4 ms·

That is true of a lot of things. Would diamonds or gold be as valuable if people didn't think it was a store of value?

auggierose 6y ago
You can use diamonds to cut things. As for store of value, nobody sees it as a store of value. If you think it has value, go and buy a large diamond from a jewellery store, and then try to sell it somewhere for the same price.
RC_ITR 6y ago
Diamonds are mostly consumption. Used diamonds always sell for WAY less than new, unless there’s some other factor.
ragnese 6y ago
Right. It's all mass psychology. Gold, the stock market, bitcoin, whatever. It only has value as long as people believe it has value. The caveat of course is that all of the things I listed have SOME more inherent value, but that is NOT the major contributor to their actual trading prices. Gold is not THAT useful. Neither is owning a billionth of a company.
- Grustaf 6y ago
  Obviously this is much less true for gold than for bitcoin, and the value of the stock market is very real. If you own a piece of Apple or the local hot dog stand, you own a piece of something that is continuously producing value for people.
  - Strom 6y ago
    > you own a piece of something that is continuously producing value for people. People will only pay for the next Apple product as long as they believe it provides value to them. It's all the same. Perception is king.
    - Grustaf 6y ago
      Over a billion people use Apple products, it's an extremely solid business. You can't compare that to a speculative bubble. Tulips were also very expensive once.
      - machinebun 6y ago
        True, but when you own a part of Apple you also have to have faith that your shares won't be diluted to nothing via new stock offerings (which numerous companies have done in the past). So while there is intrinsic value in the shares, some of that is still based on faith (if Apple doubled their outstanding shares overnight, the value of yours would go down).
        chii 6y ago
        > you also have to have faith that your shares won't be diluted to nothing via new stock offerings if the existing majority shareholders chose to do this, then it will happen, but otherwise, this can't happen. And i don't see a situation where the existing shareholders would willingly choose to do this dilution for no reason.
        Grustaf 6y ago
        No that is not how it works. In order to double the number of shares they’d need to issue and sell more shares, meaning that they would increase their cash balance, and hence overall value, by 2.5 trillion. So issuing more shares would not change the value of existing shares, at least in the short term. Never mind the fact that the shareholders would have to make this decision, and that Apple has long been doing the exact opposite.
      - Strom 6y ago
        > Over a billion people use Apple products That is not true. There are only 1.5 billion active Apple devices. I myself own 4 of those. Everyone else I know that has an Apple device also has multiple. I'm pretty sure the average Apple customer owns more than 1.5 devices. Thus there can't be over a billion of these people.
  - ragnese 6y ago
    Gold has some industrial uses. Therefore it has some "intrinsic" value. However, I suspect that the VAST majority of today's price of gold comes from the fact that it's used in jewelry (not actually "valuable" unless you also allow my bragging about my bitcoin wallet to count as value) and from "gold bugs" (basically the same as bitcoin "hodlers"). That was my point. Any "real" value in most of these things is dwarfed by social delusion value. Same with AAPL stock. Sure, I can pay ~$130 per share to technically own a fraction of Apple. And what good does that do for me? What's the dividends on AAPL? Will my vote EVER actually influence the company? I could spend $130 on canned beans and rice and likely get far more utility than I'd get from the ACTUAL share of AAPL. On the other hand, I'll probably be able to sell my AAPL share to the next sucker for more than $130. THAT'S the real reason 99.99% of us are invested in the stock market. And, like it or not, bitcoin DOES have uses. It's still a little bit cheaper to send money via bitcoin than via Western Union, AFAIK. It's easy to pay for something online without giving your personal info to PayPal or the person who you are paying. Are those minor conveniences worth $40k? Hell no. But that's also my point. It's all crap.
    - Grustaf 6y ago
      You buy a share in a company because that gives you ownership over a corresponding share of their earnings, in perpetuity, whether they pay dividends or not. In Apple’s case, you’d now have to pay 136 dollars in order to be entitled to 3.7 dollars of their annual earnings, corresponding to a current annual return rate of 2.7%. That’s better than any bank accounts, and it will most likely rise faster than inflation. This is how the stock market works and how people value mature companies.

