>There is some difference between 'stock price', 'stock value' and 'company value'. I feel that the root of your problem is that your imagination mixes them together. Stock price, that's where you started, is basically the same thing as any other price, i.e. you have buyers and sellers bargaining about the price. When they get into agreement, you have the price. Stock value is more long-term idea, i.e. some 'average' number around which stock price may ocsillate for long time, it includes elements of prognostication in regard to both company and general economy future performance. Company value is something derived and measured in accounting terms, i.e. assets and liabilities,as it stands now.

OK, but the paradox that I am targeting is that this calculated company value is, for companies whose shares are on the market, and which own lots of shares of other companies, the worth of this shares is expressed in the latest price. Now all the shares of one company change value just because some of them were sold today; therefore the value of each company holding such shares as assets also changes. That's how the production cost is calculated in some models, by the last price of the material, assuming that it brings the correction for inflation and that buying the same material at some previous price is pretty much out of the question. In some other models, everything is calculated in terms of monthly average cost price, in yet some others by average at the moment.

IMO, there's a lot of imaginary value tossed around. What happens to all those billions when Dow Jones falls from 14000 to 8000? They go to die, or they are now not imagined anymore, like a deity which ceases to exist when it loses believers? Or was some real value destroyed so the money had to evaporate to follow the change?

If all this volatile value is just selling future... then, know what, anyone who buys something they aren't quite sure how it works without taking economy 101 through 401, they do deserve that their real money goes the way of extinct imaginary money.

>Hopefully, you understand that I had to simplify all three notions. It would be naive to assume that all human knowledge in regard to these complicated matters could be squeezed in one short message.

Sellers do that all the time. Their buyers have just enough knowledge to know what they're buying, no matter how complicated those financial instruments are, right? ;)