7 ms·

Pardon my ignorance, but what is the end goal here? I feel like the end goal to hold a share today is to sell it to someone else for a higher price. It just doe

Pardon my ignorance, but what is the end goal here? I feel like the end goal to hold a share today is to sell it to someone else for a higher price. It just doesn't sit right with me. Feels like a ponzi scheme to be honest.

repomies69 5y ago
Selling to someone else with higher price is always part of capitalism, and there's nothing wrong with that. Speculation is good for the economy. Why I invest in tech stock? Because I believe the current tech companies might be 10x or 20x times the sizes in 20 years, and in 40 years they might be 1000x times the current size. Basically they could own governments and become world rulers. At least in metaverse.
- newswasboring 5y ago
  Holy shit dude! I hope you are wrong on all accounts, especially the world rulers bit. But more on point, what do you mean by size? Just valuation of their stock? Speculation on an asset makes sense when we don't know its inherent value. I can't figure out what is the inherent value of a stock any more. Does value not derive from utility now? Utility of a stock can be governance say (voting stocks) or a share in the profit. These companies with massive valuations don't generate any profits (see: Uber). So what are people speculating on actually?
  - deleted 5y ago
    [deleted]
  - MrPatan 5y ago
    Future profits
    - newswasboring 5y ago
      They don't even pay dividends on current profits. how do you expect them to pay on future ones?
jseban 5y ago
It's not a zero sum game, remember that value is created by inventions and improvements. If 10 people 10 years ago would have bought stocks in amazon and kept them for 1 year each, then sold on to the next person, and the last person just holds them 1 day and cashes out at basically break even. Then all of these 10 people have made money, and that's because because amazon is more efficient at something compared to the competitors. The losers are not the people who bought the stock "high", all stock owners won, the losers are the companies who lost business to amazon because they were less efficient. So everyone can win except those who are doing things in a way that's not efficient or not up to the latest standard. The end goal is progress, to eliminate unnecessary work and constantly move forward to other more valuable work.
- newswasboring 5y ago
  > and the last person just holds them 1 day and cashes out at basically break even. Cashes out how? That is what my confusion is. Shares don't have inherent value so to cash out you need to sell it to someone (sometimes the buyer is the company itself but I don't think that is sustainable beyond few percentage of their shares). Its not like an asset backed currency where you can go to a central bank and ask for consumable resources. (Although most times the asset is also useless, like gold). Its all just floating in the air from my point of view and "value" is just what someone else is willing to pay.
  - tomalpha 5y ago
    But shares do have an inherent value. Owning them gives you a right to a share of the profits. You own a share of the company. You can vote on who you choose to run it - i.e. the board of Directors. Now many companies recently have chosen not to distribute profits - e.g. Amazon reinvests everything back into growth. And there are types of share that don’t give you a vote on who runs the company (or your tiny ownership percentage makes it meaningless). And there are companies that don’t make any profits so there’s nothing to share out! But shares, at least classically, do have an inherent value. Edit: Examples of these classic shares are “Dividend stocks” [0], but even with say TSLA or AMZN when you buy a share you’re buying the right to a share of the future profits. [0] https://www.investopedia.com/dividend-stocks-4689744 https://www.investopedia.com/dividend-stocks-4689744 Edit2: Now of course that inherent value might be zero if the company will never make a profit…

repomies69 5y ago

Selling to someone else with higher price is always part of capitalism, and there's nothing wrong with that. Speculation is good for the economy. Why I invest in tech stock? Because I believe the current tech companies might be 10x or 20x times the sizes in 20 years, and in 40 years they might be 1000x times the current size. Basically they could own governments and become world rulers. At least in metaverse.

newswasboring 5y ago
Holy shit dude! I hope you are wrong on all accounts, especially the world rulers bit. But more on point, what do you mean by size? Just valuation of their stock? Speculation on an asset makes sense when we don't know its inherent value. I can't figure out what is the inherent value of a stock any more. Does value not derive from utility now? Utility of a stock can be governance say (voting stocks) or a share in the profit. These companies with massive valuations don't generate any profits (see: Uber). So what are people speculating on actually?
- deleted 5y ago
  [deleted]
- MrPatan 5y ago
  Future profits
  - newswasboring 5y ago
    They don't even pay dividends on current profits. how do you expect them to pay on future ones?

jseban 5y ago

It's not a zero sum game, remember that value is created by inventions and improvements. If 10 people 10 years ago would have bought stocks in amazon and kept them for 1 year each, then sold on to the next person, and the last person just holds them 1 day and cashes out at basically break even. Then all of these 10 people have made money, and that's because because amazon is more efficient at something compared to the competitors. The losers are not the people who bought the stock "high", all stock owners won, the losers are the companies who lost business to amazon because they were less efficient. So everyone can win except those who are doing things in a way that's not efficient or not up to the latest standard. The end goal is progress, to eliminate unnecessary work and constantly move forward to other more valuable work.

newswasboring 5y ago
> and the last person just holds them 1 day and cashes out at basically break even. Cashes out how? That is what my confusion is. Shares don't have inherent value so to cash out you need to sell it to someone (sometimes the buyer is the company itself but I don't think that is sustainable beyond few percentage of their shares). Its not like an asset backed currency where you can go to a central bank and ask for consumable resources. (Although most times the asset is also useless, like gold). Its all just floating in the air from my point of view and "value" is just what someone else is willing to pay.
- tomalpha 5y ago
  But shares do have an inherent value. Owning them gives you a right to a share of the profits. You own a share of the company. You can vote on who you choose to run it - i.e. the board of Directors. Now many companies recently have chosen not to distribute profits - e.g. Amazon reinvests everything back into growth. And there are types of share that don’t give you a vote on who runs the company (or your tiny ownership percentage makes it meaningless). And there are companies that don’t make any profits so there’s nothing to share out! But shares, at least classically, do have an inherent value. Edit: Examples of these classic shares are “Dividend stocks” [0], but even with say TSLA or AMZN when you buy a share you’re buying the right to a share of the future profits. [0] https://www.investopedia.com/dividend-stocks-4689744 https://www.investopedia.com/dividend-stocks-4689744 Edit2: Now of course that inherent value might be zero if the company will never make a profit…