5 ms·

This argument assumes the market is rational and well informed. It would be totally possible to have a market where a well-resourced player could tank arbitrary

by JackC 4y ago

This argument assumes the market is rational and well informed. It would be totally possible to have a market where a well-resourced player could tank arbitrary stocks, and smaller players would lose by betting against them. Making no claims about the situation here in particular, just that “put your money where your mouth is” isn’t convincing.

Bubble_Pop_22 4y ago
The stock market will never be bigger than the product/service market Sales and profit are real and 100% liquid unlike the marketcap which is essentially a perpetual voting machine. If the product is legit and starts selling , then it's gonna be shortsellers to lose out and and people betting on the company would win as long as they don't screw themselves using leverage.
- melony 4y ago
  But on paper it is, sure the value will plunge the moment a significant liquidation event happens but as far as things go on paper, the market valuation of companies (and especially tech companies) are magnitudes bigger than their net income.
  - Bubble_Pop_22 4y ago
    Net income and free cash flow are real, once achieved only long lawsuits and the government can take that away from the corporation. Marketcap can be deflated instantly just if enough people click the sell button. If you want to compare them you have to discount the marketcap adjusting it for the instability and undecisiveness of the human brain and also the instability of the marketplace of ideas and political currents, the instability of hero worship around the CEO and millions of other things. Once it's said and done it's a pretty big discount you have to apply.
boeingUH60 4y ago
Bill Ackman learned this lesson well when he shorted Herbalife, a scammy company, but still ended up losing.
- bsder 4y ago
  "Markets can stay irrational longer than you can stay solvent."--J. M. Keynes

5 ms·

This argument assumes the market is rational and well informed. It would be totally possible to have a market where a well-resourced player could tank arbitrary

by JackC 4y ago

Bubble_Pop_22 4y ago
The stock market will never be bigger than the product/service market Sales and profit are real and 100% liquid unlike the marketcap which is essentially a perpetual voting machine. If the product is legit and starts selling , then it's gonna be shortsellers to lose out and and people betting on the company would win as long as they don't screw themselves using leverage.
- melony 4y ago
  But on paper it is, sure the value will plunge the moment a significant liquidation event happens but as far as things go on paper, the market valuation of companies (and especially tech companies) are magnitudes bigger than their net income.
  - Bubble_Pop_22 4y ago
    Net income and free cash flow are real, once achieved only long lawsuits and the government can take that away from the corporation. Marketcap can be deflated instantly just if enough people click the sell button. If you want to compare them you have to discount the marketcap adjusting it for the instability and undecisiveness of the human brain and also the instability of the marketplace of ideas and political currents, the instability of hero worship around the CEO and millions of other things. Once it's said and done it's a pretty big discount you have to apply.
boeingUH60 4y ago
Bill Ackman learned this lesson well when he shorted Herbalife, a scammy company, but still ended up losing.
- bsder 4y ago
  "Markets can stay irrational longer than you can stay solvent."--J. M. Keynes