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one person wants to sell to another person an asset. They agree on a price and then sell it. what’s illogical about that
by tempsy 7y ago
one person wants to sell to another person an asset. They agree on a price and then sell it.
what’s illogical about that
- Dylan16807 7y agoA single transaction isn't what's opaque and illogical, it's the motion of the market. It's extremely chaotic and far too easily influenced by rumors and superstition.
- tempsy 7y agoThat is only true in the short term. Most people shouldn’t be day trading.
- Dylan16807 7y agoIrrational hype about companies can go for years.
- tempsy 7y agoYou can hold index funds. No one is suggesting you have to buy individual stocks. Is Amazon a candidate for “irrational hype”? Or Facebook?
- Dylan16807 7y agoWell I didn't say not to invest. And I'm not going to get into arguments about specific stocks. Past bubbles should give you all the evidence needed.
- falcolas 7y agoThe asset has virtually intrinsic value. It either pays no dividends or pays dividends which would take decades to match the purchase price. The purchase "agreement" is also incredible arcane and nonsensical, as it can take one of a dozen different forms that have little in common with a standard transaction between individuals. For example making money when the asset's price goes down (which also frequently involves psychological manipulation to make the price go down), or a third party purchasing and reselling the asset in the milliseconds between your "agreement" with someone else.
- deanmoriarty 7y ago“Would take decades to match the purchase price”: That’s typically because such stock is on a very good growth trajectory, so you paying a high multiple is part of the risk you are taking. Or, are you genuinely thinking that a business like Facebook should be valued at a 5X multiple just like your small one-person SaaS project would likely be valued if you were to put it on the market? The risk with Facebook is much lower, hence it commands a much higher multiple.