This is regarding “Talk of ’03 rally” (Business, Dec. 29). I would like to clarify two points for the readers.
The article stated that the investors have lost $7 trillion in the past three years.
This notion is somewhat misleading.
The $7 trillion figure represents stock markets’ valuation erosion or paper losses but not the investors’ actual losses.
A $1 decline in a stock price of a company with 250 million outstanding shares results in company devaluation of $250 million but does not necessarily indicate equally tangible losses experienced by investors.
Markets’ valuation decline and real investor losses are different in both their psychology and amounts.
Also, these can be subjective terms.
For every loser, there is a winner.
When you sell stocks for a net loss, that money does not evaporate.
Simply stated, it winds up in the pockets of someone as a gain.
Money in this case essentially has shifted from one place to another.
Your article only mentions the losing investors, but there are also investors on the other side of the equilibrium who have equally profited.
What we should all hope for is that the money that has been taken out of circulation would come back into play soon.
And it will when the market conditions become suitable.
It always has.
