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No different from buying random small name stocks. Sometimes you luck out and your stock grows 20x in five years. Sometimes it doesn’t. On the other hand, buy

No different from buying random small name stocks. Sometimes you luck out and your stock grows 20x in five years. Sometimes it doesn’t. On the other hand, buying, say, Apple stock, is not much different from buying a first edition Charizard card or an unopened copy of Super Metroid. It’ll probably steadily grow in value over years and has been. But both could end up collapsing tomorrow for unknown reasons.

majormajor 5y ago
This is covered in the article in the cash flow aspect. Outside of a total economic collapse that took out "real" investments and collectibles both, the reasons the value of an Apple share would fall, or the price of land would fall, would be much more tangible and understandable. The relationship for land is more obvious and immediate that business investment (you can charge rent!) but someone in 2010 who said "this iPhone thing seems to be generating a lot of cash flow for Apple, I think this is a good time to invest" is doing it not solely because they think the number of people interested in buying stocks is going to increase, but because they think Apple in particular is going to continue to do well financially because Apple is producing something people want to use.
- grapeskin 5y ago
  People will also keep buying pristine copies of old games so long as that series has some popularity. People aren’t going to lose interest in Nintendo series any time soon. Even if Nintendo made some awful business decisions, went bankrupt, and the developers and executives were all revealed to be violent criminals, people would still love those games and want to own them. There’s a non zero possibility Apple could be bankrupt in 5 years and all those stocks become worthless. You never know what the next ENRON could be.
  - deleted 5y ago
    [deleted]
  - Retric 5y ago
    If you want to compare specific bets then plenty of companies have seen 500x returns over shockingly short periods. It’s picking the winners that’s tricky and not everyone can get lucky.
  - majormajor 5y ago
    There's also a non-zero possibility this person would take a huge bath if they tried to sell in the near future: https://www.theverge.com/2021/8/7/22614450/unopened-copy-super-mario-bros-sells-2-million-record https://www.theverge.com/2021/8/7/22614450/unopened-copy-sup... Just a few years ago that would've gone for a massively lower price. How certain are you that that rate will continue in the next five years? Would you seriously recommend that as a wise place to park two million bucks? "Mario is going to remain popular" is a weak reason to expect massive returns on a $2M copy of a video game in a market that saw an extreme recent rise. https://www.cnet.com/personal-finance/crypto/jack-dorseys-2-9m-nft-tweet-auctioned-the-top-bid-280/ https://www.cnet.com/personal-finance/crypto/jack-dorseys-2-... - twitter is still popular, what's the problem, right?
  - jhbadger 5y ago
    But collectibles have a finite length of value based on the generation to which they are of interest. Many old baseball cards from the 1950s and 1960s are actually going down in value as the people to whom they were nostalgic are dying off. It might be a while for Nintendo NES/Famicom nostalgia to do the same (and even later for subsequent consoles), but eventually the people who had those consoles as children will die and later generations just won't care.
Retric 5y ago
Stocks have a positive bias above overall economic growth in dividends. In other words if you owned 1% of the US stock market in 1980 then without luck or skill you could turn that into owning more than 1% of the stock market in 2020.
- djbusby 5y ago
  Really? It just feels like dilution from IPOs would make it less percentage than the original stake.
  - SgtBastard 5y ago
    I’d read it as being a combination of dividends being re-invested over 40 years (including indirectly for share buy backs) if you did basically nothing.
  - Retric 5y ago
    Yes a large part of this is IPO’s are uncommon and companies go public early on when they are much smaller. But the other half is dividends collectively add up to enormous amounts of money. Microsoft’s ~0.8% dividend doesn’t sound like much but it’s ~15 billion dollars every year. It’s rare for a US IPO to be that large and few US companies IPO every year. Sure Facebook was $104 billion at IPO, but that’s the largest ever yet Microsoft’s dividend alone would have paid for it in less than a decade. PS: That’s looking at US companies, global IPO’s are tricky.
  - bliteben 5y ago
    VOO (SP 500 index) has a current dividend yield of ~1.6%, ignoring that it was likely higher yield in the 80s and honestly much of this time frame, you use the rule of 70 to determine it would take about 43 years (70/1.6) to double from just dividends. Of course this ETF (the index did exist) didn't exist in the 80s, and you increased the valuation numbers much more due to inflation which was double this dividend rate for all of this period. Additionally somewhere in there, the US economy grew a lot in this time period.
elil17 5y ago
Individual stocks still have a positive average return, even if they have huge amount of risk. Collectibles have the same risk but a zero or negative average return.

