WITH ALL THE CARSHING N MALTING DOWN OF STOCK MARKET IE BILLIONS LOST WHERES THE MONEY GOING AND IN WHOSE POCKETS???

i just heard the richest guys lost over 1 billion each these days

GREAT! question. I would like to know the answer too.

What many do not realize when these things happen is that there is not an actual exchange of money per se, but the underlying asset(tangible asset such as land or stock, bonds, brokerage account etc) is what is lost.

For instance. You purchase a mortgage that you are 50 % vested in the underlying asset. $100,000.00 dollar mortgage for $200,000.00 dollar home. Sometime later, you default on the loan, and the bank(mortgager) repos. They "created $100,000.00 dollars worth of fake money when you put yours in, to create the contract. No real money(just fiat money)--ELECTRONS. Now as they repo the asset, they have a tangible asset that was delivered by use of (electrons) fiat money(intangible asset-debt). When you signed you mortgage, they didn't "give" anyone $100,000.00, they just made electronic notations in the mortgager's account, and they held ownership of the tangible asset until repaid.

Hope that helps.

It works exactly the same in the markets. The tangible asset being the stock or bond(a piece of paper of an "interest") in some company.

Shorts, options, derrivatives, futures are all speculation money. Bets on thin air. Effective in managing downside risk of a portfolio, but the trade off is assumption of huge downside risk. So if you believe say Apple is going to go to $5 from $100 because their manufacturing plant just fell into a sinkhole, or some other reason, to place a "short" on the value of the issue using some method of these(and they can be quite convoluted) using a PORTION of supplied capital to underwrite the device. If it goes down, you guessed right, and make money. If it goes up you loose multiples of what your underlying asset value is--in short, you can loose your ass very quickly-very very quickly. It's a bet, nothing more. Speculation.

In a market that is so heavily corrupted, these devices are huge risks--unless you have greater knowledge of what will happen instead of the common investor. An example of that would be the massive puts on airline stocks immediately before 9/11. Well doccumented.

Last Edited by Bodiless on 08/25/2015 04:27 PM