For example the boss of facebook had millions of shares so how come he has not lost everything?
Every share has two or more prices - one is the stock market value placed on the shares - what you hear about on the news - and the second value is the "book value" - which is calculated from the balance sheet of the company. These two prices are rarely the same - in most cases the stock market value is far higher than the book value (per share) because the business is a "going concern" making profits.
Even if the stock market value went to zero - Facebook and most NYSE companies have assets in excess of liabilities - that means the book value is above zero. According to Yahoo Fiance, the book value of Facebook is $6.10 per share. This means that - in an auction - the assets of the company have some value.
And here's the interesting thing - even if the company declared bankruptcy - the share value rarely drops to zero - the website and word "Facebook" would be attractive to any buyer - just to use the word and website to grab the eyeballs of a billion users.
If the stock market 'crashes', this means that the value of the billions of shares outstanding for the thousands of companies that offer their stock up for sale, is falling in value. Investors are what control this. When prices are falling, there are more sellers than there area buyers. Investors may get skittish and want to remove their capital (value) from risky places. How this works is when someone wants to invest in a company, they buy a 'share' of the business, with the intention of the share going up in value as the company grows its earnings and revenue. Often companies pay back some of the revenue as dividends, or cash payments to shareholders. When investors think that bad times are coming and that the value of their shares may drop, they are willing to dump them off, sometimes for lower prices than they're actually worth by a slight margin, and they sell them at the lower than street value price. The next guy then sees this, and cannot find a buyer for the new street price, and has to go a little lower. What this is creating is a falling stock market when everyone is afraid of risk and dump their shares for cash to put into something less volatile. It's a chain reaction when everyone is doing it, and it can bring down trillions of 'value' out there because investors all over the world are jumping on board. This can takes days, weeks, even months to stabilize. Back to the question at hand: you will not lose your shares per say. You will lose the value of your shares, but even if they are worthless (or even negative) you will still have those shares unless as the first answerer here said: the company goes belly up.
Say you have 100 shares of XYZ CORP. and on 1/1/15 the value is $100. per share. You have $10,000. in your portfolio.
If on 2/1/15, the market crashes and XYZ Corp. drops to $10. a share, now your portfolio is worth $1,000.
If on 3/1/15, XYZ Corp declares bankruptcy and closes down, your shares are now worth ZERO.
In a market crash, all stocks are bound to be affected. Not all will go into bankruptcy, but some of the weaker companies might.
A market crash is always possible, we have had them before, and logic says they will happen again. The best thing to do is to diversify your assets: stocks, bonds, CD's, real estate, gold, silver, collectibles, commodities, etc. The trick is to get the % of money in each category "right".
Within the stock market, there are degrees of risks (low risk stocks, medium risk stocks, and high risk stocks).
Low risk stocks are those of
(1) Blue chip, large companies that have been around for many years
(2) Companies that make foods, consumer products, pharmaceuticals
(3) Public utilities
(4) Oil and natural gas producers and pipelines
All of these companies are involved in products and services that everyone wants and needs every day. A few might go bankrupt, but they come back. These are called "defensive stocks" It's best to hold onto them for many years.
You have a lot of learning to do. The "boss" of facebook has not lost money, the stock has done okay since it's initial sale. When you buy stock, it is important to do research into the company. If you do your homework there is still risk of losing a lot but it is very low compared to the potential rewards. You don't lose "your shares" - somewhere I still own 300 shares of some defunct company that I bought stock in years ago, but the paper is worthless.
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You lose value, or if the company is completely gone, you lose them all.
There are far safer investments out there but with all the lobbying that has been done to misinform people, that's what most people know...the stock market.
The markets never completely shut down...eventually they come back...you only lose money when you sell at a loss.
If the stock market crashes do you loose all our shares?
For example the boss of facebook had millions of shares so how come he has not lost everything?
