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If you went to your broker a few months ago and bought $10,000 worth of stocks and now they are worth $7000.00, do you view the loss philosphically as just a paper loss because you have not sold the stocks yet. Or do you view your self as $3000.00 poorer.
I do not understand the concept of a paper loss or gain. To me if I see my stocks are up or down 30%, I see my self as richer or poorer that day. who knows I may have to cash out my portfolio at any time, then my gains or losses are very real.
I haven't lost a thing until I've cashed out all or part of any of my investments. It's all unrealized at this point, and in fact may be a good time to buy.
All the Chicken Littles running around like the world is ending is pretty amusing...although the world possibly IS ending if you were an idiot with your money.
Aside from my mortgage, I'm debt-free with money in the bank and willing to be patient and let the sludge flush out of our financial cistern.
I haven't lost a thing until I've cashed out all or part of any of my investments. It's all unrealized at this point, and in fact may be a good time to buy.
I've heard this rationalization before...you haven't lost a cent till you sell. But yes, you can still lose. You never know when you'll need that cash for some emergency, and at that point, the loss will be very REAL.
I'm not in the stock market right now...got out a couple years ago. Too close to retirement to gamble. If you are still young (under 40) then it's no big deal, but it would be for me right now. I don't have the time to wait to recoup any losses. So my investments have been very conservative of late.
I don't think most people see it as a "paper" loss. They feel the loss. It scares them, which is one reason the market is tanking so badly right now - loss of confidence, and fear. Good time to buy? I'd sit it out in cash for the immediate future!
I haven't lost a thing until I've cashed out all or part of any of my investments. It's all unrealized at this point, and in fact may be a good time to buy.
All the Chicken Littles running around like the world is ending is pretty amusing...although the world possibly IS ending if you were an idiot with your money.
Aside from my mortgage, I'm debt-free with money in the bank and willing to be patient and let the sludge flush out of our financial cistern.
Hello Shuffler,
Yes you will lose if they proceed with the bailout. If the balloon is deflating and they pump up their end they can buy your deflated assets with their inflated finances. If they leave it be then we all lose since productivity will stall in real terms. The best thing they could do in this system is tax rebates which will keep the currency from deflating while containing the wealth transfer effect.
Using your paper gain example on houses, then the property tax is very unfair. I was paying property taxes on the assessed value of my home a few years ago which is far higher than I could sell it for today. Using the Property tax logic, maybe we should pay taxes on our stock holdings based on the value it is at a given time of the year if we sell it or not.
Quote:
Originally Posted by Mircea
It's a paper loss. The value of any stock is theoretical, until you liquidate the stock and convert it to actual cash.
If you buy $10,000 in stock and the theoretical value rises to $100,000 and then drops back to $10,000, you haven't lost a dime.
If it drops to $1,000, then yes, you just lost $9,000.
It's no different than buying a home for $350,000 and then later it's appraised at $425,000.
If it drops back to $350,000, you didn't lose a dime.
Your house is only worth $425,000 if you can liquidate it at that price.
Well since my account is way higher than what I have invested still and I have never actually had the money;I look at it as paper really. Its like a house;it is only worth what you get when you sell;before that it is just a figure on paper if you get it appraised.
Using your paper gain example on houses, then the property tax is very unfair. I was paying property taxes on the assessed value of my home a few years ago which is far higher than I could sell it for today. Using the Property tax logic, maybe we should pay taxes on our stock holdings based on the value it is at a given time of the year if we sell it or not.
And that's why quite a few cities are re-assessing houses (at least here) and are realizing that they won't have the revenue that they had. Call your local tax office and see if there's any plan to redo yours.
As for the paper loss thing, you shouldn't have money in the market that you have any expectation of needing in the near term, that's what savings accounts are for.
when you spend real money or assets to purchase anything of value, if the price goes up you have made money, just ask uncle sam at tax time. if it goes down you lose money. of course it is a pape loss as all our currency is in paper form.
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