majormajor 5y ago

This is covered in the article in the cash flow aspect. Outside of a total economic collapse that took out "real" investments and collectibles both, the reasons the value of an Apple share would fall, or the price of land would fall, would be much more tangible and understandable. The relationship for land is more obvious and immediate that business investment (you can charge rent!) but someone in 2010 who said "this iPhone thing seems to be generating a lot of cash flow for Apple, I think this is a good time to invest" is doing it not solely because they think the number of people interested in buying stocks is going to increase, but because they think Apple in particular is going to continue to do well financially because Apple is producing something people want to use.

grapeskin 5y ago
People will also keep buying pristine copies of old games so long as that series has some popularity. People aren’t going to lose interest in Nintendo series any time soon. Even if Nintendo made some awful business decisions, went bankrupt, and the developers and executives were all revealed to be violent criminals, people would still love those games and want to own them. There’s a non zero possibility Apple could be bankrupt in 5 years and all those stocks become worthless. You never know what the next ENRON could be.
- deleted 5y ago
  [deleted]
- Retric 5y ago
  If you want to compare specific bets then plenty of companies have seen 500x returns over shockingly short periods. It’s picking the winners that’s tricky and not everyone can get lucky.
- majormajor 5y ago
  There's also a non-zero possibility this person would take a huge bath if they tried to sell in the near future: https://www.theverge.com/2021/8/7/22614450/unopened-copy-super-mario-bros-sells-2-million-record https://www.theverge.com/2021/8/7/22614450/unopened-copy-sup... Just a few years ago that would've gone for a massively lower price. How certain are you that that rate will continue in the next five years? Would you seriously recommend that as a wise place to park two million bucks? "Mario is going to remain popular" is a weak reason to expect massive returns on a $2M copy of a video game in a market that saw an extreme recent rise. https://www.cnet.com/personal-finance/crypto/jack-dorseys-2-9m-nft-tweet-auctioned-the-top-bid-280/ https://www.cnet.com/personal-finance/crypto/jack-dorseys-2-... - twitter is still popular, what's the problem, right?
- jhbadger 5y ago
  But collectibles have a finite length of value based on the generation to which they are of interest. Many old baseball cards from the 1950s and 1960s are actually going down in value as the people to whom they were nostalgic are dying off. It might be a while for Nintendo NES/Famicom nostalgia to do the same (and even later for subsequent consoles), but eventually the people who had those consoles as children will die and later generations just won't care.

Retric 5y ago

Stocks have a positive bias above overall economic growth in dividends. In other words if you owned 1% of the US stock market in 1980 then without luck or skill you could turn that into owning more than 1% of the stock market in 2020.

djbusby 5y ago
Really? It just feels like dilution from IPOs would make it less percentage than the original stake.
- SgtBastard 5y ago
  I’d read it as being a combination of dividends being re-invested over 40 years (including indirectly for share buy backs) if you did basically nothing.
- Retric 5y ago
  Yes a large part of this is IPO’s are uncommon and companies go public early on when they are much smaller. But the other half is dividends collectively add up to enormous amounts of money. Microsoft’s ~0.8% dividend doesn’t sound like much but it’s ~15 billion dollars every year. It’s rare for a US IPO to be that large and few US companies IPO every year. Sure Facebook was $104 billion at IPO, but that’s the largest ever yet Microsoft’s dividend alone would have paid for it in less than a decade. PS: That’s looking at US companies, global IPO’s are tricky.
- bliteben 5y ago
  VOO (SP 500 index) has a current dividend yield of ~1.6%, ignoring that it was likely higher yield in the 80s and honestly much of this time frame, you use the rule of 70 to determine it would take about 43 years (70/1.6) to double from just dividends. Of course this ETF (the index did exist) didn't exist in the 80s, and you increased the valuation numbers much more due to inflation which was double this dividend rate for all of this period. Additionally somewhere in there, the US economy grew a lot in this time period.

elil17 5y ago

Individual stocks still have a positive average return, even if they have huge amount of risk. Collectibles have the same risk but a zero or negative average return.