5 ms·

I guess, where would you place a publicly traded stock that doesn't pay dividends or do buybacks? Old investors are literally being paid by newer investors, but

I guess, where would you place a publicly traded stock that doesn't pay dividends or do buybacks? Old investors are literally being paid by newer investors, but it doesn't indicate any fraud.

iforgetti 5y ago
A growth stock is engaged in an ongoing value creation process. In your scenario, it is also subject to all of the public disclosure requirements consistent with being a publicly traded company.
- thebean11 5y ago
  Ok, but now you're moving the goalpost. Does "new investors paying old investors" make something a Ponzi scheme or not? The legal definition is much more specific.
- ianai 5y ago
  Stocks actually are piece wise ownership of an operating business.
- stickfigure 5y ago
  > A growth stock is engaged in an ongoing value creation process. It's popular on HN to complain that companies like Facebook or Amazon destroy value. Or do you mean, create value for shareholders? Facebook and Amazon have never paid a dividend. If you buy stock and hold it all the way to bankruptcy (all companies die, eventually), you will have received no value. > public disclosure requirements Dogecoin, stupid as it is, is far more transparent than the machinations of any corporation.
  - NovemberWhiskey 5y ago
    Companies have a book value, which is the value of their assets after their liabilities, to which their shareholders are ultimately entitled. Many of the tech companies do share buybacks, which increases the ownership of the shareholders who hold the stock. The value of a share is predicated on the belief that the company will start to pay dividends at some point. Apple, Cisco, Intel, Microsoft all pay dividends at this point. If the executive team at Amazon or Facebook came out to say "we will never pay a dividend"; firstly, there would be a shareholder revolt and the board of directors would be removed and replaced; secondly, there would also probably be a massive shareholder lawsuit against the directors personally for violating their fiduciary obligations.
- dnautics 5y ago
  What is your definition of 'value'?
nmfisher 5y ago
I keep seeing this argument cropping up and it’s really not a useful comparison. If you buy a share, you generally buy (a) a vote that you can use to kick out the board and replace them with someone who will pay a dividend, and (b) a share of the assets of the company if it’s dissolved. Those are both tangible rights, the crypto ponzi scheme offers nothing of the sort.
- emteycz 5y ago
  Cryptocoin is a certificate [of uniquity], which are assets. Ponzi schemes are something totally different, sometimes done with currencies and sometimes with assets such as cryptocoins, but the coin itself can't be a ponzi scheme by definition.
aqme28 5y ago
If you're talking about a company that produces no revenue and has no assets, and exists only as a tradeable stock, then I agree that it's close to doge.
- thebean11 5y ago
  Not sure about Doge, but BTC and ETH especially have revenue (transaction fees)

I guess, where would you place a publicly traded stock that doesn't pay dividends or do buybacks? Old investors are literally being paid by newer investors, but it doesn't indicate any fraud.

iforgetti 5y ago

A growth stock is engaged in an ongoing value creation process. In your scenario, it is also subject to all of the public disclosure requirements consistent with being a publicly traded company.

thebean11 5y ago
Ok, but now you're moving the goalpost. Does "new investors paying old investors" make something a Ponzi scheme or not? The legal definition is much more specific.
ianai 5y ago
Stocks actually are piece wise ownership of an operating business.
stickfigure 5y ago
> A growth stock is engaged in an ongoing value creation process. It's popular on HN to complain that companies like Facebook or Amazon destroy value. Or do you mean, create value for shareholders? Facebook and Amazon have never paid a dividend. If you buy stock and hold it all the way to bankruptcy (all companies die, eventually), you will have received no value. > public disclosure requirements Dogecoin, stupid as it is, is far more transparent than the machinations of any corporation.
- NovemberWhiskey 5y ago
  Companies have a book value, which is the value of their assets after their liabilities, to which their shareholders are ultimately entitled. Many of the tech companies do share buybacks, which increases the ownership of the shareholders who hold the stock. The value of a share is predicated on the belief that the company will start to pay dividends at some point. Apple, Cisco, Intel, Microsoft all pay dividends at this point. If the executive team at Amazon or Facebook came out to say "we will never pay a dividend"; firstly, there would be a shareholder revolt and the board of directors would be removed and replaced; secondly, there would also probably be a massive shareholder lawsuit against the directors personally for violating their fiduciary obligations.
dnautics 5y ago
What is your definition of 'value'?

nmfisher 5y ago

I keep seeing this argument cropping up and it’s really not a useful comparison. If you buy a share, you generally buy (a) a vote that you can use to kick out the board and replace them with someone who will pay a dividend, and (b) a share of the assets of the company if it’s dissolved. Those are both tangible rights, the crypto ponzi scheme offers nothing of the sort.

emteycz 5y ago
Cryptocoin is a certificate [of uniquity], which are assets. Ponzi schemes are something totally different, sometimes done with currencies and sometimes with assets such as cryptocoins, but the coin itself can't be a ponzi scheme by definition.

aqme28 5y ago

If you're talking about a company that produces no revenue and has no assets, and exists only as a tradeable stock, then I agree that it's close to doge.

thebean11 5y ago
Not sure about Doge, but BTC and ETH especially have revenue (transaction fees)