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This is nonsense. Stock vs flow comparisons occur all the time and no one is confused. How often have you heard things like "Don't buy a house costing more than
by RyanCavanaugh 8y ago
This is nonsense. Stock vs flow comparisons occur all the time and no one is confused. How often have you heard things like "Don't buy a house costing more than 3x your salary" ? No one objects and says it's illogical to compare a fixed cost to a rate of accumulation.
The comparison is straightforward: If a country with a trillion-dollar GDP could put all its useful effort into constructing a company, they'd produce a company like Apple once a year.
Is that some kind of insane conflation? No one thinks it's actually possible for a country to produce a company as an output. It's just a way to describe the approximate order of magnitude of two things - the valuation of a company, and the yearly output of a nation.
- nabla9 8y agoYou are correct, mostly. Stock value comparison to something else than just the nominal valuation is better than writing articles about the $1 trillion dollar valuation that was not first in any meaningful sense. Where you go wrong is saying that no one is confused. Articles writer themselves are often confused or write in confusing way.
- javaun 8y agoThe "3x your salary" is a correct ratio of stock to flow: https://en.wikipedia.org/wiki/Stock_and_flow#Comparing_stocks_and_flows https://en.wikipedia.org/wiki/Stock_and_flow#Comparing_stock... The direct comparison of Apple market cap (stock) to country GDP (flow) is invalid. (EDIT: noting GDP is a flow measure)
- dalbasal 8y agoMaybe I'm being ungenerous, but I think this is purely a know-it-all response to articles, kind of a troll-lite. It's like commenting on sample sizes, for articles reporting on some preliminary study. It's not too different from the other "really important" point this article makes: $1trn is not more remarkable than $999.99bn. Profound. Imagine going to some online Q&A and asking a "piece of string" question: "How much does it cost to film a documentary?" You can bet a shilling that one of the first comments will be "stupid question. It depends." It's easy. It's obvious. It'll get some karma. In person it would be a little power play, because you are correcting/berating. Online, it's a little troll. Even if it isn't trolling, it is a boring tangent. Who cares if the analogy is optimal. BTW (2 tangents and we get back to topic)... This is interesting (to me) "No one think it's actually possible for a country to produce a company as an output." In some senses, they do. That is, companies exist now that did not exist previously. The company itself and stock in that company is a sort of "product." When politicians say they want jobs, economic growth and such... Are they saying the economy should output more companies. There are relationships between revenues, profits and market cap so it'll always be possible to represent it the other way if we want. Still...
- j88439h84 8y agoWhat does piece of string mean?
- RyanCavanaugh 8y agoPeople will ask a question like "How long does it take to plow a field?" and get useless responses like "How long is a piece of string?", the implication being that no satisfactory answer could be given because a specific answer is dependent on factors not known in the question. This is done in lieu of providing a useful order-of-magnitude answer. How long is a piece of string? To be useful, at least a few inches. A common task, sewing a button, needs about 12". Most string in a store is 200 yards long, but this is enough to do many things. String longer than that is very rare.
- zachwood 8y agoVery good summary of an annoyance I have with this place. So many pedantic know-it-alls that can't wait to tell others why they are most definitely obviously completely wrong.