Backyard Aquaponics
A place to discuss aquaponics

and never the twain shall meet!

Jessy-
"where did all that money go"? The value of stocks are whatever they will sell for. In balance sheet accounting, there are several terms for it, including "customer goodwill". The value of anything is dependent on what it can be sold for.

If I buy a house for $500,000 and right after closing, the market drops, and people won't buy it for any more than $100,000, then it's value is $100,000 (but you can bet I'll be taxed on the $500K). Unfortunately, when things seem scarce, the intrinsic value of them goes up (law of supply and demand). If I have a business that is based on my personality, (for example sales of some item), I may be earning 10,000 a month, but the value of the business may be only $20,000, since once I'm no longer there, the income will not continue to flow.

Stocks are something that can be used as a great "fudge factor" with the value of a business. If I have a business with 1000 shares of stock, and these stocks trade at $100 apiece, then my business is worth $100,000. On the other hand, if that business is liquidated, I may only have $10,000 in sellable assets. In liquidation, the company is then worth $10 per share. But if people are scared, and don't want to hold the stocks, they may sell them at $1 per share, so the book value of the company is then $1,000.

Long answer to say, that your real cash that you spent for ownership in companies may be worth much less or much more than the companies are really worth. That artificial inflation and deflation of stock values, is what day traders make money from.

Similarly, when you buy a car, a good portion of that value evaporates when you drive it off the lot. The $20,000 car, once driven off the lot is a $15,000 used car. The utility of the car hasn't changed, the mileage is the same, the amount of time it will last is still there, but going from new to used status, depreciates it significantly.

When you look at your stock portfolio (or what's left of it), you may think that you have little you can do about it, but if you band together with other holders of that stock, you own a part of that company.

There is another option. During the great depression, there were several stocks that sold for pennies on the dollar of the real value of the company and/or its assets. People that bought at that time, were able to realize great profits when the stocks recovered.

This current mess was due to several things:
1- The overvaluation of real estate
2- Subprime mortgages on that real estate (not a problem it the values continued to rise, but when they started to drop, the $200K paper was only worth $100K in forclosure).
3- Political pressure on the US government backed paper for these subprime mortgages (Fannie & Freddie paid off the politicians - [C. Schumer, B. Obama were the top 2 payoffs] to not bring any oversight into how they were buying overvalued paper.)
4- When the house of cards began to collapse, the problem was compounded by not letting the market compensate, but attempting to prop it up to keep it from falling.

We have a mess now.

Get out of debt, stay out of debt.

If I had talked to my inlaws, and had them as my home mortgager, they would have been able to pay off my house with what they've lost. Goes to show that small banks are probably better than the super conglomerates.

"Sorry... not from my cold hard cash...."

There is of course the other word Rupe, Devaluation.

+1 Greenedo

Now don't you guys and gals go "devaluing" me ...

By the way.... can anyone explain why an economy that is exhibiting no growth, is trillions of dollars in debt (deficit), is exhibiting a complete fiscal and monetary meltdown, a construction and manufacturing contraction, rising unemployment and essentially 0% interest rates....

Is somehow still the benchmark against which other currencies are measured.... and why given the "relatively" robustness of the Australian economy and our current account and fiscal position..... are we trading @ $0.64c against the $US????

Riddle me that one joker.....

I have a feeling Rupe it is to do with benchmarks. When we started this stupididity currencies changed from the price of gold to the greenback. Benchmarks are arbitrary (size of an English Kings foot, or the weight of a carrot seed). Speculating on a benchmark is a difficult concept.
There again after a few beers I have some very strange thoughts/ideas

US is the world's biggest importer. With falling dollar imports are getting more and more expensive and so US consumer will buy less imported goods. Massive decrease in world market. Add to this that the falling dollar will ensure inflation in the US. Further reduction of consumer spending. Once the US dollar went off the gold standard first in 1933 with FDR refusing Americans the right to surrender dollars for gold - or even to own gold - and then in 1971 when Nixon "closed the gold window" thus preventing foreign countries the right to return dollars for gold.... inflation became inevitable. Americans are now able to own gold thanks to Pres. Ford. But this did not return them to the gold standard. So no natural balancing within the economy. Where before paper money could be printed to the value of 4 times the gold reserves now there are no limits. Print as much paper money as you want and inflation results. Look at Zimbabwe today. Mugabe prints money like a madman who has no tomorrow. Zim's inflation rate is now said to be 231,000,000%. Enough money cannot be drawn per day to feed a family one meal a day.

China is rising.... some compensation in the global economy...... new market. But some say their economic growth is too slow for what is coming. They are expected to weather it better than some. But China is worried because US is their biggest importer. Not too much says "Made in America" these days. (Actually corporately the EU is China's biggest importer now but the USA is huge as a single buyer.) So China is trying to keep the Yuan from appreciating too much against the dollar and thereby placing their goods beyond the means of the American consumer.

OPEC buying oil in Euros. More trouble for the world's largest single consumer. Oil traded in US dollars was the foundation of the dollar's elite status in the world. Oil basically replaced gold. Oil will be what the next big war will be fought over. Oil is the USA's achilles heal. Dominantly oil dependant US economy is at the mercy of oil-rich enemies sworn to destroy her ... along with Israel. With OPEC looking to sell oil in Euros that eleite status is over.

Everyone wanted to be locked into the biggest consumer market in the world... the USA. Now everyone is affected by the slide. Take the sub-prime morgage debacle. Candidates for buying a home were sought in the "sub-prime" market.... sub-prime being less than prime in terms of suitability... but standards were dropped to increase money generation. It did not end there. These bankers signed up the loans with shaky prospects... took a commission and re-sold the loans to other bankers... some in Europe. Everyone got their greedy paws into the mess. When the inevitable defaulting in loan repayments started certain banks collapsed....

It truly has become a global economy.... no country is untouched as part of this global market.

+1 CHELLE

Chelle quoted:

It truly has become a global economy.... no country is untouched as part of this global market.

CHELLE.........except one! Apparently IRAN has been shut out (by the USA) from the global financial market some time
ago with havng their assets seized etc.
Now they are probably their heads off.

Re: Global Currency Values: Who fixes/sets the currencies each day Is it some global "Old Boys Network"
Re: Price of Gold ............. Who fixes/sets the gold price Is it some global .........................
With just a bit of insider info..........xillions $$ are made everyday.


There are lots of billionaires in the USA ........does anybody remember the bloke who nearly busted the Bank of England!

Financial Market definitions


CEO --Chief Embezzlement Officer.
CFO-- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW-- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- An archaic word no longer in use

"Re: Price of Gold ............. Who fixes/sets the gold price Is it some global ......................... "

LBMA

It all happened before

"…public credit depends on public confidence…The financial crisis in America is really a moral crisis, caused by the series of proofs … that the leading financiers who control banks, trust companies and industrial corporations are often imprudent, and not seldom dishonest. They have mismanaged…funds and used them freely for speculative purposes. Hence the alarm of depositors and a general collapse of credit …

"The Economist magazine, November 2nd, during the 1907 crash

Yeah ... but it's not their money or their lifestyles that they place at risk... while they skim the profits to live their opulent lifestyles.... it's ours...

Throw the usurers from the temple I say... burn the financial institutes... and stone the bastards....

Hee! hee!.... love the definitions Heka

thanks for the witticisms heka, I've had plenty of old man lectures about the state of the financial and global world matters and it's nice to hear some in layman's terms for a change (and a laugh)