Yeah, how much the market tanks is fairly irrelevant since it's just a paper loss and will pop right back. More interesting is how much money various actors made/lost.
Perhaps those that sold at a lower price purchased another stock also at a lower price and there is an assumption the universe will balance it out. But stocks drop at different % some institutions may choose to move to cash or another commodity temporarily. I don’t expect it’s a zero sum
That is what I know, am I missing something ?
I can understand the exchange rolling back half an hour of trading or whatever and calling it a wash. The idea that a trader is somehow liable for something seems absurd. Only thing he is guilty of is annoying powerful people.
https://www.margaretthatcher.org/document/106145
Having protections in place to guard against market manipulation is a facet of this policy where all citizens are now traders (and not just a select group of well educated, well steeled stock market professionals.)
I don’t defend this policy, but I see why the former leads to the latter.
Another good reason to enforce a level playing field in capital markets comes about from another backbone of the 80s and 90s: placing national infrastructure like power, water, and pensions in the hands of private companies traded on the stock market, who need some form of protection on their share price.
I expect it will be quite difficult to defend that position. The value of a company to its owners is more or less its expected earning potential. That is to say, low share prices in and of themselves don't necessarily cause bad outcomes for the shareholders in the long term and have no impact at all on the prospects of a company. There is no reason to protect something that isn't important. If anything, the very high returns vs share price should drive additional investment in the sector, although the link there is a bit tenuous and speculative if market manipulation is involved.
Personally I don't see a problem investors are forced to - crazy as it may seem - buy things because they want to own them for the long term.
I'm a normal citizen who holds shares. I remember I got an email alert when the flash crash happened, had a minor heart attack, and then reminded myself that I'm investing for the long term and it doesn't matter what the market does on any one particular day. In that case, it wasn't even a whole day before my portfolio had recovered.
Markets need to be fair and transparent, but you can't save people who panic-sell in a crash.
This is like saying "because chainsaws are available everywhere to use without a license, we must make juggling them safe for all ages".
Well, ok, maybe we should forbid market orders to retail investors. Or make it a special privilege that you have to be approved for like margin and options.
It's possibly a foreign relations issue if the winners or losers are heavily biased towards one country or another. Like if all the winners were Russian and the losers were American
I also don't have a definitive answer however some things that play into the equation must be:
I think VWAP (Volume-weighted average price) also plays into how much money was made by people and how much was lost in aggregate. This specific share we are tracking along its lifetime might have exchanged hands a lot while it is going up and traded rarely during periods of decline.
Also the share could have been first purchased as a part of the options given to investors, employees, etc.