellers. When the sellers cave, the price crashes because the sellers are agreeing to take less for what they have.
The value of anything depends on buyers and sellers, and what they are willing to pay.
Let's say you found a car you really liked, and even though you knew it was overpriced at $10,000, you bought it anyway ('cuz of the cute, pink hubcaps). ;-)
You own it for a week, and then you decide you don't like it. So, you want to sell it, but nobody will give you $10,000.
Maybe you get $8,000.
So, that means that $2,000 of what you had to start with went poof and it is gone (like at the bank, on "South Park").
Where did it go?
Your bad decision made it disappear. poof
The seller of the car got the $10,000. So in reality that's where the money went.
A stock price closes at $50 on Monday. But Monday night, there is bad news. It opens at $40 on Tuesday.
poof
$10 per share is gone.
It could have also opened at $60 on good news.
poof
$10 per share is a lucky windfall for those who already owned it at $50.
The money doesn't really "go" anywhere.
It's just that assets are re-priced, due to buyers and sellers agreeing to a new price.
So in essence, the seller gets what went poof?
I think an easier way to say it is, people sell the stocks so they can get out of the market and have cash again. If a stock is priced at $60. Let's say there are 50 people buying it at $59.99 and 50 people selling it at $60.01. In this situation, the stock price stays stable because the buyers and sellers offers are not intersecting.
If all of a sudden there's good news, and 100 people decide to buy the stock for 60.01, those 50 sellers immediately get their orders filled. Now, there is no one selling the stock for 60.01 and 50 of those buyers will have to raise their price if they want the stock.
The same thing can happen if there's bad news. If people panic from bad news, and 100 people decide to cave and sell for 59.99, 50 people will get that price, and 50 people will not get their order filled and be forced to go lower because they ran out of people who were selling it for 59.99.
A shorter way to say this is there's a gap between the buying and selling price, and when the buyers cave to the sellers, the price increases because the buyers are agreeing to pay a little more to the sellers. When the sellers cave, the price crashes because the sellers are agreeing to take less for what they have.