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What investment is not a Ponzi scheme? Real estate and stocks rely on a greater fool that was later to the party to come buy them at a later date. Stocks have

What investment is not a Ponzi scheme? Real estate and stocks rely on a greater fool that was later to the party to come buy them at a later date. Stocks have appreciated in value so far past what they are worth for a dividend that we have had to give up that charade long ago. From the wiki for Ponzi scheme- > The scheme leads victims to believe that profits are coming from legitimate business activity (e.g. product sales and/or successful investments), and they remain unaware that other investors are the source of funds. TSLA has a P/E of 1,181 right now. Peloton is 1,660. Amazon is even 80. How is it any different right now?

walleeee 6y ago
Yes, and it's not only stock market misvaluation. Perpetual growth economics itself functions like a Ponzi scheme insofar as it renders the planet more challenging for future humans to live on.
Retric 6y ago
Stocks have dividends, loans have interest, land has either rents or utility from using it. It’s that income stream beyond the initial capital that turns something into an investment. Bitcoin lacks that, it only has money from new investors and it loses money from mining. Which means without new investment it’s value must crash which creates incentives for people that own Bitcoin to convince others to buy Bitcoin. The only way to argue Bitcoin has long term value is it must provide inherent utility like land. Increasing the number of transactions per second would be one way to demonstrate that value, but talking about future value doesn’t.
- gruez 6y ago
  >Stocks have dividends when was the last time TSLA paid out a dividend?
  - Retric 6y ago
    Growth is optimizing for future dividends. If you know a stock will never issue a dividend, buyback, etc the it’s value is 0. That’s why people talk about future cash flows.
  - JohnJamesRambo 6y ago
    Not only that but companies keep buying back their own stock to make the price go higher. If this isn’t Ponzi I don’t know what is. The companies realized they don’t even have to wait for an investor to pump the price they can just do it themselves. Spend the money that should have been spent on keeping planes from falling out of the sky on the stock. Genius! Goodhardt’s Law in full effect. >Boeing, which has been struggling for the past year with the safety of its 737 Max jet, has spent over $43 billion buying back stock over the past decade. The six airlines—Southwest Airlines, Alaska Air, Delta Airlines, United Airlines, American Airlines and JetBlue—have spent about $47 billion over the same period. https://www.newsweek.com/boeing-airlines-under-fire-90-billion-share-buybacks-stoke-controversy-bailout-pleas-least-1493934 https://www.newsweek.com/boeing-airlines-under-fire-90-billi...
    - Retric 6y ago
      I think you’re misunderstanding what a buyback does, it returns value to shareholders. If you own X% of a company and it buys back 20% of it’s shares, congratulations you now own 1.25X% of the company. If you don’t want 1.25% of the company sell 1/5th and it’s equivalent to a dividend. Alternatively, if it does this for long enough without you selling then you end up owning 100% of the company and the next buyback is again equivalent to a dividend.
      - JohnJamesRambo 6y ago
        Think about what you wrote more and then come back later.
        deleted 6y ago
        [deleted]
        salawat 6y ago
        Never rely on those stuck on the financial abstraction to dig themselves out. Economics has a way of rotting the connection between real life and price movement. The point is that the company is pumping share price, not through actually creating value, but by tweaking but by engineering scarcity, and othogonal to the corporation's reason to exist. GP is conflating the end to which buybacks are a means with the actual goal of what Boeing was colloquially for; baking safe airplanes. This more pervasive than anyone in the business world wishes to admit.
- nly 6y ago
  Something is valuable if you'd be more than happy to own it even if you, or your heirs, could never sell or exchange it. Currencies aren't inherently valuable, but a measure of value and a medium of exchange. If you couldn't buy things, or settle your debts (taxes), with US dollars tomorrow they'd be worthless. Something that is valuable, and is either subjectively or objectively going to become more valuable, is an investment. You can make a case for almost anything being an investment, since value can be subjective and speculation is rife
  - Retric 6y ago
    Utility covers a lot of stuff, a painting you enjoy looking at or water that you drink etc. As you point out USD has built in utility and thus demand because the IRS doesn’t accept potatoes. The issue is crypto currency is a digital asset so you need a buyer to do anything with it. That buyer could be a 3rd party uninvolved in the transaction, but someone needs to hold it after the sale even if it’s just to look for the next buyer.
dghlsakjg 6y ago
You cite real estate and stocks: You can buy real estate and generate returns by renting it out. A smart real estate investment can generate money for y you regardless if its market value. Stocks are the same: they represent a real piece of a company. If the company doesn’t issue dividends, the value is retained in the price of the stock. Warren Buffet almost never sells stock, his whole strategy is to hold forever. Stocks and real estate are zero sum in the short term. In the long term, they are not
- neop1x 6y ago
  >> A smart real estate investment can generate money for y you regardless if its market value. Unless it loses 50%+ of value suddenly. Then it may take you 10+ years to return back to profit. >> If the company doesn’t issue dividends, the value is retained in the price of the stock. Unless your company go bankrupt. You may lose the whole investment.
  - dghlsakjg 6y ago
    >> Unless it loses 50%+ of value suddenly. Then it may take you 10+ years to return back to profit. You didn't understand what I said. It doesn't matter about short term fluctuations of market value. If you are pulling in rent (or not paying rent because you are using the house) then it doesn't matter what the market price is right this minute. Flipping assets in a hot market is a zero sum game, and is more akin to gambling than capitalism. Traditionally capital generates profit by producing real value, in this case by providing shelter to you, or to someone paying you. Ownership of a company is the same thing (that's what a stock is). It produces value or provides a service. This is a thread about bitcoin. Which is a virtual (read intangible), currency whose value is determined entirely by other people's belief that it is worth something. It can't be used for anything except as an incredibly unstable store of value. It can't provide shelter, people won't give you real value to temporarily hold it. Bitcoin as an algorithm is unkillable. As an investment it is, very, very fragile.
almost_usual 6y ago
You can’t live inside a Bitcoin.

walleeee 6y ago

Yes, and it's not only stock market misvaluation. Perpetual growth economics itself functions like a Ponzi scheme insofar as it renders the planet more challenging for future humans to live on.

