Who gets rich when the stock market crashes?

Investors who are net short make money when the market falls.

Selling stock short means borrowing shares you do not own to sell first with the hope of buying back later at a lower price.

You may also own ETFs or funds that increase in value when the market drops.

You may also be short futures or options--both positions that profit when the underlying drops in price.

Market makers do not necessarily profit when the market drops--although when volatility really screams as it has lately, they increase the bid/ask spread dramatically to cover their *sses. If they're net long option premium then they can do well as the market falls.

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Yes, short sellers get rich when the stock market crashes but the total amount of stock sold short is a very small percentage of the outstanding stock. The better answer to your question is that the money lost goes nowhere. It just evaporates into the ether of fallen investments.

A funny thing to think about is that a company might have a billion shares of stock outstanding but the value of all that stock is determined by the last sale on the stock exchange. So if the stock is selling for $100/share the company is worth $100B. If the next sale on the stock exchange is for 100 shares @ $99/share, then the company is now worth $99B and a billion dollars of capitalization has just vanished.

That means that when global stock markets tank, trillions of dollars in wealth is just wiped out. It's not transferred to anybody. It's just obliterated.

The short sellers. A short seller sells a stock that he/she does not own for a certain fixed price. When the price falls because of a stock market crash he/she can buy the stock cheaply and sell it for a good profit.

The Wall Street people who short the stocks

Sometime I think people just do not open their eyes. Why every time when unemployment reports and other reports come out the stocks either go up or down? This is a controlled investment and I really do not see any use of investing into this type of investment I will continue to invest in CDs and continue to add and build by doing my normal savings routine. I work to hard to trust a person with my money and just risk throwing it away. Investment firms charge an annual fee and get rich no matter if you make money or lose money. Think about it nobody in this world care about another person well being, its all about greed and money. God Bless

People who sell short.

Selling short is the process of literally borrowing stock from a broker and selling the stocks to someone else. Then, you buy the stock back for a lower price give the stock back to the broker and pocket the money.

So, for example. If yahoo stock is trading at $1.00 and you think Yahoo stock is going to go down, you initiate a short trade with your broker and borrow 100 shares from them, then you sell the stocks to someone for the market price of $1.00 each for a total of $100. So now, you have extra $100 in your pocket and you own your broker 100 shares.

If the value of the stock goes down like you predicted... you now buy those shares back at the lower price and give the broker his shares back. So if the price goes down to $0.80.. you take that $100 you had in your pocket and buy the stocks for $0.80 a piece for a total of $80, and you give those stocks back to the broker and are left with $20 of profit in your pocket.

The manipulators.

You know them.

They are very rich. The rich becomes richer.

I'm quoting Mark Cuban:

" Cuban wrote on May 9, 2010. "They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It's a platform to be exploited by every technological and intellectual means possible."

So the stock traders exploits Wall Street to derive profit and making more until it crashes.

Who make short position they all are earn big money when market crash.