You can use diamonds to cut things. As for store of value, nobody sees it as a store of value. If you think it has value, go and buy a large diamond from a jewellery store, and then try to sell it somewhere for the same price.

RC_ITR 6y ago

Diamonds are mostly consumption. Used diamonds always sell for WAY less than new, unless there’s some other factor.

ragnese 6y ago

Right. It's all mass psychology. Gold, the stock market, bitcoin, whatever. It only has value as long as people believe it has value. The caveat of course is that all of the things I listed have SOME more inherent value, but that is NOT the major contributor to their actual trading prices. Gold is not THAT useful. Neither is owning a billionth of a company.

Grustaf 6y ago
Obviously this is much less true for gold than for bitcoin, and the value of the stock market is very real. If you own a piece of Apple or the local hot dog stand, you own a piece of something that is continuously producing value for people.
- Strom 6y ago
  > you own a piece of something that is continuously producing value for people. People will only pay for the next Apple product as long as they believe it provides value to them. It's all the same. Perception is king.
  - Grustaf 6y ago
    Over a billion people use Apple products, it's an extremely solid business. You can't compare that to a speculative bubble. Tulips were also very expensive once.
    - machinebun 6y ago
      True, but when you own a part of Apple you also have to have faith that your shares won't be diluted to nothing via new stock offerings (which numerous companies have done in the past). So while there is intrinsic value in the shares, some of that is still based on faith (if Apple doubled their outstanding shares overnight, the value of yours would go down).
      - chii 6y ago
        > you also have to have faith that your shares won't be diluted to nothing via new stock offerings if the existing majority shareholders chose to do this, then it will happen, but otherwise, this can't happen. And i don't see a situation where the existing shareholders would willingly choose to do this dilution for no reason.
      - Grustaf 6y ago
        No that is not how it works. In order to double the number of shares they’d need to issue and sell more shares, meaning that they would increase their cash balance, and hence overall value, by 2.5 trillion. So issuing more shares would not change the value of existing shares, at least in the short term. Never mind the fact that the shareholders would have to make this decision, and that Apple has long been doing the exact opposite.
    - Strom 6y ago
      > Over a billion people use Apple products That is not true. There are only 1.5 billion active Apple devices. I myself own 4 of those. Everyone else I know that has an Apple device also has multiple. I'm pretty sure the average Apple customer owns more than 1.5 devices. Thus there can't be over a billion of these people.
- ragnese 6y ago
  Gold has some industrial uses. Therefore it has some "intrinsic" value. However, I suspect that the VAST majority of today's price of gold comes from the fact that it's used in jewelry (not actually "valuable" unless you also allow my bragging about my bitcoin wallet to count as value) and from "gold bugs" (basically the same as bitcoin "hodlers"). That was my point. Any "real" value in most of these things is dwarfed by social delusion value. Same with AAPL stock. Sure, I can pay ~$130 per share to technically own a fraction of Apple. And what good does that do for me? What's the dividends on AAPL? Will my vote EVER actually influence the company? I could spend $130 on canned beans and rice and likely get far more utility than I'd get from the ACTUAL share of AAPL. On the other hand, I'll probably be able to sell my AAPL share to the next sucker for more than $130. THAT'S the real reason 99.99% of us are invested in the stock market. And, like it or not, bitcoin DOES have uses. It's still a little bit cheaper to send money via bitcoin than via Western Union, AFAIK. It's easy to pay for something online without giving your personal info to PayPal or the person who you are paying. Are those minor conveniences worth $40k? Hell no. But that's also my point. It's all crap.
  - Grustaf 6y ago
    You buy a share in a company because that gives you ownership over a corresponding share of their earnings, in perpetuity, whether they pay dividends or not. In Apple’s case, you’d now have to pay 136 dollars in order to be entitled to 3.7 dollars of their annual earnings, corresponding to a current annual return rate of 2.7%. That’s better than any bank accounts, and it will most likely rise faster than inflation. This is how the stock market works and how people value mature companies.