The best way I can grasp the "where is that trillion dollars now" question, which is surely too simplistic, is: It seems to me that when you buy stocks you are buying paper promises with uncounted intermediaries between you and the promisor. The promise is to grow corporate profits and plow value into the stock with minimal waste and fraud. I think the *bulk* of the value is in perceived future value (herd mentality), with some smaller part being a more objective, verifiable accounting value.

So Uncle D must be right that the money went to those who sold before everyone lost collective confidence in the future. The money still exists, in their hands (with its separate, smaller issues in the promise of the federal government in backing that paper and preserving its value relative to bread and milk.)

It's awfully hard to perceive true value in those promises of future performance in comparison to a few acres of land in Oregon.

With expectations smashed ("history shows you will earn 10% per year!"), and the boomer productive years almost past, it hard to see the confidence in future value resurging for a decade at least.

It's time for me to start buying, since I can wait 10 or 15 years.

I know a guy who sold his home in 2006, and is still waiting to buy again. So I guess he is holding a few hundred thousand dollars of the money that investors in mortgage-backed securities THOUGHT THEY owned.