financial plan question

When a financial plan loses 8 or 10 thousand, who gets that money? Somebody must get it! After all, isn't it actual money? It puzzles me. Seems to me a real brain twister.

It all depends on how the financial planner loses the money. If he/she had 10 or 12 $1000 bills and loses them, the eventual finders (or dust bunnies) get the money.

If the financial planner buys $100,000 of securities that are now worth $88,000 to $90,000, he/she has lost $10,000 to $12,000. The person who sold him the securities has the money.

It's the same thing if I buy a new-to-me tractor for $20,000 and later sell it for $10,000. I have lost $10,000. The fellow who sold it to me got his $20,000 and the fellow who I sold it to got the tractor. I get to keep the $10,000 lesson.

You only actually "lose money" when you sell. As long as you possess the shares of the plan, it's only a number on a piece of paper, what you WOULD lose IF you sold.

As TomIA says, the one who sold you the shares has the money. You have the shares.

It sort of like the definition of a joint venture.

A joint venture is a situation where one party has the money and the other party has the experience. Six months later the
positions are reversed.

Did I loose actual cash when the value of my land dropped after the 08 crash? I've got two feedlots full of cattle. If cash cattle prices fall between now and when they're finished, and at the sale barn, am I out actual cash, or only that I'll make less than I would if they were ready to go and I sold them today at todays price?

The only time you actually ''loose money'' in your financial account is if you bought an asset and you have to sell it for less than you paid out of pocket. Anything else is just some pie in the sky number that it's ''worth'' if you sold it right at this moment.

If you bought a house for 200K and sold it later for 150K, did somebody else make money? Yes and no. Middlemen made money on the two transactions, but most of the 50K you lost vanished into thin air. Same thing with most investments. Now speculation on futures contracts is a bit different; these are bets with a winner and a loser.

Pie in the sky, or speculative earnings . You havent lost or gained anything until you sell. Then it becomes a realized gain or loss.

It is just actual numbers.

George should be along to school us in this.

Vito

It's nice to dream, but unless you're ready to sell, that's all it is.

The guy who doesn't lose money, is the financial advisor. After the 08 disaster. I did recover eventually. When the market started going south recently, at 80 years old I may not have time to recover this time. I removed my money from the stock market. With CD's paying close to 4%, and going up I put my savings there. Not getting a lot, but not losing either. Schools should have a mandatory class on managing money, not how to diagram a sentence, never did figure that one out. Stan

Its notthat you lost actual money unless you sell. Its just that your shares of what ever are worth less, but you still have the same number of shares. Think of it the other way. If the market goes up and your portfolio is worth more, who made the money? You did, if you sell and cash out.

Actually, right now you are losing money. 4% does not cover 8% inflation.

Farmer #1 had a cow. He sold it to farmer #2 for $100. A week later he regretted that he sold it so he bought the cow back for $150. The next week farmer #2 offered him $200 for the cow so he sold it again. This went on for several weeks, each time the price raised by $50. Finally farmer #3 came to farmer #2 and bid $100 more for the cow and #2 sold it to him. Farmer #1 accused #2 of ruining their good business plan. Don't you know we were both making good money off that cow?

Vito,
Why don't you tell everyone how the stock market works?
George

Maria Bartiroma says it goes to ''Money Heaven''. (;>))

I remember Jerry Clower telling that same story about two guys and a mule. ''You and me was both makin' a good livin' off that mule!''.

55 55
It is obvious you know nothing about the NYSE or any exchange.
I'll try to keep it simple.
NYSE is an auction house where you buy or sell shares of a company.
Your financial advisor has to work for a brokerage firm approved by the SEC.
Your financial advisor can't get his fingers on your money. He makes recommendations and you have to decide if you want to buy or sell that stock.
Your financial advisor has to handle your trades, you can't.
All trades have to go through your advisor who works for a brokerage firm like Edwards Jones, Raymond James.
You can't buy stocks on the NYSE.
Your financial advisor gets paid a commission to make trades.
It's a better deal for me to pay a fixed commission based on the total value of my portfolio and I can make as many trades as I want. I'm charged 1/4 of 1% per quarter. If my portfolio increases in value my advisor makes more. If my portfolio goes down my advisor makes less.

The NYSE is an auction house.
If I want to sell a stock I have two choices.
One choice, You set the price(limit). How much you want to pay?
If you sell a stock you can do the same. You set the price you want to sell it for.
All trades, someone has to be willing to sell a stock and someone has to be willing to buy the stock at your selling price. That trade determines the value of the stock you are holding.

Your other choice is to buy or sell a stock at what buyers or sellers are willing to pay on the exchange, no limits.

