Your money is lost when you buy a stock
- Thread starter deaddog
- Start date
You're confusing accounting lol.
Imagine your balance sheet with A = L+E. On your asset side you have cash and investments. If you have $100 of cash and buy $100 worth of stocks, nothing to your net worth changes. Your -100 to cash is +100 to investments. Your L+E remains the same, at 100 (assuming no debt.
The other concept you're confusing is "opportunity cost", e.g. the return you forego by not doing anything. e.g. what's the IRR on a relative basis?
Imagine your balance sheet with A = L+E. On your asset side you have cash and investments. If you have $100 of cash and buy $100 worth of stocks, nothing to your net worth changes. Your -100 to cash is +100 to investments. Your L+E remains the same, at 100 (assuming no debt.
The other concept you're confusing is "opportunity cost", e.g. the return you forego by not doing anything. e.g. what's the IRR on a relative basis?
Where do you stand on the concept of it's not a loss until you sell?
Are you familiar with mark to market accounting?
It's what I use but there is a faction out there that deludes themselves into thinking that you don't have a loss until you realize it.