Its 20% down from the last highest high
Then 20% up from the last lowest low.
Not 20% of your average price. Big difference.
I really dont think you'd have property investment as we do if prices of Harbor waterfront properties could fall 80%
Its not a good analogy as you dont have the liquidity you have with stock.Your NOT selling in the HOPE prices will fall your selling when its CLEAR they are falling and have PROVEN they have by falling 20%. I dont think Harbor property has EVER fallen 20% in a year let alone 2 weeks or even a week!---or even a day!
If you look back EVERY share that continues to rise will BREAKOUT of an area----
Hype---- well there are opportunities all over the place.--BitCoin , CPH made me $80K in a few weeks with $20K
Tech-Boom ,Trump elected ---on the opposite end COVID GFC. Dont underestimate the opportunities enveloped in Hype.
90% of the population are the Tortoise and 89% remain in their shell.
10% are the Hare and fortunately for the Tortoise enough succeed.
There certainly is people that have lost 80% of their money (equity) investing in Sydney harbour water front property, just because the total value of the property doesn’t drop by 80% doesn’t mean the persons equity component doesn’t drop to $0 or perhaps even negative, if the the property market drops by say 10%.
When you buy shares, you are buying Equity in a business, hence why another name for shares is literally “equities”.
So when a share price drops by say 50%, it’s the equivalent of a person that has an 80% loan on a property having their property price drop by 10%, in both cases their equity position has halved.
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for example, (made up numbers)
say you own Woolies shares @ $40 per share, and their market $100 Billion.
That $100 Billion market cap is just the equity position, the Total enterprise value might be $400 Billion when you include the parts of the Business owned by other stake holders such as debt holders (banks, bond holders, finance leasing, suppliers, land lords etc)
The just like Sydney harbour water front property the total value value of Woolworths enterprise is not likely to drop in value by 80% either, but it’s equity value/share price can, just as the water front property owners equity can.
if Woolworths had zero bank debt, zero bonds, zero leases, paid all suppliers upfront with cash, and owned all property, plant and trucks etc outright, their liquidation value would never drop by 80% either, it’s only because of all the other stake holders that have claims on the assets before equity owners that the equity value fluctuates so much compared to total enterprise value.
but return on equity would be lower if to much equity built up in Woolworths, hence why they are currently getting rid of equity by doing a share buy back.
share buybacks are a way company’s reduce equity in the capital structure, by handing back capital to share holders, paying off debt is a way to increase equity.