You buy a car for $20,000. A year later, the Bluebook tells you it's worth $10,000. Who got the $10,000 that you've "lost"?

When your portfolio "dropped" today you didn't gain or lose anything. You still own the same tiny fraction of some company. All that happened is that some guy sold his tiny fraction to some other guy for less than you paid.

Please consider the context of the comment I was replying to. In your example, who "gets" the 10K I lose? No one. A car changing in value is not wealth transfer. A stock going down in value is not wealth transfer.

At least, that's how I understand it. I was curious if the original commenter meant something different.

Yes, you're absolutely right. I didn't realize your question was semi-rhetorical.

that's a poor example. it's called depreciation and is accounted for in the books and taxes, and subsequently market fundamentals

Not of all the value lost is depreciation. A lot of the value is determined by the market. For example, Hondas and Toyotas have better resale than a Ford. The principle is still the same thing basically.

A car is depreciated on the books per standard rules and traditions, generally around 5 years.

Computers are depreciated around 3 years.

The above is true only if a purchase is "capitalized" and classified as an asset. This "depreciation" allows you to deduct a loss per that 3 or 5 years on your taxes, or incrementally decrease your assets on your balance sheet.

If it is not capitalized and classified as an asset, it is an expense. An expense is noted on the income statement and the entire cost is accounted for in that quarter.

I think we're really talking about two different things. You're talking about depreciation as it applies for tax purposes. I'm talking about what's the actual price of a used car. Depreciation tries to make a baseline guess at what rate the value of car will fall, but does not set the actual price of the car in the market.

you're right, we are talking about 2 things, and your approach is more accurate - however. most entities will value an asset based off of a formula, not market price.