What would it mean if Dow Jones, Nasdaq, and S&P all dropped to $0 per share?

kevin04: What would it mean if Dow Jones, Nasdaq, and S&P all dropped to per share?
I don’t know much of anything about the stock market. All I know is, it appears to be there. But I really don’t understand why it goes up and why it goes down. I assume that it has to do with people buying goods from stores. But I also assume that it has to do with people that buys stock in companies. If people are selling their stock, then it goes down. I also assume that the stock market can be altered by very wealthy people to guide the “stock market” into the direction that they want it to move in.

But anyway, if Dow Jones, Nasdaq, and S&P all went to $ 0 per share; would that mean no one in the world would have money?

Did all stocks during the “Great Depression” drop to $ 0 per share, or did it just go so low that it was considered a gigantic blow to the economy?

Just a few questions I thought up and couldn’t reason out an answer myself.

Answers and Views:

Answer by Ron
There is a theory called Efficient Market Hypothesis. What is means is that prices of securities move depending on various things. First, the weak version – reading charts and trying to time buys and sales can’t trick the efficient market. Second, the semi-strong version – reading charts and using public information to time buys and sales can’t trick the efficient market. Third, the strong version – using inside information to time buys and sales can’t trick the market.

What this means is by the time you would use any information, so will the next guy and the prices would already reflect the available information.

What does this mean? It means that if all investors sold their holdings based on information from either version of the efficient market, they would need someone to sell their holdings to. In other words, the people demanding holdings from the people who are selling, have to buy at some price. They won’t simply be given the stock for free. This keeps the markets from going to $ 0 per share. Also, companies will have value during all this and if they do, their stock is going to be worth something to somebody.

It would take a helluva sell-off to drive the price even close to zero. During the depression, stocks weren’t $ 0 but they were very low. One additional thought, what happened after the depression? We recovered pretty well because of the buying that ensued afterwards. If you invested back then when the prices were low, you would have gotten a bargain and would be one of the rich guys.

Ron, ChFC

Answer by NYC_Since_the_90s
For the S&P to go to $ 0, then the top 500 companies in the US would have to go bankrupt (and even then the S&P would still be worth somethign since it will take away for the stock to go to $ 0 because of short buyers and recovery rates).

Similar for Dow and even more so for Nasdaq. So it that happened then you money would be the least of your worries since it would be worthless and the entire world’s economy would be shutdown.

Answer by jimbobbighouse
just wanted to point out that the Dow Jones, NASDAQ, and S&P are all indices – so they could go to 0 but not really $ 0 per share.

Answer by slavaret2
Socialism.