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> fundamental value Money is a made up thing. From another comment I made: > Why is a Audi "worth" $60K but a VW "worth" $30K? A Porsche "worth" over $100K? W

> fundamental value Money is a made up thing. From another comment I made: > Why is a Audi "worth" $60K but a VW "worth" $30K? A Porsche "worth" over $100K? Why is a Patek Philippe or A. Lange & Söhne Tourbillon watch worth $100K? Why should I pay $300 for one All-Clad pan when for the same price I can get a 10-piece set at Costco? […] > And to go back to my first paragraph: a Porsche is not "worth" $100K to me—because I'm not willing to pay for it, or even for an Audi. But it may be "worth" it to someone else because they are willing to pay for it. * https://news.ycombinator.com/item?id=25935968 https://news.ycombinator.com/item?id=25935968 It's a convenient fiction that allows for a complicated society to run relatively smoothly, but it's a fiction nonetheless when you get down to it (IMHO).

rank0 6y ago
so you're okay with market manipulation? If value isn't real there should be no rules right?
- Judgmentality 6y ago
  I don't think that's what he's saying. I think he's saying it's not manipulation, but simply a bet. If I buy GameStop at $100 believing I can sell it for $120 tomorrow, I am buying that stock honestly believing in its current value so I'm not sure you can call it manipulation any more than another investor hoping to cash in on an expectation that a stock will appreciate. How do you decide whether or not something is manipulation? Everybody invests in stocks expecting them to go up - at what point is it nefarious?
  - rank0 6y ago
    It becomes manipulation when its coordinated. A massive investment forum is blatantly talking about inducing a short squeeze as a collective. This has been advertised non-stop on WSB as some kind of populist uprising for months. All the rhetoric about the little guy sticking it to "the man" is necessary for attracting new buyers and keeping the squeeze alive. In reality, many institutions are also long GME and capitalizing on the squeeze as well. It's a pump-dump...which is illegal.
    - Judgmentality 6y ago
      > It becomes manipulation when its coordinated. Does this mean investment firms are inherently manipulative, since they coordinate investments for their investors? They're doing the same thing - investing in bulk, hoping to catch the rising tide. When big investment firms and famous traders make announcements it affects the stock price too, you know. I'm not trying to be obtuse. I just don't see how you can make an objective distinction. I'd argue you could say everyone investing in TSLA is coordinating a pump-and-dump scheme as that stock is insanely overpriced as well.
      - rank0 6y ago
        Yes I also think firms and famous traders manipulate the market. Yes hedge funds can also be manipulative. There is a clear difference in TSLA. People were not coordinated. They have been investing because they believe the company will grow and the stock will appreciate long term. GME is a bunch of people on reddit saying "guys if we all collectively buy, we can induce a short squeeze and artificially pump the stock price for a short period of time. Pour all your money in and diamond hand so we can get rich together." Then as it hits the mainstream, the smart people will cash out, and the dumb people will stay on the train and lose a ton of money. You really don't see the difference?
        Judgmentality 6y ago
        I don't think any sane person could possibly believe TSLA stock isn't overvalued, and yet people continue to invest and the stock continues to climb. There are multiple forums where people discuss nothing but Tesla, including some focused solely on the stock. Many financial wizards have talked specifically about TSLA and how it is a bad investment, such as David Einhorn, and many of the stockholders have been happy to rally to higher prices because Elon Musk tweets he wants to see a higher number. It seems like both stocks are targets of manipulation to me.
