5 ms·

This applies to every market cap? If every Apple stock holder would try to sell it today, the market cap would plummet.

whatshisface 6y ago
>If every Apple stock holder would try to sell it today, the market cap would plummet. This is often repeated but not necessarily true. I don't own a particularly large amount of Apple stock, but if the price dropped even a little bit, and if I knew the drop was due to nothing more than this weird thing where everyone was selling for some reason, I might decide to own more. If aliens sent out a mind control signal that caused every Apple shareholder to start selling, the buyers (whoever they were, maybe the aliens? ;) ) would compete with each other to buy. To give you a concrete example, let's say I am the only owner in the world of a flying car. One day, I decide to sell it. 100% of the owners of flying cars have decided to sell, but the price would clearly not drop to zero! The idea that everyone selling implies the price will drop to zero applies to pure Keynesian beauty contests where 100% of the value is in owning something perceived to be valuable. For currencies that is completely true, but for companies that is less true.
- boh 6y ago
  > This is often repeated but not necessarily true. This is always true. It doesn't have to go to zero to qualify as plummeting.
  - whatshisface 6y ago
    I would suggest that my flying car example is one where it's not true. Another example would be intermediate industrial products: everyone who has intermediate chemicals is trying to sell them! Everyone who buys them uses them up as fast as they can, which means that at any given moment, virtually every owner of the intermediate industrial chemical is trying to sell it.
    - boh 6y ago
      The price of stocks decrease if everyone sells them. Your examples are incompatible.
      - abduhl 6y ago
        Well if everyone is selling then nobody is buying and the quoted stock price remains unchanged. See how ridiculous it is to nitpick purely hypothetical situations?
        boh 6y ago
        It's not hypothetical because it happens. Stocks don't operate in low-entropy hypothetical planes of existence, they trade on markets. If your ask has no bids you lower your ask. Sellers will keep lowering it and if there's no bids it will get very near zero in which case the exchange will likely de-list the stock. A hypothetical where you sell one flying car doesn't illustrate a comparable dynamic.
- VRay 6y ago
  That argument could be applied to anything What you're really looking for is the fact that Apple shares have an intrinsic value related to the company's assets and future cash flows. Bitcoin, on the other hand, has an intrinsic value of zero, so it could theoretically plummet all the way to zero. Same goes for some companies' stocks
  - whatshisface 6y ago
    >That argument could be applied to anything Yeah, it could be applied to anything. Its conclusion is true for everything. Prices will not actually go to zero when everyone sells, unless there is no intrinsic value.
Aunche 6y ago
Apple presumably isn't misleading investors, so its market cap is accurate. Valuations are really just numbers based on supply and demand, so if everyone wanted to sell Apple it would be worth nothing.
- mikeyouse 6y ago
  What crypto enthusiasts miss is that owning a share of Apple grants you a right to a portion of their current cash + future profits (net of debt). A Bitcoin grants you nothing but that Bitcoin - that’s what people mean when they say stocks have “intrinsic value”. Apple will never go to zero because they have a boatload of cash and the ability to make more. If there are fewer shareholders, existing ones just get a larger portion of the profits but the market cap will never drop below the current cash - debt.
smsm42 6y ago
It would but unless we're talking about complete economic collapse there's a bottom to it - Apple's real estate, intellectual property, inventory, brand, etc. all cost something. Even if we completely discount all future earnings (which assumes again Apple never earns a cent - doesn't look plausible unless there's total collapse of the industry). This means there would be people that would be willing to buy at that bottom price - of course, the opinions of people at which price is the bottom would differ, but it's unlikely - again, barring full collapse of the economical system - there won't be any. With virtual coins, the bottom is literally zero. It is completely plausible that one day just nobody wants to buy $CRAPCOIN at any price. If for BTC there's probably always be some market (one has to pay the ransomware and buy drugs somehow ;) for novelty coins there's no reason to have any hard bottom, and thus no real downwards limit to "capitalization".
- lupire 6y ago
  Unless you are making a complex hedge investment like options trading, that not interesting. For long holder, the difference between 10x upside and 1000x upside is interesting, but the difference between 0.9x downside and 1.0x downside is not, because you haven't invested literal all your wealth in the asset.
- GoblinSlayer 6y ago
  If you can make more money from shitposting than from apple stock, it doesn't matter that it's technically not zero.

