How Stocks Crash, and Where the Money Goes

Video Description

In this video, learn how stocks can crash or fall in price, and also learn where the money goes when stock prices fall and when they crash. ➡️ JOIN OUR MASTERMIND FACEBOOK GROUP: https://www.facebook.com/groups/intelligentstockinvestors BEST INVESTING BOOKS 📚 The Little Book That Still Beats the Market ➜ https://amzn.to/3fkkscB 📚 The Outsiders ➜ https://amzn.to/3jeFcmW 📚 100 Baggers ➜ https://amzn.to/3A3Nt49 📚 The Complete Investor ➜ https://amzn.to/2V3Saw5 📚 Richer, Wiser, Happier ➜ https://amzn.to/3igSvUC 📚 The Dhandho Investor ➜ https://amzn.to/3ykf1l9 📚 Tao of Charlie Munger ➜ https://amzn.to/2V9FgMM 📚 The Complete Financial History of Berkshire ➜ https://amzn.to/3kRFRNp 🙋‍♂️ Watch Next to Keep Learning (YouTube Playlist): ➜ https://www.youtube.com/watch?v=R98EpiTtzI0&list=PLu59mM1CZTBs6BlQGueRfTv47cqB_4cm- 🛎 SUBSCRIBE (Click to subscribe): ➜ http://www.youtube.com/channel/UC8hyOJoF1gS_uGUL5uQqRhg?sub_confirmation=1 Stocks represent ownership in a company and that ownership has value inherently because it’s a cash-generating asset. Its value is based on the cash it will generate in the future for its owner(s). Stock prices and stock values are not always one and the same. Sometimes stock prices are bid up beyond what they’re worth, and sometimes they're traded to price levels below what they’re worth. This is where the opportunity is for us value investors. When unexpected events cause panic, people sell, which causes prices to drop, which causes more people to panic, and sell, causing further price drops. Supply and demand dictate prices and when there are more sellers than buyers, prices will fall. “In the short term the stock market is a voting machine, but in the long run it’s a weighing machine” - Benjamin Graham As stocks get driven to higher and higher prices they become more and more out of touch with the reality of the underlying value. Eventually, rationality will kick in as people start to realize prices are not at all justifiable. The higher they go from this point, the more fragile they get. Eventually, the market will correct itself. So where does the money go if you buy, and then watch the price come down, leaving you with an unrealized gain (or even a realized gain if you do sell and take the loss)? You can think of it in terms of buying a new car. You drive it home and a few months later decide you don’t want the car and you want to sell it… Only to discover it’s not worth nearly as much as you paid for it. Where did the money go? You could say that it went to the car dealership that sold you the car, but closer to the truth is just simply that the value of the asset you owned decreased in market value. Keywords: Where Does The Loss Money Go In Stock Market Trading? When stocks fall how does your money disappear? where does the money go when the stock market crashes How Stock Market Crashes Happen Special thanks to my incredibly beautiful, smart, and creative girlfriend, Stephanie, for her editing wizardry and creative insights and ideas. Disclaimer: These youtube videos and content are for entertainment purposes only. If stocks or companies are mentioned, Richard may have an ownership interest in them -- DO NOT make buying or selling decisions based on Richard’s videos. All information contained herein should not be construed as anything other than an opinion for entertainment purposes only. Information being provided may be outdated or inaccurate; it is your responsibility to verify all information. No financial advice is being given nor is any other advice of any kind. You should consult with a qualified professional where appropriate and before any action is taken on this video. No liability or damages shall take place because of this video and/or content. There is no express or implied representations or warranty with respect to the accuracy or completeness of the content of the videos, including any content, description, links, or resources shared, including those by third parties. Furthermore, all parties specifically disclaim any and all express or implied warranties of merchantability or fitness for a particular purpose. By watching this and all related videos, you agree to be bound by this disclaimer. #StockInvesting #StockMarketForBeginners #ValueInvesting