Broad Oak: your emotional support animal

Saturday, January 03, 2009

Pop

Perhaps the fall will be faster.

In this piece, Charles Biderman explains that the value of a stock is set by marginal purchases, which do not reflect what you'd get if you sold all the company's shares at the same time. He estimates that from 2003-2007 the world's equities increased in notional value by $25 trillion, on nothing more than $1.5 trillion cash, a bit of borrowing and mostly, illusion: "Market cap and money aren't necessarily related."

When the illusion goes pop, so do all the gains. First out gets the most.

htp: zgirl

3 comments:

James Higham said...

How accurate are those figures, Sackers? If so, then we are in a bit of bother.

Sackerson said...

Sorry, James, wish I knew. That's the point, though, isn't it? The taxman wants to know what you've got down to the last trouser button, yet we are almost completely in the dark about the great tides of money sloshing around the world.

Anonymous said...

same with all assets. Price determined at the margins. The price of your house is not determined by YOU it is determined by the last person that sold.