(07-13-2011, 06:43 AM)velvetfog Wrote:are you serious? if your equity in something drops so does your collateral, you have less of it to offset borrowing.(07-13-2011, 05:32 AM)billy Wrote: as of now he's lost about 17 percent of his share price which is billions.Share prices go up and down all the time.
How do you know that Murdoch has lost any money over this?
Did he actually sell any of his personal stock holdings when the share price dropped?
To lose money in a stock, you have to buy high and sell low.
On days when you are not trading any shares, that day's market price of those shares is not relevant to you.
It is the same with housing. If the average price of a home dropped, say, 20% in the community where you live, but you are staying put and not moving this year, neither buying or selling any real estate, then no one can say that you have lost 20% on your home.
it's why hundreds of thousands lost their homes. banks lied as to how much they were worth in order to offload mortgages.
he's closed down the biggest selling newspaper in the english speaking world. the bskyb take over has all but failed, so he'll lose any profit he would have made there.
if what you say is indeed true, then why are what shares he owns counted toward his wealth, like everything else we own shares are valued at a given price. do you think people jumped out of windows because it didn't matter that their stocks had fallen during the 22 crash?
if you borrow against stock value and it falls you can be asked to produce other collateral or the debt can be called. this fact is often ipso facto in any contract of debt concerning shares. again it's one of the reason banks and others went belly up when the truth was known, their shares fell and they had to borrow tens of billions to pay creditors. Chrysler shares fell so far it would have gone under had it not been bailed out. to say a share that falls is not relevant to those who hold on to theirs is a preposterous statement. to say a mortgages that falls 20% means nothing if the person doesn't sell is just as preposterous, specially if they wish to use it to get a 2nd mortgage as many do.
i can guarantee you that the money murdoch wanted to borrow would have had to have been based on the strength/wealth of his company. that it fell 17% in a week will scare a lot of investors off, that BSkyB shares also fell will make those shareholders more likely to hold on to their shares and demand a higher price when selling.
ergo he'll have to put up more collateral for the loan in the form (most likely) of extra shares. shares by the way are a form of currency.
what you said also intimates that if you have a dollar you got when it was worth 2 pound, dosent matter if you still own a dollar when it only worth 1 pound 50 pence. both stocks and currency are worth what the market says they're worth and as such have an intrinsic value