When stocks drop in price... where does the money go? Say l purchased $1000 worth of stocks, and it fell to $500, where did that $500 go?

l know that if someone sold me the stocks for $1000, and they purchased them for $800, they pocketed the $200 difference.

But how can money in an economy disappear? If l purchased for $1000, and they are currently valued at $500... who pocketed the $500?

the money does not disappear at all, the stock price is simply the going rate at that time for the stock. It is just like the price of milk or anything else you can buy.

When you buy the stock the money goes to the company in which you bought the stock from. The stock price is the price paid for the last transaction completed for that stock. If the price falls the company, technically, pockets the difference.

the money is gone. think about this, what happens if is stock goes to zero tomorrow. that billion dollar market cap is whiped out.

Nobody, because unless and until you sell the stock, your gains and losses are on paper. Now, if you decide to sell the stocks for $500, then the buyer pocketed the $500 - they picked it right out of your pocket!!

There is no money in stocks at all. There is only the stock price that stock market investors r willing to pay. And the price they r willing to pay changes all the time depending on market conditions, the condition of the company, & economic conditions in general.

When u buy a house for $300,000. And a year later u r able to sell it only for $200,000. Then there is not anybody who gets $100,000 either from u or from the house. All it means is that you've overpaid for the house when u bought it. And u would've been better off if u waited for one year & bought it for $200,000 instead of for $300,000.

It is the same with stocks & any other property that can be bought & sold.

l do not know how other people complicated the answer, but let me try to explain.

1) The company itself is unaffected by the change in price of their stock. When they went public, they received their money from the issuance of shares & that was that, case closed.

2) For every stock that is bought, one is equally sold. So if l buy 1 share at $20 & later sell it for $30, l make $10. And then if that person then sells it for $25, he lost $5.

--It is just a carousel of who makes/loses the money. No money disappears, it is just transferred from one pocket to another, over & over again.