What happens to money when stock prices go down.?

Question

Ok lets say i buy 100 shares of a stock for $100.00 each, thats $1,000.00 lets say the value goes down 90% and is now worth $100.00. Who ultimately ends up with that money?

Answer 1

when you bought it, you gave $1000 to the market; this was then automatically divided up as necessary to fill your order; it might have gone to 1 person selling 100 shares, or 100 people selling 1 share.

Now, when you sell, the same thing happens again; there is no money created or "lost" because it is merely exchanged with another entity.

Answer 2

Unless you are short-selling stock, no one gets that money.

When stock prices goes up or down, it is simply reflecting the mood of the market. People are valuating the business, by paying a certain price for a portion of it.

so the answer again to you question is that if your investment goes down 90pp, the only thing that has hhappenedis that that is how much the last person was willing to pay for a pice of it. No noe has the money lost, it is just valued lower.

Answer 3

The value of the stock when you cash it in, is yours.  In your example you stock is worth $10,000.  If the price falls by 90% and is then worth $10 per share, your holding will be worth $1,000.  You will get $1,000 if you cash in.  There could be some fees to deduct and if you have made a profit there could be tax to pay.  if you don't sell the stock, you own 100 shares today's price $10 and the price may rise or fall.

Disclaimer:

The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances.  To find and IFA please call 0800 085 3250 or go to http://www.unbiased.co.uk.