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You all seem to be intentionally avoiding the fact that facebook has an intrinsic value independent from its market cap. Goldman increased the value of faceboo
by klochner 16y ago
You all seem to be intentionally avoiding the fact that facebook has an intrinsic value independent from its market cap.
Goldman increased the value of facebook stock by 20%. Directly linking market cap to intrinsic value would require the Efficient Market Hypothesis, which I'm pretty sure no one believes anymore.
- danenania 16y agoExactly, this is all I was getting at. Has nothing to do with fraud.
- yummyfajitas 16y agoThen why bring up a company which was overvalued primarily due to fraud? Why not bring up, e.g., Pets.com or AOL?
- danenania 16y agoLook, the parent post stated that if people are willing to buy into a company at a particular valuation, then the company is by definition worth that much to investors. This is false and the Madoff scheme demonstrates it, as would any other ponzi scheme or speculative bubble that has collapsed. If you prefer a different example, write your own post.
- yters 16y agoIn fact fundamental analysis is predicated on the very idea that company value is independent from stock market valuation. How else can Warren Buffett make so much money investing in undervalued companies if their value is identical to valuation?