Retric 6y ago

Stocks have dividends, loans have interest, land has either rents or utility from using it. It’s that income stream beyond the initial capital that turns something into an investment. Bitcoin lacks that, it only has money from new investors and it loses money from mining. Which means without new investment it’s value must crash which creates incentives for people that own Bitcoin to convince others to buy Bitcoin. The only way to argue Bitcoin has long term value is it must provide inherent utility like land. Increasing the number of transactions per second would be one way to demonstrate that value, but talking about future value doesn’t.

gruez 6y ago
>Stocks have dividends when was the last time TSLA paid out a dividend?
- Retric 6y ago
  Growth is optimizing for future dividends. If you know a stock will never issue a dividend, buyback, etc the it’s value is 0. That’s why people talk about future cash flows.
- JohnJamesRambo 6y ago
  Not only that but companies keep buying back their own stock to make the price go higher. If this isn’t Ponzi I don’t know what is. The companies realized they don’t even have to wait for an investor to pump the price they can just do it themselves. Spend the money that should have been spent on keeping planes from falling out of the sky on the stock. Genius! Goodhardt’s Law in full effect. >Boeing, which has been struggling for the past year with the safety of its 737 Max jet, has spent over $43 billion buying back stock over the past decade. The six airlines—Southwest Airlines, Alaska Air, Delta Airlines, United Airlines, American Airlines and JetBlue—have spent about $47 billion over the same period. https://www.newsweek.com/boeing-airlines-under-fire-90-billion-share-buybacks-stoke-controversy-bailout-pleas-least-1493934 https://www.newsweek.com/boeing-airlines-under-fire-90-billi...
  - Retric 6y ago
    I think you’re misunderstanding what a buyback does, it returns value to shareholders. If you own X% of a company and it buys back 20% of it’s shares, congratulations you now own 1.25X% of the company. If you don’t want 1.25% of the company sell 1/5th and it’s equivalent to a dividend. Alternatively, if it does this for long enough without you selling then you end up owning 100% of the company and the next buyback is again equivalent to a dividend.
    - JohnJamesRambo 6y ago
      Think about what you wrote more and then come back later.
      - deleted 6y ago
        [deleted]
      - salawat 6y ago
        Never rely on those stuck on the financial abstraction to dig themselves out. Economics has a way of rotting the connection between real life and price movement. The point is that the company is pumping share price, not through actually creating value, but by tweaking but by engineering scarcity, and othogonal to the corporation's reason to exist. GP is conflating the end to which buybacks are a means with the actual goal of what Boeing was colloquially for; baking safe airplanes. This more pervasive than anyone in the business world wishes to admit.
nly 6y ago
Something is valuable if you'd be more than happy to own it even if you, or your heirs, could never sell or exchange it. Currencies aren't inherently valuable, but a measure of value and a medium of exchange. If you couldn't buy things, or settle your debts (taxes), with US dollars tomorrow they'd be worthless. Something that is valuable, and is either subjectively or objectively going to become more valuable, is an investment. You can make a case for almost anything being an investment, since value can be subjective and speculation is rife
- Retric 6y ago
  Utility covers a lot of stuff, a painting you enjoy looking at or water that you drink etc. As you point out USD has built in utility and thus demand because the IRS doesn’t accept potatoes. The issue is crypto currency is a digital asset so you need a buyer to do anything with it. That buyer could be a 3rd party uninvolved in the transaction, but someone needs to hold it after the sale even if it’s just to look for the next buyer.

dghlsakjg 6y ago

You cite real estate and stocks: You can buy real estate and generate returns by renting it out. A smart real estate investment can generate money for y you regardless if its market value. Stocks are the same: they represent a real piece of a company. If the company doesn’t issue dividends, the value is retained in the price of the stock. Warren Buffet almost never sells stock, his whole strategy is to hold forever. Stocks and real estate are zero sum in the short term. In the long term, they are not

neop1x 6y ago
>> A smart real estate investment can generate money for y you regardless if its market value. Unless it loses 50%+ of value suddenly. Then it may take you 10+ years to return back to profit. >> If the company doesn’t issue dividends, the value is retained in the price of the stock. Unless your company go bankrupt. You may lose the whole investment.
- dghlsakjg 6y ago
  >> Unless it loses 50%+ of value suddenly. Then it may take you 10+ years to return back to profit. You didn't understand what I said. It doesn't matter about short term fluctuations of market value. If you are pulling in rent (or not paying rent because you are using the house) then it doesn't matter what the market price is right this minute. Flipping assets in a hot market is a zero sum game, and is more akin to gambling than capitalism. Traditionally capital generates profit by producing real value, in this case by providing shelter to you, or to someone paying you. Ownership of a company is the same thing (that's what a stock is). It produces value or provides a service. This is a thread about bitcoin. Which is a virtual (read intangible), currency whose value is determined entirely by other people's belief that it is worth something. It can't be used for anything except as an incredibly unstable store of value. It can't provide shelter, people won't give you real value to temporarily hold it. Bitcoin as an algorithm is unkillable. As an investment it is, very, very fragile.

almost_usual 6y ago

You can’t live inside a Bitcoin.