Consider the case of an investor, Alice, willing to invest in fossil fuel stocks, who is currently sitting on $100 cash and looking for a profitable investment.

Consider the case of an investor, Alice, willing to invest in fossil fuel stocks, who is currently sitting on $100 cash and looking for a profitable investment. Last year the fossil fuel company X was trading at $10 / share, largely based on a valuation from discounted cash flows that would be returned to the investor (forecast dividends), giving a net present value of buying and holding the stock of $10 / share assuming that investors require a 10% discount rate when calculating NPV. Suppose this year there is no change in the fundamentals of the company -- the business is exactly the same -- but nearly all investors are not willing to hold shares in X for moral/ethical reasons, so many former investors have sold, and there is reduced demand to buy. So now the quoted market price of one share of X is $1 / share, but the fundamental valuation of X based on forecast future dividends is still $10 / share, still using the same discount rate. Alice can now spend $100 to buy and hold 100 shares in X, which she values as being worth $1000 in net present value due to forecast returns from dividends by holding the stock and never selling it. Suppose Bob is another investor who is willing to invest in fossil fuel stocks, but had invested his $100 into 10 shares of company X at last year's price of $10 / share. This year the quoted market price of Bob's 10 shares is $10 . Bob will incur a 90% loss in capital if he sells at the current market price. But if he refuses to sell and holds, he will still achieve a fair return from dividends of holding the stock. If Bob has spare cash he can, like Alice, buy additional shares of X at the new low price. Further tangents: https://en.m.wikipedia.org/wiki/Mr._Market https://en.m.wikipedia.org/wiki/Mr._Market http://www.efficientfrontier.com/ef/401/fisher.htm http://www.efficientfrontier.com/ef/401/fisher.htm