4 ms·

> and it can be dangerous as a society if we encourage saying things like this. why?

andrewmcwatters 2y ago
Because in particular, impressionable young men in large amounts in the public think ownership of businesses works in ways that it definitely does not, and it affects the way they make purchasing decisions. You’re not buying “a stock,” you’re buying shares of an actual business and you need to judge for yourself a reasonable price as to what you think you’re buying it for. I’d argue we’re probably already there. It’s why people don’t think twice about paying $25+ per $1 of earnings and don’t realize what a stupid decision that is and then they try and rationalize it by saying, “Oh, well the business will continue to grow and that’s what you’re paying such high prices for.” No, you’re just getting scammed. It’s the same thinking that led us to predominantly young men buying a non-tangible thing just because it goes up in price, in the hopes that some greater fool will buy it from you for said greater price.
- matrix87 2y ago
  > No, you’re just getting scammed But hasn't the market already incorporated PE ratio (and other factors) into the company's estimated value? It sounds like what you're saying is PE ratio has more predictive value than whatever indicators people are using (e.g. press coverage and leather jackets) Or are you saying that our entire concept of value is screwed up? Not really clear
  - TheAlchemist 2y ago
    I think he's saying that people stopped thinking about buying stocks as investments. By that, I mean buying a share of an actual business. Today it's a lot of 'oh stock is going up, AI AI AI etc.'. Look up some ARKK research - it's beyond stupid and borderline criminal. At current prices of many companies, you would need to wait 50 years to get your money back, if you would buy the whole business. But since those stocks move 5, 10% per day, and in recent years it was mostly up, people got really greedy - and indeed, the fact that one can trade 0dte options makes it so much easier to gamble. Look up the volumes of those options - it's absolutely mind blowing. Conventional wisdom is that 90% of individual investors are loosing money in the stock market. With options, I bet it's 99.9%.

Because in particular, impressionable young men in large amounts in the public think ownership of businesses works in ways that it definitely does not, and it affects the way they make purchasing decisions. You’re not buying “a stock,” you’re buying shares of an actual business and you need to judge for yourself a reasonable price as to what you think you’re buying it for. I’d argue we’re probably already there. It’s why people don’t think twice about paying $25+ per $1 of earnings and don’t realize what a stupid decision that is and then they try and rationalize it by saying, “Oh, well the business will continue to grow and that’s what you’re paying such high prices for.” No, you’re just getting scammed. It’s the same thinking that led us to predominantly young men buying a non-tangible thing just because it goes up in price, in the hopes that some greater fool will buy it from you for said greater price.

matrix87 2y ago
> No, you’re just getting scammed But hasn't the market already incorporated PE ratio (and other factors) into the company's estimated value? It sounds like what you're saying is PE ratio has more predictive value than whatever indicators people are using (e.g. press coverage and leather jackets) Or are you saying that our entire concept of value is screwed up? Not really clear
- TheAlchemist 2y ago
  I think he's saying that people stopped thinking about buying stocks as investments. By that, I mean buying a share of an actual business. Today it's a lot of 'oh stock is going up, AI AI AI etc.'. Look up some ARKK research - it's beyond stupid and borderline criminal. At current prices of many companies, you would need to wait 50 years to get your money back, if you would buy the whole business. But since those stocks move 5, 10% per day, and in recent years it was mostly up, people got really greedy - and indeed, the fact that one can trade 0dte options makes it so much easier to gamble. Look up the volumes of those options - it's absolutely mind blowing. Conventional wisdom is that 90% of individual investors are loosing money in the stock market. With options, I bet it's 99.9%.