Monday, October 29, 2018

Even Bloomberg (Temporarily?) Misunderstands What a "Loss" is

The headline as it appeared on Google News ...

Moutai Investors Lose $10 Billion as Liquor Maker Faces Slowdown

... seems to have been corrected at the site to ...

One of China’s most potent symbols of luxury spending at home -- the fiery liquor churned out by Kweichow Moutai Co. -- was dealt a $10 billion blow to its market value Monday, the latest company to be hit by anxiety over a pullback in spending by shoppers.

Moutai, which makes the baijiu liquor that’s favored by China’s leaders and often prized as a luxury gift, saw its shares plunge to the daily limit Monday after disappointing earnings stoked pessimism.

If you purchase a share of stock at $2 and the market price of that share subsequently drops to $1, you've only lost a dollar if you sell the share at that lower price.

If you don't sell the share, you haven't lost money yet. You bought a share. You still have a share. It may or may not produce income in the form of dividends. When you do eventually sell it, you may take a loss, or a profit, or break even. But not until you sell it (or until the company actually dissolves/goes bankrupt, leaving the share worthless and unsellable).

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