        rank0 6y ago
        You're just being stubborn. TSLA investors are not relying on a short squeeze. You keep conveniently ignoring the short squeeze. The people who got into GME early are relying on marketing this David v Goliath falsehood so that they can jump off early and make a ton of money in a very short period. I suggest you read up on shorting and pump-dumps. TSLA investors believe the company is changing the world and has enormous growth opportunity.
  - stickfigure 6y ago
    > at what point is it nefarious? While I agree with your skepticism of the govt trying to stop "manipulation", what happens when this hits scale? https://en.wikipedia.org/wiki/Albanian_Civil_War https://en.wikipedia.org/wiki/Albanian_Civil_War At some point the music will stop and everyone hodling GME is going to lose their collective shirt. Everyone knows it. You can say "it's simply a bet", and you're right except for the simple part.
- chillacy 6y ago
  I don't see anything in the parent comment that would imply that they were "okay with market manipulation" and "if value isn't real there should be no rules".
  - rank0 6y ago
    He's saying there's no such thing as fundamental value, and as a result, collectively pumping a stock to induce a short squeeze is no different that spotting an undervalued company. Anyone with half a brain should be able to recognize that GME moving from a 900m market cap to a 30b market cap in a few weeks is completely nonsensical.
    - chillacy 6y ago
      I mean, he literally just said that money is a construct, and maybe implied that fundamental value is too, which is sort of a reductive argument, but going from that to "market manipulation" and "there should be no real rules" is a strawman argument.
darawk 6y ago
You know that economists actually have answers to all those questions, right? They're called Veblen goods. https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good You didn't break economics with your "why are luxury goods so expensive even though they're not better" argument, unfortunately.
- yifanl 6y ago
  Defining a namespace for a problem class isn't the same as giving an answer to why the problem class exists.
  - reissbaker 6y ago
    I don't think the point of mentioning Veblen goods was defining a namespace. The point is that this is such well-covered ground in economic theory that there's actually a name for it. The Wikipedia link is presumably a pointer to where you can start reading more answers about these questions (e.g. conspicuous consumption for social status).
- throw0101a 6y ago
  Yes, I am aware of Velben goods (as well as Giffen goods): if you go into my comment history you'll see I actually mentioned them just in the last week. > You didn't break economics with your "why are luxury goods so expensive even though they're not better" argument, unfortunately. I do not see (a) where my claims imply breaking any economics principles, and (b) did not claim they're not better. As someone with an engineering degree I was taught all about trade-offs in design. Different situations may call for a need for different characteristics of a design: one person's situation may call for VW (simple commuting) while another's a Porsche (dealing with a mid-life crisis). My point was that different items, which have different prices, have different value to different people. So to say what something is "worth" can be completely arbitrary, independent of price. Similarly, various people can find the same item "worth" differently, depending on what they value, so each is will to pay a different price: this is what auctions are all about after all. In the case of GME: the people who actually care about the retail company may value it one way, and thus are willing to pay a particular price for each stock; while the people who care about fulfilling their (shorting) option contracts may have a different value and are wilting to pay a different price. What each stock is "worth" is different to each of them.

