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Sorry, I didn’t mean for it to come over as an attack - but I don’t think it’s a straw man. What do you think doing that would say about Amazon’s value? Why do

• Retric 5y ago
  The current stock price is always a prediction of future earnings x the probability of those earnings. A lottery ticket might in theory be worth 50 cents but have a high probability of being worth nothing. In essence guessing if a stock is likely worth it’s current price is asking if it’s a low variance bet (T-Bills), high variance bet, or miss priced.
  • ta1234567890 5y ago
    > The current stock price is always a prediction of future earnings Maybe in theory, but in practice, at least currently, that’s not how the market is behaving. The current stock price reflects the aggregated sentiment of past transactions regarding the probability of the actors being able to turn a profit now vs later. The person who is selling is either acting on the sentiment of cutting losses or realizing a gain, while the one buying is acting on the sentiment of the expectation of future gains. Earnings might be one factor that informs sentiment, but it is not the only one or even the most important, especially for retail investors using Robinhood for example.
    • Retric 5y ago
      Are you taking a narrow view of earnings? As far as a stockholder is concerned a company being bought out qualifies as earnings even if they never turn a profit and are only bought for their IP.
      • ta1234567890 5y ago
        You are right. I understood earnings as company earnings, as that is usually the meaning in the context of stocks. Now I realize you were talking about the stockholder’s earnings.