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The classical wisdom is ${price of stock} is at least somewhat correlated with ${price of company assets} + some speculative modifier for future performance. Th
by lordCarbonFiber 9y ago
The classical wisdom is ${price of stock} is at least somewhat correlated with ${price of company assets} + some speculative modifier for future performance. The cryptocoins only have the latter.
- hnarn 9y agoThat's because cryptocoins are currency and stocks are parts of any kind of enterprise that does something to add value to the material world around us. People seem to have a hard time understanding the difference between "The US Dollar" and "The Kraft Heinz Company".
- jerf 9y agoWe can also see there is a real sense in which market cap matters. There are many cases where companies acquire other companies that are publicly traded in one shot. When that happens, the offer is generally somewhere in the ballpark of the market cap. If someone wanted to acquire "all BitCoin", there isn't an equivalent way to use the "market cap" of BitCoin to mean anything. (If you want to observe that value is thus still relative and that the people making the offer are themselves influenced by the market cap, go nuts. However, if you intend "valuations are relative anyhow" as a selective attack on the realness of stock market caps but then "accidentally" forget to apply the same logic to cryptocurrency market caps, I'll pass.)
- jo909 9y agoI don't think there is much wisdom in factoring in the price of company assets in its stock price. That's just obvious. That's like selling your car vs selling your car with 10.000 dollars in the trunk. Obviously it affects what I'm willing to pay. But the important question is still the worth of the car - which is very complicated to determine objectively and with f.e. classic cars nearly pure speculation.