Clarification of $1.2B Capital "Loss"

From: Roger Nebel (RNebelat_private)
Date: Mon Feb 21 2000 - 13:44:45 PST

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    I resisted pointing this out earlier but it keeps coming back up.  The
study quoted said that "as much as" $1.2B of market capitalization may
be lost.  So-called market cap is not lost business.  Market cap = the
stock price * the number of shares outstanding.  A $10 stock price with
a million shares outstanding = $10m market cap.  So, it was estimated
that total market cap may drop by up to $1.2B because investors would
lose confidence in the Internet economy and sell shares driving the
price down according to the law of supply and demand.  Who loses in this
scenario?  The shareholders and investors do, pension funds, IRAs,
401(k)s, etc.  In other words, you and I.  

--roger

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