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It means the stock is over-priced. In a rational world the investment decisions would be trivial.

by dexterdog 7y ago

colejohnson66 7y ago
It’s not overpriced if people are willing to trade it for that amount
- Supermancho 7y ago
  Context, specifically regarding time windows, matters. A panicked starving man will pay everything he has for eggs. That doesn't mean your chickens are worth a fortune. Right now, Netflix is a ubiquitously recognized and used service. This is an unusual circumstance.
- dexterdog 7y ago
  That was my point. People are not rational.
xnyan 7y ago
I’m not saying you’re necessarily wrong but one way of thinking about it is like this: People buy shares not because they think netflix is worth more than disney, they buy shares because they think that the shares will go up in value. It’t not really a question of which company has more assists, but rather who can offer me more gain in a certain time window. I think you can absolutely make argument that Netflix is overvalued, but I think it’s certainly not crazy to bet that you make more money off Netflix vs Disney in the short/medium term.
- chii 7y ago
  > it’s certainly not crazy to bet that you make more money off Netflix vs Disney when the price of a share is high vs its earnings, there's actually low chance of making money. Buying it when it's already high actually leads to a loss of money when the earnings expectations don't eventuate. One would need to have purchased NFLX during it's hayday years, when nobody expected it to be as big as it is today, and sell today when it's trading at high P/E ratios, to make a hefty profit. Disney, on the other hand, is a distressed company. It's price is much lower than the assets it holds, and the operations it normally conducts. This means buying disney right now is taking on a high risk, but this risk comes with rewards, when disney resumes its business (in a year or so i presume). So if you're a risk taker, disney is a better buy than NFLX, and i would dare say, you'd earn much more with DIS than NFLX will ever return to you.
ramblerman 7y ago
> In a rational world the investment decisions would be trivial. This is like those poker players complaining their elaborate strategy didn't work because the opponent was too stupid.

It means the stock is over-priced. In a rational world the investment decisions would be trivial.

colejohnson66 7y ago

It’s not overpriced if people are willing to trade it for that amount

Supermancho 7y ago
Context, specifically regarding time windows, matters. A panicked starving man will pay everything he has for eggs. That doesn't mean your chickens are worth a fortune. Right now, Netflix is a ubiquitously recognized and used service. This is an unusual circumstance.
dexterdog 7y ago
That was my point. People are not rational.

xnyan 7y ago

I’m not saying you’re necessarily wrong but one way of thinking about it is like this: People buy shares not because they think netflix is worth more than disney, they buy shares because they think that the shares will go up in value. It’t not really a question of which company has more assists, but rather who can offer me more gain in a certain time window. I think you can absolutely make argument that Netflix is overvalued, but I think it’s certainly not crazy to bet that you make more money off Netflix vs Disney in the short/medium term.

chii 7y ago
> it’s certainly not crazy to bet that you make more money off Netflix vs Disney when the price of a share is high vs its earnings, there's actually low chance of making money. Buying it when it's already high actually leads to a loss of money when the earnings expectations don't eventuate. One would need to have purchased NFLX during it's hayday years, when nobody expected it to be as big as it is today, and sell today when it's trading at high P/E ratios, to make a hefty profit. Disney, on the other hand, is a distressed company. It's price is much lower than the assets it holds, and the operations it normally conducts. This means buying disney right now is taking on a high risk, but this risk comes with rewards, when disney resumes its business (in a year or so i presume). So if you're a risk taker, disney is a better buy than NFLX, and i would dare say, you'd earn much more with DIS than NFLX will ever return to you.

ramblerman 7y ago

> In a rational world the investment decisions would be trivial. This is like those poker players complaining their elaborate strategy didn't work because the opponent was too stupid.