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In that sense they're not much different. Beanie babies formed a speculative bubble too. One might quibble that the phrase "Ponzi scheme" suggests conscious in
by Jeff_Brown 6y ago
In that sense they're not much different. Beanie babies formed a speculative bubble too.
One might quibble that the phrase "Ponzi scheme" suggests conscious intent to deceive. That's a hard thing to prove, and largely economically immaterial. Putting questions of intent aside, every speculative bubble is a Ponzi scheme: buyers plan to sell for more money, and eventually can't.
- Udik 6y ago> buyers plan to sell for more money, and eventually can't. This also holds for all those shares that don't pay dividends: Alphabet, Amazon, etc.
- Jeff_Brown 6y agoSometimes -- it depends on the investor. Other investors want non-paying stocks today because they will presumably start paying dividends someday. And in a perfectly rational world, the only reason the first kind of investor would have for believing they could sell at a profit would be because they anticipate the second kind of investor's beliefs.
- smnrchrds 6y agoI think you are mixing up Ponzi scheme and pyramid scheme.
- Jeff_Brown 6y agoYou're right, thanks. (For anyone else unaware of the difference, Ponzi schemes are financial fraud and always illegal; pyramid schemes form a more inclusive set.)