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Can the stock market go to zero?

afrugaldoctor.com

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Re: Can the stock market go to zero?

#31

Post by cuteboy19 »

nologic01 wrote: post #21

Electricity prices can go negative, interest rates can go negative, so yeah, there are conceivable circumstances where the "stock market" can go not just to zero but negative. I.e., people paying something to get rid of their stock ownership. Argumemts about rationality and arbitrage are good for quantitative finance books and the make-believe worlds they construct. They dont define the limits of what can actually ha…

The concept of limited liability limits this negative scenario. And my limit buy for the entire US stock market @5cents keeps it from going to exact zero

Re: Can the stock market go to zero?

#32

Post by thetopher »

nologic01 wrote: post #21

Electricity prices can go negative, interest rates can go negative, so yeah, there are conceivable circumstances where the "stock market" can go not just to zero but negative. I.e., people paying something to get rid of their stock ownership. Argumemts about rationality and arbitrage are good for quantitative finance books and the make-believe worlds they construct. They dont define the limits of what can actually ha…

I don’t know if these are good examples. Money and electricity both have inherent liabilities that don’t seem to translate to stock. At the end of the day, cash has to be transported and stored somewhere. Negative interest rates can be used to effectively pay somebody else to store your cash. A similar situation has happened with oil prices going negative.

Negative electric rates could be used to increase load on a grid that would otherwise be generating too much electricity.

Is there any kind of liability that comes with owning stock in a company? I don’t see any motivation to ever pay for somebody to take ownership of your stock.

Re: Can the stock market go to zero?

#33

Post by kens »

bruce511 wrote: post #7

>> According to statista.com, somewhere between 19,000 to 60,000 businesses file for bankruptcy every year in the United States, although not all of these are publicly traded companies. Understatement of the year? About 20-200 public companies go bankrupt in a year [1]. So about 0.01% of the numbers quoted. "Not all" is doing some heavy lifting there. [1] https://www.jonesday.com/en/insights/2022/01/the-year-in-ban..…

I don't understand your math. 0.01% of 60,000 is 6.

Re: Can the stock market go to zero?

#34

Post by patmcc »

misja111 wrote: post #29
nologic01 wrote: post #21

Electricity prices can go negative, interest rates can go negative, so yeah, there are conceivable circumstances where the "stock market" can go not just to zero but negative. I.e., people paying something to get rid of their stock ownership. Argumemts about rationality and arbitrage are good for quantitative finance books and the make-believe worlds they construct. They dont define the limits of what can actually ha…

> there are conceivable circumstances where the "stock market" can go not just to zero but negative No there are not. As a shareholder you cannot be held accountable for losses of the company you're holding the shares of. In the worst case, your share becomes worthless.

>>>As a shareholder you cannot be held accountable for losses of the company

This is true. This could also change on the whim of a government. I don't think that's likely, but in a revolution? Who can say.

Re: Can the stock market go to zero?

#35

Post by bandrami »

bboygravity wrote: post #23
chii wrote: post #13

Earlier quoted context omitted.

> who held US stocks which they bought via the Chinese/Russian stock market it would depend on what it means to hold stock "via the stockmarket". If those chinese/russian citizens had a legal entity in the US, and purchased via a US broker, then they ought to be able to claim legal ownership of those stocks they purchased. If, on the other hand, the stock was purchased on custody by a chinese/russian entity, then the…

> via a US broker, then they ought to be able to claim legal ownership of those stocks they purchased. This is a funny sentence if you know how US brokers operate, because: -- The stock is registered at Cede and Co. In your broker's name (not the client's name). -- Most US brokers don't hold all the stock that their clients "have" in their account. They lend out stock with or without the client's approval. -- It has…

Gold exchanges are like that too -- the amount of gold "held" by investors exceeds the world supply.

Re: Can the stock market go to zero?

#36

Post by laeri »

nologic01 wrote: post #21

Electricity prices can go negative, interest rates can go negative, so yeah, there are conceivable circumstances where the "stock market" can go not just to zero but negative. I.e., people paying something to get rid of their stock ownership. Argumemts about rationality and arbitrage are good for quantitative finance books and the make-believe worlds they construct. They dont define the limits of what can actually ha…

Why would someone want to pay to get rid of their stocks? In the worst case they would be worthless or not?

Re: Can the stock market go to zero?

#37

Post by bmitc »

kens wrote: post #33
bruce511 wrote: post #7

>> According to statista.com, somewhere between 19,000 to 60,000 businesses file for bankruptcy every year in the United States, although not all of these are publicly traded companies. Understatement of the year? About 20-200 public companies go bankrupt in a year [1]. So about 0.01% of the numbers quoted. "Not all" is doing some heavy lifting there. [1] https://www.jonesday.com/en/insights/2022/01/the-year-in-ban..…

I don't understand your math. 0.01% of 60,000 is 6.

I don't think the point is lost by correcting the value to 0.1%.

Re: Can the stock market go to zero?

#38

Post by panarky »

bmitc wrote: post #19
TekMol wrote: post #10

So the stock markets of two of the biggest countries in the world (Russia and China) went to zero quite recently (1917 and 1949). And the author summarizes that stock markets can't go to zero? How does that make sense? Even his closing statement contradicts itself: So in conclusion, rest assured that as long as you are properly diversified, your stock investments won’t go to zero. If you should diversify, then that s…

To be specific though, neither of the countries of modern China or Russia existed at those times. In particular, those two dates were revolutionary dates on which entire governments were replaced. There was more going on than just the stock markets. And as far as I can tell, at least with the Shanghai Stock Exchange, it didn't go to zero in 1950. It was simply closed and liquidated, and that implies that people got b…

Nearly every asset depends on the existing regime for its value.

Public and private corporations are chartered by governments.

Real estate is titled into existence by governments.

Currency and bonds are issued by governments.

When the regime ends, these assets may or may not be recognized by the new regime.

Gold, fine art and crypto are the exceptions to the rule.

Re: Can the stock market go to zero?

#39

Post by globalise83 »

justrealist wrote: post #3

No, it can't. I am the backstop. If the stock market goes to $1 I will personally buy all public companies in the US using the change I found underneath my couch. I am willing to make this personal sacrifice to maintain the financial stability of the free world. It's not a burden I take lightly, but it's one I take of my own volition.

Not if a totalitarian regime decides that you cannot own stock and live at the same time.
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