Monday, November 10, 2008

DJIA = Zero?

Watching the American stock market drift further and further down brings up and interesting question: What happens if a major market indicator - for example the Dow Jones Industrial Average - drops down to zero?

Would that mean that buyers would offer to take stock for free? That owners/sellers would offer to give away stock they own for free? That the companies in the index would now be worth nothing?

We recently purchased a food stock that had dropped sufficiently low to get our attention; we had been following it for a long time and people have to eat. But why are the sellers selling? The company is still a good one. Some market pundits have suggested that sellers are panicking. The only reason I can come up with is the sellers owe money - such as a mortgage payment - and have to sell stock to pay their bills

1 comment:

Kay Dennison said...

I've wondered about that, too. I If we had a big enough disaster I suppose it could drop to a big fat 0.