>If every Apple stock holder would try to sell it today, the market cap would plummet. This is often repeated but not necessarily true. I don't own a particularly large amount of Apple stock, but if the price dropped even a little bit, and if I knew the drop was due to nothing more than this weird thing where everyone was selling for some reason, I might decide to own more. If aliens sent out a mind control signal that caused every Apple shareholder to start selling, the buyers (whoever they were, maybe the aliens? ;) ) would compete with each other to buy. To give you a concrete example, let's say I am the only owner in the world of a flying car. One day, I decide to sell it. 100% of the owners of flying cars have decided to sell, but the price would clearly not drop to zero! The idea that everyone selling implies the price will drop to zero applies to pure Keynesian beauty contests where 100% of the value is in owning something perceived to be valuable. For currencies that is completely true, but for companies that is less true.

boh 6y ago
> This is often repeated but not necessarily true. This is always true. It doesn't have to go to zero to qualify as plummeting.
- whatshisface 6y ago
  I would suggest that my flying car example is one where it's not true. Another example would be intermediate industrial products: everyone who has intermediate chemicals is trying to sell them! Everyone who buys them uses them up as fast as they can, which means that at any given moment, virtually every owner of the intermediate industrial chemical is trying to sell it.
  - boh 6y ago
    The price of stocks decrease if everyone sells them. Your examples are incompatible.
    - abduhl 6y ago
      Well if everyone is selling then nobody is buying and the quoted stock price remains unchanged. See how ridiculous it is to nitpick purely hypothetical situations?
      - boh 6y ago
        It's not hypothetical because it happens. Stocks don't operate in low-entropy hypothetical planes of existence, they trade on markets. If your ask has no bids you lower your ask. Sellers will keep lowering it and if there's no bids it will get very near zero in which case the exchange will likely de-list the stock. A hypothetical where you sell one flying car doesn't illustrate a comparable dynamic.
VRay 6y ago
That argument could be applied to anything What you're really looking for is the fact that Apple shares have an intrinsic value related to the company's assets and future cash flows. Bitcoin, on the other hand, has an intrinsic value of zero, so it could theoretically plummet all the way to zero. Same goes for some companies' stocks
- whatshisface 6y ago
  >That argument could be applied to anything Yeah, it could be applied to anything. Its conclusion is true for everything. Prices will not actually go to zero when everyone sells, unless there is no intrinsic value.

Aunche 6y ago

Apple presumably isn't misleading investors, so its market cap is accurate. Valuations are really just numbers based on supply and demand, so if everyone wanted to sell Apple it would be worth nothing.

mikeyouse 6y ago
What crypto enthusiasts miss is that owning a share of Apple grants you a right to a portion of their current cash + future profits (net of debt). A Bitcoin grants you nothing but that Bitcoin - that’s what people mean when they say stocks have “intrinsic value”. Apple will never go to zero because they have a boatload of cash and the ability to make more. If there are fewer shareholders, existing ones just get a larger portion of the profits but the market cap will never drop below the current cash - debt.

smsm42 6y ago

It would but unless we're talking about complete economic collapse there's a bottom to it - Apple's real estate, intellectual property, inventory, brand, etc. all cost something. Even if we completely discount all future earnings (which assumes again Apple never earns a cent - doesn't look plausible unless there's total collapse of the industry). This means there would be people that would be willing to buy at that bottom price - of course, the opinions of people at which price is the bottom would differ, but it's unlikely - again, barring full collapse of the economical system - there won't be any. With virtual coins, the bottom is literally zero. It is completely plausible that one day just nobody wants to buy $CRAPCOIN at any price. If for BTC there's probably always be some market (one has to pay the ransomware and buy drugs somehow ;) for novelty coins there's no reason to have any hard bottom, and thus no real downwards limit to "capitalization".

lupire 6y ago
Unless you are making a complex hedge investment like options trading, that not interesting. For long holder, the difference between 10x upside and 1000x upside is interesting, but the difference between 0.9x downside and 1.0x downside is not, because you haven't invested literal all your wealth in the asset.
GoblinSlayer 6y ago
If you can make more money from shitposting than from apple stock, it doesn't matter that it's technically not zero.