[mgh2]

I think my question was a bit misunderstood (downvotes): it has two parts, the fed and the rich.

1. The Fed: Thank you for providing resources to answer the 1st part of the question.

2. The rich: For the people who sold off stocks or real state at its peak, where are they going to park that cash next, if not speculative assets?

[civilized]

We're talking about marginal changes here. I think plenty of people are still happy to have their money in these speculative assets.

Those taking the money out may have liquidity needs elsewhere due to expected Fed actions, or may have lost confidence that the asset will appreciate at the rate needed to justify the investment at higher interest rates.

Just my speculation. It's interesting to think about!

[mgh2]

> plenty of people are still happy to have their money in these speculative assets

Are you sure? All the stocks that got bumped during covid are now down/or on their way to pre-pandemic levels. Even FAANGs that were supposed to fuel the stay at home trend: Amazon, Netflix (-20%). Crypto might be next...

Somebody is making a killing, where will that gain go next?

[civilized]

I sort of get what you mean, but I'm not sure if it makes sense. If I have some FB stock and sell it to you for $303.17 (price as of this moment), I gain $303.17 and you lose $303.17, and a stock changes hands. Is there more money from this transaction that needs to be parked somewhere?

There's only "more money" if you look at one side, and only one side, as "the savvy speculator" who is always looking for a new place to park the money.

[mgh2]

The people who move stock prices significantly are usually the ones doing it by volume - i.e. institutional investors (ex: Cathy Wood). Retail investors are a recent phenomenon when in aggregate.

The question still remains, where are they going to park these profits?

[civilized]

I still don't think that a stock price going down means there is excess money in the economy that needs to be parked somewhere. Someone has more money and someone has less.

This is still true when we're talking about institutions. Some institutions profit and others lose. Cathy Wood's record is far from perfect and she is losing big time right now.