Quote:
Originally Posted by competentone
Changes in "values" of stocks and the businesses underlying them -- or changes in the value of anything -- doesn't represent "money" going or coming, it just represents the "mass conclusions" of the people making up the markets for the trading in those stocks.
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I spent an entire lunch trying to explain this point to my dear old mum, who lost a bundle after 9/11 and just couldn't understand why. "What's it got to do with X Co? They make pharmaceuticals"—she kept insisting. She still doesn't quite get it.
One problem is the media. Everywhere you turn the media is milking the "Economic Meltdown" story—to often ridiculous lengths in my view. This of course feeds the negative market sentiment—often much more even than real factors, such as the fundamentals of the companies in question.
A friend of mine, who is much more astute in these matters than me, is tracking a portfolio of companies whose share prices have suffered significantly almost wholly because of current market sentiment, and whose underlying businesses are largely unaffected by the current economic malaise. He's buying these one at a time, and I suspect he will be very rich very soon.