4 ms·

> a stock is worth.. Hasn't this always been the case? Genuinely curious.

• helsinkiandrew 4y ago
  > Hasn't this always been the case? Yes, but think the poster was implying the increase in interest rates makes it worth less. $100 in 10 years is worth $91 today at 1% but $53 at 6%. That has a big affect on the valuation of growth companies.
• ornornor 4y ago
  Not an economist. AFAIK this used to be true in the olden days. For the last few decades, many tech companies have turned little to no profit and yet trade at insanely high premiums given the fundamentals because most people have FOMO and pay for the expectation that maybe one day $money_loser will make money and be worth what they paid. Outside of tech, I don’t think this is the case though. It’s valuing stocks by that axiom. But in tech, all bets are off.
  • PedroBatista 4y ago
    It always been like that for every company in every field. The only new factor is the amount of “free” money on the market. In the past it was minimal ( more or less ), now it’s maximal after a decade of zero interest rates and trillions of paper printed. This exacerbated some aspects of the market but the fundamentals remain the same.
• ummonk 4y ago
  In a speculation driven environment, the future earnings of a particular growth company are heavily dependent on investor sentiment. If people want to invest in a company for whatever reason (such as hype), that means the company can raise more money at a higher valuation for a given amount of dilution, and by investing that money it can generate higher future earnings per share.