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> Lots of stocks don't pay dividends, and you can't eat them either. Yes, you can. If you are an UHNWI your private banker who also manages your portfolio will

> Lots of stocks don't pay dividends, and you can't eat them either. Yes, you can. If you are an UHNWI your private banker who also manages your portfolio will organize cash loans to you and your family using the shares as collateral. It just shows up in your bank account and you pay your bills, go eat out and live off that tax free income. If you don't have major equity holdings (say a kleptocrat living in London who, coming from the wild-west has an aversion to publicly listed equities) your banker will do the same but using your real estate holdings, yachts, etc. as the collateral.

kortilla 2y ago
They will also do the same thing with bitcoin as collateral. Ability to be used as collateral doesn’t mean anything
- popcalc 2y ago
  Extremely small market. The reason is there is a real risk that past margin call for the lender there will be no one to offload the crypto onto, even at fire-sale prices. With AAPL and condo developments in LA/NYC there is very low cost of insuring an annihilation of value for obvious reasons -- because it's unthinkable. Not so much for magic internet beans.
  - vlovich123 2y ago
    Bitcoin’s market cap is $1.2T and the 2008 banking crisis wiped out a huge amount of value of condo value by in LA/NYC. While condo’s may be less volatile, I don’t think Bitcoin is particularly more volatile than the stock market overall. Indeed one of the criticisms is that it seems highly correlated indicating it’s not really a unique asset class from a stock.
    - popcalc 2y ago
      It's not volatility, rather underlying real value. You can't live in a bitcoin.
      - vlovich123 2y ago
        You can’t live in a stock either. What’s your point? Value is what we assign to something collectively. It’s not a measure of some intrinsic reality.
        popcalc 2y ago
        AAPL and MSFT create value for their customers. >Value is what we assign to something collectively. It’s not a measure of some intrinsic reality. I beg to differ.
        vlovich123 2y ago
        > AAPL and MSFT create value for their customers. And a similar argument could be made that Bitcoin creates value for its customers. You might disagree with that but the people buying bitcoin would probably disagree with you. To me that seems like subjectivity. Similarly for AAPL and MSFT - the stock price is a measure of a gamble on future earnings not how much value they create for their customers. Indeed high margin businesses like AAPL shouldn’t even exist under an intrinsic theory of value because a large part of the 30% markup is because of social cred and network effects. That’s not really value creation. > I beg to differ. Can you please describe it in more detail because this directly contradicts what little I know about economics. If I’m understanding your position, it seems like you’re arguing that value is some intrinsic property. That mechanism however is rejected in the Wealth of Nations, because of things such as the diamond-water paradox. Diamonds are fairly useless (or at least were moreso when the treatise was written) but still cost more than water which is crucial to life. If value is represented of the intrinsic value, why would that be? This paradox is interestingly resolved by the subjective theory of value which has a similar solution to marginalism which says basically that while the first units of water are valuable, if you have excess of what you need it you won’t want more. Whereas because diamonds are rare you will want more of them and are only bounded by your storage constraints. https://en.m.wikipedia.org/wiki/Subjective_theory_of_value https://en.m.wikipedia.org/wiki/Subjective_theory_of_value > A combination of both labour and subjective theories can be seen in the formulations of English economist Alfred Marshall. He argued that prices are determined by both the objective costs of production, the supply, and the subjective utility of consumers, the demand. This approach is in line with the modern conception of how market prices are determined, where both the demand and supply curves intersect.[9] This is in contrast to other 19th century theories which view costs through a type of subjective value lens. Since the subjective value holds that buyers use their own value judgements, the same goes for sellers, and thus the mechanism of production. Austrian economist Ludwig von Mises believes that production costs are determined by a seller's evaluations of their opportunity costs, or the sellers "marginal utility lost of having fewer of that good".[10] Under this, supply curves are also set by subjective preferences. So it’s pretty well established economic theory that the important factors for value are the perceived value of something (demand) and the cost to produce it (supply). But there’s no objective intrinsic way to measure value because it doesn’t exist as it’s a product of supply (objective based on cost to produce) and demand (subjective based on perceived value).

kortilla 2y ago

They will also do the same thing with bitcoin as collateral. Ability to be used as collateral doesn’t mean anything

popcalc 2y ago
Extremely small market. The reason is there is a real risk that past margin call for the lender there will be no one to offload the crypto onto, even at fire-sale prices. With AAPL and condo developments in LA/NYC there is very low cost of insuring an annihilation of value for obvious reasons -- because it's unthinkable. Not so much for magic internet beans.
- vlovich123 2y ago
  Bitcoin’s market cap is $1.2T and the 2008 banking crisis wiped out a huge amount of value of condo value by in LA/NYC. While condo’s may be less volatile, I don’t think Bitcoin is particularly more volatile than the stock market overall. Indeed one of the criticisms is that it seems highly correlated indicating it’s not really a unique asset class from a stock.
  - popcalc 2y ago
    It's not volatility, rather underlying real value. You can't live in a bitcoin.
    - vlovich123 2y ago
      You can’t live in a stock either. What’s your point? Value is what we assign to something collectively. It’s not a measure of some intrinsic reality.
      - popcalc 2y ago
        AAPL and MSFT create value for their customers. >Value is what we assign to something collectively. It’s not a measure of some intrinsic reality. I beg to differ.
        vlovich123 2y ago
        > AAPL and MSFT create value for their customers. And a similar argument could be made that Bitcoin creates value for its customers. You might disagree with that but the people buying bitcoin would probably disagree with you. To me that seems like subjectivity. Similarly for AAPL and MSFT - the stock price is a measure of a gamble on future earnings not how much value they create for their customers. Indeed high margin businesses like AAPL shouldn’t even exist under an intrinsic theory of value because a large part of the 30% markup is because of social cred and network effects. That’s not really value creation. > I beg to differ. Can you please describe it in more detail because this directly contradicts what little I know about economics. If I’m understanding your position, it seems like you’re arguing that value is some intrinsic property. That mechanism however is rejected in the Wealth of Nations, because of things such as the diamond-water paradox. Diamonds are fairly useless (or at least were moreso when the treatise was written) but still cost more than water which is crucial to life. If value is represented of the intrinsic value, why would that be? This paradox is interestingly resolved by the subjective theory of value which has a similar solution to marginalism which says basically that while the first units of water are valuable, if you have excess of what you need it you won’t want more. Whereas because diamonds are rare you will want more of them and are only bounded by your storage constraints. https://en.m.wikipedia.org/wiki/Subjective_theory_of_value https://en.m.wikipedia.org/wiki/Subjective_theory_of_value > A combination of both labour and subjective theories can be seen in the formulations of English economist Alfred Marshall. He argued that prices are determined by both the objective costs of production, the supply, and the subjective utility of consumers, the demand. This approach is in line with the modern conception of how market prices are determined, where both the demand and supply curves intersect.[9] This is in contrast to other 19th century theories which view costs through a type of subjective value lens. Since the subjective value holds that buyers use their own value judgements, the same goes for sellers, and thus the mechanism of production. Austrian economist Ludwig von Mises believes that production costs are determined by a seller's evaluations of their opportunity costs, or the sellers "marginal utility lost of having fewer of that good".[10] Under this, supply curves are also set by subjective preferences. So it’s pretty well established economic theory that the important factors for value are the perceived value of something (demand) and the cost to produce it (supply). But there’s no objective intrinsic way to measure value because it doesn’t exist as it’s a product of supply (objective based on cost to produce) and demand (subjective based on perceived value).