People lost money on paper. The loss turns real when they try to sell their assets.
Prices can drop on very low volumes. All that prices tell us is what someone agreed to buy and sell at a given point in time. Some (most?) sellers are likely selling because they are planning to buy when the price is lower (i.e. they are betting the market will go down) not because they need to use it.
Generally gold is not considered an investment or a hedge against marker instability and most diversified portfolios would not have gold in them.
Yes- if I own the S&P 500 and the S&P 500 goes down then the current value of my investment has gone down.
Disagree on many points, stocks are used as collateral for debt financing, their prices can definitely trigger cascade effects and losses even if not actually sold.
Overreaching arguments that sellers are like selling because they plan to buy when it's lower, no proof and a limited view, in fact in my also overreached argument I would say the opposite, most people just want to put money on an ETF and hold it until retirement, without having to touch it, they sell because something is forcing their hand and they need the liquidity to pay for something else.
Gold is definitely a hedge for inflation and market instability which is why it's had such a big run up these past few months, and they are definitely used in most diversified portfolios, yale fund as an example, (I don't know where you got this notion from)
You just realized pledging claims on paper with multiple degrees of seperation (stocks) for anything with a trigger mechanism, and then banking on it… is a terrible idea?