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> US equities have intrinsic value Really? My impression is that many US equities in 2022 are more like Reddit up/downvote scores than a reflection of intrinsi
by dheera 5y ago
> US equities have intrinsic value
Really? My impression is that many US equities in 2022 are more like Reddit up/downvote scores than a reflection of intrinsic value.
Which isn't a bad thing in my opinion, by the way.
- benreesman 5y agoI mean if they pay a dividend (and you believe it will continue) you can do math that treats it like a bond coupon and do a present-day valuation. If they have attached voting rights you can get together with other investors and vote yourself a bigger dividend (though same goes for Uniswap v2), or a share buyback. But yeah, mostly it’s a Keynsian Beauty Contest.
- cillian64 5y agoI think of it like this. If you suddenly owned 100% of Bitcoin, then you wouldn’t actually have anything valuable - nobody would buy it off you. If you suddenly owned 100% of Tesla then you’d be able to extract a lot of value.
- benreesman 5y agoI’ll start the bidding at 1 USD to own all BTC. Anyone want to go higher?
- foxhill 5y agohmm. it might be a bit more subtle than that - if you were to own all 21 million bitcoin (i.e, nothing can be mined or otherwise created), it’d pose an existential crisis for the currency. miners would have no reason to mine, transactions on the small scale couldn’t happen, etc. at the very least i expect other coins would pop up with a different genesis block. or maybe some form of hard fork (again, i might add). owning them all might be problematic. 99% might not be. that said, i don’t think it can be done for >100 years yet..
- dheera 5y agosure, 2 USD, bring it on
- coderintherye 5y agoSorry, but that's provably false, just look at all the Bitcoin knockoffs that forked off the main chain and the amount of money people put into them. If someone managed to somehow own 100% of Bitcoin, it would make it worth much less, but it would not make it without value.
- Tenoke 5y agoIf I suddenly own 100% of Tesla the stock would crash. I'll extract some value but it would be a pittance.
- jcranmer 5y agoYou seem to ignore the fact that you would then have access to 100% of the revenue that Tesla makes by selling cars and other things. (This in turn sort of guarantees a price floor for stocks in public companies: the price of a stock shouldn't really go below the net asset value of the company.)
- Tenoke 5y agoI really doubt Tesla would survive very long in that state. Stock will crash, public opinion will sour, employees will quit etc. very quickly.
- dheera 5y agoWhy would public opinion matter if your company wasn't public? IMO it's a beautiful thing if your company can be aligned 100% with customers and not some random idiots that want participation in your company issues without even owning a Tesla let alone an EV. No earnings reports, no SEC wasting your time. Only reason companies (unfortunately) need to go public is the need for upfront capital or early-stage capital that wants an exit.
- fullshark 5y agoFirms used to give out dividends, that would make it easier to claim it had intrinsic value (future cash flows discounted). Now it appears the only intrinsic value is how much another firm would pay to acquire the company and do X with it.
- ratsmack 5y agoThere are plenty of companies that give dividends. I own about a hundred different stocks and 99% of them are dividend bearing to the tune of about $200K per year.
- dheera 5y agoDividends are worthless. Stocks go down every time they give out dividends so you never really make anything. And you will never beat inflation with dividends. Dividend investing is stuff of 1980's folklore. These days it's all about modelling and executing on hype. We're entering an era where hype is intrinsic value. I'm not advocating for a world like that, but it's the world we live in now whether we like it or not.
- Liron 5y agoNo… Your claims are typical of how people talk during peak bubbles. It's very similar to how people talked about buying any tech IPO stock in 1999, even when the companies had hopeless business models. The way I expect they'll get disproved is simply when the market cycle turns. Right now there's a powerful illusion that asset prices have become unmoored from expected returns, but at some point macroeconomic conditions change and the demand to liquidate the assets becomes significantly higher than the demand to keep buying them at their previous prices. Like if S&P P/E multiples begin a steady slide from 30 to 15 due to less liquidity in the economy, everyone's stock portfolio will feel like a bloodbath. In such an environment, demand for all these crazy coins also dries up and prices plummet (so much for being a "store of value"), since there are no cashflows that reward the purchasers and set a floor on the price; it's entirely - as you say - a function of the current “hype” i.e. buy-side demand level.
- vitaflo 5y ago