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Actually this thinking is incorrect, at least for company valuations. You're discussing shares being exchanged for arbitrary random values. In a regulated marke
by kqvamxurcagg 6y ago
Actually this thinking is incorrect, at least for company valuations. You're discussing shares being exchanged for arbitrary random values. In a regulated market prices will always be at the marginal level where buyers and sellers exchange at the equilibrium price.
Market cap is only meaningless if the participants in the market are trading at random prices, which they're not.
To validate this theory, just look at M&A. Companies get bought at close to or above their market capitalisation every day of the week.
- Denvercoder9 6y agoExcept we're not talking about companies, we're talking about currency. Companies have intrinsic value: they own assets, they produce something of value. Currency does not.
- aplummer 6y agoAre you trying to tell me crypto will not deliver internet 2.0
- lupire 6y agoLook at the market cap of a company in bankruptcy. Assets are a tiny fraction of a going concern's market cap. Facebook's main store of value is eyeballs, which can evaporate quickly.
- GoblinSlayer 6y agoNothing prevents you from selling a company for any price, and sometimes there's disagreement about company valuation.
- arthurcolle 6y agoAJRD was just bought by LMT this week for a 25% premium, as one example.
- lupire 6y agoPeople confuse acquisitions with selloffs. The reason an aquisition goes near share recent share price but a selloffs doesn't, is that an aquisition is new information that someone wants the stock, and a selloff is new information that almost no one does.