If everyone is selling in a bear market, does your broker have to buy your shares from you?

jester112358 answered one year ago …

f everyone is really selling then there is no market and you'll just have to hold your pieces of paper marked "stock" until someone will trade their pieces of paper called "dollars" for them. This situation of no buyers in a market for securities is called a liquidity crisis since no paper asset is really guaranteed to be marketable. This is why everyone is so freaked out about investment banks and banks which hold hundreds of billions in not trillions of dollars of CDOs and SIVS and CDS (all just pieces of paper like your stock, don't worry about what they represent, the bankers certainly didn't when they bought them) for which there is no market. Its like an auction was held and no bidders showed up (this is actually what has been happening in the bond market lately) So, the Fed, read US taxpayers, has recently become the market maker of last resort. We all just trust that a market will exist when we want to sell something, real estate, gold, equities, etc. By the way, this is also true of money market funds which are mostly backed by short term "high quality" corporate debt. Many rating agencies once rated CDOs backed by mortgages as "high quality" too, so "high quality" is in the eye of the beholder.

Sort of scary isn't it? Just like a house of cards which stands up only because we believe it will stand up. So, keep believing investors! If you don't believe then only hold hard assets, such as heating oil, gasoline, food, guns and ammo etc. And by hold I mean store them in your garage with a loaded gun nearby!