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In finance a '''paper loss''' or '''paper gain''' is a hypothetical loss or gain on an investment. They are important components of the [[Financial Crisis of 2008]]. Paper losses in the U.S. stock market were $8.3 trillion dollars in 2008, as the total value of all shares fell from $20 trillion in Jan. 2008 to $12 trillion in October. Paper losses hit the trillion-dollar level on several days in 2008. The stock markets in outher countries had even worse performances.
In finance a '''paper loss''' or '''paper gain''' is a hypothetical loss or gain on an investment. They are important components of the [[Financial Crisis of 2008]]. Paper losses in the U.S. stock market were $8.3 trillion in 2008, as the total value of all shares fell from $20 trillion in Jan. 2008 to $12 trillion in October. Paper losses hit the trillion-dollar level on several days in 2008. The stock markets in outher countries had even worse performances.
Suppose people bought stock XYZ in 2003 for $1000, watched it go to $1500 in 2008, then drop to $1000 again in 2008. Their "paper loss" is $500 but their real loss is zero since they are back where they started. People who bought at $800 still have made a $200 paper profit. People who bought at $1200, say, have a paper loss of $200. The paper loss or gain becomes real when they finally sell the stock.
Suppose people bought stock XYZ in 2003 for $1000, watched it go to $1500 in 2008, then drop to $1000 again in 2008. Their "paper loss" is $500 but their real loss is zero since they are back where they started. People who bought at $800 still have made a $200 paper profit. People who bought at $1200, say, have a paper loss of $200. The paper loss or gain becomes real when they finally sell the stock.