5 ms·

The stock market is zero sum as well... When one person wins, another loses. Are people buying Google, Facebook and Amazon stock suckers as well?

Animats 6y ago
Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.
- tcoff91 6y ago
  More and more companies are moving away from dividends to buy backs so for many stocks you have to sell to realize profits.
  - Animats 6y ago
    Yes, because stock buybacks reward management with options. Dividends do not. Many countries don't allow a company to buy its own stock.
    - tcoff91 6y ago
      Stock buybacks are more tax advantageous to investors than dividends. The price goes up and you sell some shares and pay long term capital gains if you’ve held for more than a year. This is cheaper than paying income tax on dividends.
- Galanwe 6y ago
  > The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.
  - Animats 6y ago
    After a while, reality comes back to bite you.
  - georgeecollins 6y ago
    >> That is an idea from the 70s. No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. You can value a stock however you like. Good luck, I wish you well.
    - Galanwe 6y ago
      > No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. It really depends on what level of formalism you consider to be the basis of "the idea". I'm referring to the "dividend discount model" (DDM) here, which to me is the first real well defined model of this idea in modern economy. Exposed in early 60s and democratized in the 70s: "The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value."
petters 6y ago
The stock market is certainly not zero sum. Bitcoin provides very little value outside speculation, not zero, but very little. That is the difference.
- tcoff91 6y ago
  Crypto provides global access to a decentralized, permissionless, censorship resistant financial system. Bitcoin provides a savings vehicle that has a completely predictable and transparent supply. That's very valuable.
  - andresp 6y ago
    Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure...
    - throwaway3699 6y ago
      It doesn't matter if there's some instability, as long as it's not a downward trend. > Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure... Bitcoin could conceivably become the next global reserve currency, 50k USD is horribly undervalued from that PoV.
    - repartix 6y ago
      I applaud you for asking good questions. > Why do you care so much about predictable supply if the price is anything but predictable? Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable. > How is such high volatility commodity a good storage of value? It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitcoin. Volatility is a sign of disruption as much as it is a sign of value. > 1 BTC > 50k USD... Yeah, sure... If only you could see the data I'm seeing.
np- 6y ago
Well, no comment on if they're suckers or not, but I think this is a misunderstanding of what a share in a company is. With a share, you own something with actual tangential value, i.e. claim on dividends/voting rights/cash flow/etc. Plus the company itself can actually go and do valuable things and make money - Apple can go and sell a bunch of iPhones and make a ton of money, and then reward their investors through dividends, buybacks, etc. That's not zero sum, there was something of value created and provided to the world. I do understand that in reality many people play the stock market like it's a casino, but that doesn't change the fact that it's still fundamentally different.

Animats 6y ago

Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.

tcoff91 6y ago
More and more companies are moving away from dividends to buy backs so for many stocks you have to sell to realize profits.
- Animats 6y ago
  Yes, because stock buybacks reward management with options. Dividends do not. Many countries don't allow a company to buy its own stock.
  - tcoff91 6y ago
    Stock buybacks are more tax advantageous to investors than dividends. The price goes up and you sell some shares and pay long term capital gains if you’ve held for more than a year. This is cheaper than paying income tax on dividends.
Galanwe 6y ago
> The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.
- Animats 6y ago
  After a while, reality comes back to bite you.
- georgeecollins 6y ago
  >> That is an idea from the 70s. No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. You can value a stock however you like. Good luck, I wish you well.
  - Galanwe 6y ago
    > No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that. It really depends on what level of formalism you consider to be the basis of "the idea". I'm referring to the "dividend discount model" (DDM) here, which to me is the first real well defined model of this idea in modern economy. Exposed in early 60s and democratized in the 70s: "The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value."

petters 6y ago

The stock market is certainly not zero sum. Bitcoin provides very little value outside speculation, not zero, but very little. That is the difference.

tcoff91 6y ago
Crypto provides global access to a decentralized, permissionless, censorship resistant financial system. Bitcoin provides a savings vehicle that has a completely predictable and transparent supply. That's very valuable.
- andresp 6y ago
  Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure...
  - throwaway3699 6y ago
    It doesn't matter if there's some instability, as long as it's not a downward trend. > Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure... Bitcoin could conceivably become the next global reserve currency, 50k USD is horribly undervalued from that PoV.
  - repartix 6y ago
    I applaud you for asking good questions. > Why do you care so much about predictable supply if the price is anything but predictable? Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable. > How is such high volatility commodity a good storage of value? It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitcoin. Volatility is a sign of disruption as much as it is a sign of value. > 1 BTC > 50k USD... Yeah, sure... If only you could see the data I'm seeing.

np- 6y ago

Well, no comment on if they're suckers or not, but I think this is a misunderstanding of what a share in a company is. With a share, you own something with actual tangential value, i.e. claim on dividends/voting rights/cash flow/etc. Plus the company itself can actually go and do valuable things and make money - Apple can go and sell a bunch of iPhones and make a ton of money, and then reward their investors through dividends, buybacks, etc. That's not zero sum, there was something of value created and provided to the world. I do understand that in reality many people play the stock market like it's a casino, but that doesn't change the fact that it's still fundamentally different.