Sometimes I may not sell or buy a stock today if I set a limit that no one is willing to pay.
If you look at stock prices they change second by second.

So like everything else, the value of your stock is determined by what someone is willing to sell their stock for and what someone else is willing to pay for your stock.

No biggie, you only make money or lose money when you sell the stock.

I only buy stocks that pay dividends. So my stock can lose value, yet I get paid a quarterly dividend. Dividends are paid when a company makes a profit. Dividends are like profit sharing.
One of my favorite stocks is IEP.
Google the history of IEP dividends. They have paid a $2 Q dividend for many years.
IEP, Icahn Enterprises L.P.
Carl Icahn is an interesting man.
Not too many men like him.
Carl Icahn is an American financier and currently serves as the Chief Executive Officer of Icahn Capital LP, an investment management firm headquartered in New York. Through the years, Icahn has garnered a reputation as a corporate raider, and has made his way to the Forbes 400 with a current net worth of $18.1 billion.

Financial advisors play it safe and only recommend stocks their brokerage recommends.

I like going off the reservation and buying what I want.
when you sell any stock or get paid a dividend you pay capital gains taxes, it's income.
Sell any stock for a loss and take a capital loss, save on income taxes.

Did I make it simple enough for you to get your mind around?
It all comes down to one thing.
What one person is willing to sell a stock for and what someone is willing to pay for it determines the value of your stock.

No money goes poof.
You still own the same number of shares.

Not my field of expertise. You probably have more invested in it than I do and have a better understanding of the game they play.

Vito

I'm surprised the people who think they have controlling shares of Tractor Talk are not complaining your post is not tractor related.

Seems like a good spot to resurrect this, been around the internet quite a bit

(quoted from post at 15:12:57 10/08/19) This is an interesting little story. I am going to keep the last part of it out of the story for now because I think it will distract from the "puzzle" part of this. For now, just reply if you can give a simple explanation, I'm sure it's not all that complex but it seems like it might be .... here ya go .... I'll come back later with "the rest of the story."

It's a slow day in a small town and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100.00 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100.00 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100.00 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100.00 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything.

However, all these individuals are now out of debt and there is an atmosphere of optimism and glee.

Click to expand...

Earlier post

Dont need to know anything about the stock market, the examples of farmer (tractor related) buying and selling should explain it.

Farmer #1 and farmer #2 in prior post both have more money in their pocket so they made a profit. But they no longer have a cow. Farmer #3 has less money in his pocket and if the price of cows goes down, he lost money, but he has the cow. Regardless of the value placed on the cow, he will get a calf in the spring. An argument for having your money invested in production assets rather than assets that you hope will simply gain value over time. And money in your pocket is worth nothing if you are not willing to spend it.

I posted this with a tiny bit of jest. And I know it's not necessarily tractor related. Sorry folks.

(quoted from post at 22:39:45 12/05/22) I posted this with a tiny bit of jest. And I know it's not necessarily tractor related. Sorry folks.

Click to expand...

You sure got everybody cranked up!

This post was edited by Rich'sToys on 12/05/2022 at 09:24 pm.

(quoted from post at 14:50:23 12/05/22) Farmer #1 had a cow. He sold it to farmer #2 for $100. A week later he regretted that he sold it so he bought the cow back for $150. The next week farmer #2 offered him $200 for the cow so he sold it again. This went on for several weeks, each time the price raised by $50. Finally farmer #3 came to farmer #2 and bid $100 more for the cow and #2 sold it to him. Farmer #1 accused #2 of ruining their good business plan. Don't you know we were both making good money off that cow?

Click to expand...

This would be hilarious if so many people didn't think this way.

George .... I noticed that this reply of yours is to your own reply. Anyways, I would say that you and you alone easily have control of the YT marketplace. Good thing you aren't paying a posting fee to an agent or you'd be flat broke ..... ha!

Your assets go up and down in value.

Your cash supply goes up and down.

Very different measures of your worth tho.

If you dont run out of cash, it doesnt matter too much.

Now are you the type the spends it all no matter how many assets and cash you have, or are you happy with what you got and have plenty with just a little.

Paul

you don't need to call a broker to buy and sell stocks, treasuries, cds', or banker acceptance bonds. open a self-directed account at fidelity, schawb, or whoever and trade away online. can transfer money between accounts 24 hrs/day. i haven't paid a fee to buy / sell in years. if you do go off reservation, and pick your own stocks there is no reason to pay commissions. i had a advisor once. he wouldn't listen to my ideas, and impossible to get a hold of when the market tanked.