rank0 6y ago

so you're okay with market manipulation? If value isn't real there should be no rules right?

Judgmentality 6y ago
I don't think that's what he's saying. I think he's saying it's not manipulation, but simply a bet. If I buy GameStop at $100 believing I can sell it for $120 tomorrow, I am buying that stock honestly believing in its current value so I'm not sure you can call it manipulation any more than another investor hoping to cash in on an expectation that a stock will appreciate. How do you decide whether or not something is manipulation? Everybody invests in stocks expecting them to go up - at what point is it nefarious?
- rank0 6y ago
  It becomes manipulation when its coordinated. A massive investment forum is blatantly talking about inducing a short squeeze as a collective. This has been advertised non-stop on WSB as some kind of populist uprising for months. All the rhetoric about the little guy sticking it to "the man" is necessary for attracting new buyers and keeping the squeeze alive. In reality, many institutions are also long GME and capitalizing on the squeeze as well. It's a pump-dump...which is illegal.
  - Judgmentality 6y ago
    > It becomes manipulation when its coordinated. Does this mean investment firms are inherently manipulative, since they coordinate investments for their investors? They're doing the same thing - investing in bulk, hoping to catch the rising tide. When big investment firms and famous traders make announcements it affects the stock price too, you know. I'm not trying to be obtuse. I just don't see how you can make an objective distinction. I'd argue you could say everyone investing in TSLA is coordinating a pump-and-dump scheme as that stock is insanely overpriced as well.
    - rank0 6y ago
      Yes I also think firms and famous traders manipulate the market. Yes hedge funds can also be manipulative. There is a clear difference in TSLA. People were not coordinated. They have been investing because they believe the company will grow and the stock will appreciate long term. GME is a bunch of people on reddit saying "guys if we all collectively buy, we can induce a short squeeze and artificially pump the stock price for a short period of time. Pour all your money in and diamond hand so we can get rich together." Then as it hits the mainstream, the smart people will cash out, and the dumb people will stay on the train and lose a ton of money. You really don't see the difference?
      - Judgmentality 6y ago
        I don't think any sane person could possibly believe TSLA stock isn't overvalued, and yet people continue to invest and the stock continues to climb. There are multiple forums where people discuss nothing but Tesla, including some focused solely on the stock. Many financial wizards have talked specifically about TSLA and how it is a bad investment, such as David Einhorn, and many of the stockholders have been happy to rally to higher prices because Elon Musk tweets he wants to see a higher number. It seems like both stocks are targets of manipulation to me.
        rank0 6y ago
        You're just being stubborn. TSLA investors are not relying on a short squeeze. You keep conveniently ignoring the short squeeze. The people who got into GME early are relying on marketing this David v Goliath falsehood so that they can jump off early and make a ton of money in a very short period. I suggest you read up on shorting and pump-dumps. TSLA investors believe the company is changing the world and has enormous growth opportunity.
- stickfigure 6y ago
  > at what point is it nefarious? While I agree with your skepticism of the govt trying to stop "manipulation", what happens when this hits scale? https://en.wikipedia.org/wiki/Albanian_Civil_War https://en.wikipedia.org/wiki/Albanian_Civil_War At some point the music will stop and everyone hodling GME is going to lose their collective shirt. Everyone knows it. You can say "it's simply a bet", and you're right except for the simple part.
chillacy 6y ago
I don't see anything in the parent comment that would imply that they were "okay with market manipulation" and "if value isn't real there should be no rules".
- rank0 6y ago
  He's saying there's no such thing as fundamental value, and as a result, collectively pumping a stock to induce a short squeeze is no different that spotting an undervalued company. Anyone with half a brain should be able to recognize that GME moving from a 900m market cap to a 30b market cap in a few weeks is completely nonsensical.
  - chillacy 6y ago
    I mean, he literally just said that money is a construct, and maybe implied that fundamental value is too, which is sort of a reductive argument, but going from that to "market manipulation" and "there should be no real rules" is a strawman argument.

darawk 6y ago

You know that economists actually have answers to all those questions, right? They're called Veblen goods. https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good You didn't break economics with your "why are luxury goods so expensive even though they're not better" argument, unfortunately.

yifanl 6y ago
Defining a namespace for a problem class isn't the same as giving an answer to why the problem class exists.
- reissbaker 6y ago
  I don't think the point of mentioning Veblen goods was defining a namespace. The point is that this is such well-covered ground in economic theory that there's actually a name for it. The Wikipedia link is presumably a pointer to where you can start reading more answers about these questions (e.g. conspicuous consumption for social status).
throw0101a 6y ago
Yes, I am aware of Velben goods (as well as Giffen goods): if you go into my comment history you'll see I actually mentioned them just in the last week. > You didn't break economics with your "why are luxury goods so expensive even though they're not better" argument, unfortunately. I do not see (a) where my claims imply breaking any economics principles, and (b) did not claim they're not better. As someone with an engineering degree I was taught all about trade-offs in design. Different situations may call for a need for different characteristics of a design: one person's situation may call for VW (simple commuting) while another's a Porsche (dealing with a mid-life crisis). My point was that different items, which have different prices, have different value to different people. So to say what something is "worth" can be completely arbitrary, independent of price. Similarly, various people can find the same item "worth" differently, depending on what they value, so each is will to pay a different price: this is what auctions are all about after all. In the case of GME: the people who actually care about the retail company may value it one way, and thus are willing to pay a particular price for each stock; while the people who care about fulfilling their (shorting) option contracts may have a different value and are wilting to pay a different price. What each stock is "worth" is different to each of them.