For this example we will substitute a house for shares:
Say your house is worth $500K you owe $200 so quite conservative borrowing.
The weather report says cyclone coming towards your house.
Your insurance comapny calls you and says sorry you are not nsured agaisnt cyclone. By the time this happens your house is now valued at $300k, because of the approach of the cyclone.
Do you sell? os stay?
The cyclone gets closer , now someone says they will give you $250k, if you sell you can pay your loan but the value has halved. Do you sell or stay?
The cyclone is still heading your way now the offer is down to $180K. If you sell you still owe $20k , if the cyclone misses the value will be restored.
Do you sell or stay?
Finally the bank says as your house is only worth $180 at the moment we are going to sell it to guarantee at least something, if the cyclone hits we get nothing.
You have no choice its made for you.
The cyclone bypasses your area ,and in a few months you see your house (that was sold for $180k fore sale at $325K
in 2 years the same house sells for $500k and you still are paying off your 20k loan to the bank. A simple analogy but one many sharholders are facing as a reality
