when i think about market capitalization, it seems as abstract as mirage

when you look at particular stock of company XYZ, stock symbol XYZ and say market cap is 100B$ as of today. It is easier to think that there is a 100B$ dollar invested in the stock at current time. But I think this is wrong assumption. I also mistakenly held belief (altghough naively, much thinking involve), stock XYZ has locked up 100B$ out of total economy, which after thinking about it, was a wrong assumption. My thinking to prove myself wrong is below.

100B$ = market is just number of available floating stock * stock price.
and stock price is just today's ask/bid price and number of ask/bid's based on price obviousy would be much less. It does not mean, if all floating stocks sold in one swoop today, it will be sold to 100B$.

That leads to how much invested in total aggregate time from stock's inception (IPO) to until today when market cap is 100B$. In hypothetical scenario, lets say, 100B$ is 1 billion stock is floating and each one is 100$. Additinally, hypotehtically, lets say 50%of all floating stock were sold at 40$ last year since inception (IPO). and thirdly, let's say rest of the 50% were sold on the market at the price of 100$.

So that means total dollar amount invested in all the floating stock:
100$ * 0.5(1,000,000,000) + 40 * 0.5(1,000,000,000) = 140 (0.5(1,000,000,000))=70,000,000,000. In other words, it was 70 billion!

That means, it is easily possible, market cap of 100b means in actuality, much less has been invested so far to this stock which stands for 70b.

 

So if you redefine market cap, you get a different answer?

 

%%
I dont look @ it like that\
especially since not many large caps would lose 30% ''today''
True small caps[$250 million to 2 billion bucks million\ may lose more /but/ gain more.
You are right to see you wrongly think money in a stock is ''locked up 100b out of total economy''
IF i 'm trading/investing ETFs + I do /
something i look @ / bids/asks more / than\
=AUM. Sorry, i would not figure that stock has less invested with your figures;
but a 3 year\ 1 year/10 year\ all data maybe a bit more complex than yours.OK by me.
You redifinition seems to imply that large cap is a better buy than most think/maybe right/ uptrend/assume above 200dma.............................................................................................../

 

you could benefit from a taking a simple corp finance 101 course...

 

%%
THAT;
+ old WSJ + old IBD newspapers.
New WSJ newpapers have barely readable black + grey candlecharts, maybe to save money on ink+ encourage not throwing the old color WSJ charts away.............................

 

Market cap is not the total amount paid for the stock. I think that's what you just figured out. Congratulations.

 

This case illustrates it clearly

https://www.bloomberg.com/news/arti...illion-deli-decried-by-einhorn-draws-sec-suit

 

There is no money in the market, only claims to it.

 

yes, you nailed it )). When you reading all these news market cap and how many quarters to get there, it is really easy to feels like, subconsciously, looks like it