What would happen, hyperthetically speaking, if any of the indices ended up at 0?
I have to admit I don’t quite understand the stock market, in order to sell something, you have to have a buyer, if there’s no buyer, you are still stuck with your shares, except they are now worth nothing. Correct?
Stock prices are quoted on the basis of the last sale made, so you are never going to see a published price of zero even if the stock is for all practical purposes unmarketable. Once trading activity in a stock falls below a certain level, indicating a lack of marketability, the exchanges will freeze the stock and de-list the company from the exchange. This is probably why GM and Ford are still listed but those are two very strange and distorted situations. Under any sane financial analysis, shares in GM and Ford are worthless. Really bizarre. I’m guessing the institutions that own the shares sort of swap them back and forth so they won’t have to write down their portfolios.
The indexes are priced based on a basket of individual stocks, and they are given different “weights” in determining the index price. They are generally the market leaders and short of the Apocalypse, it is practically impossible for shares in the companies that make up the index to be worth zero dollars.
They should always be worth a small percentage of the underlying capital assets of the company if any were to be left over after a liquidation.
Even after Enron’s implosion they sent me a check for $0.04 or something crazy like that IIRC.
They can’t fall below zero since investors are only liable for the amount they invested and no more unless in cases of illegal activities.