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At least Alphabet, Microsoft and Amazon can afford it. Nvidia is not losing anything if their stock falls. So whats left? The typical candidates of course: We

At least Alphabet, Microsoft and Amazon can afford it. Nvidia is not losing anything if their stock falls. So whats left? The typical candidates of course: We poor people. 401k, ETF, etc. we pay the bill.

TSiege 4mo ago
If Alphabet can afford it why are they issuing $80B in new shares for fresh capital?
- skybrian 4mo ago
  It makes good financial sense for a company to sell shares when the price is high and do stock buybacks when it's low. I guess they think the price is on the high side? Also, selling shares puts them in a better position to survive a downturn (more cash, less debt).
  - Analemma_ 4mo ago
    Google is also issuing a bunch of debt this year. It sounds like they need a lot of capital and want to keep a particular debt/equity ratio, rather than having a strong opinion on their share price.
  - jorvi 4mo ago
    In a real competitive market it would never make financial sense to do stock buybacks because competition is so fierce you need to invest it all in R&D and sharp prices for your customers. See the Chinese EV market. Stock buybacks are also a tax trick. They're just holistically evil and should have never been made legal.
- Qhemlomo 4mo ago
  Just look at the net income of alphabet. Whatever financial games they play in the background, doesn't matter when you make that much per 2 quarters alone.
- matwood 4mo ago
  When money is cheap you take it. Google sees all the capital waiting to pour into these AI IPOs, and correctly assumed they could tap into that with little dilution.
skybrian 4mo ago
If the S&P 500 dropped 20%, that's about a year's growth. Long-term investors who bought before that would be poorer than they thought they were, but they're not worse off than they started and there wouldn't be any particular bill to pay. If they're a long term investor then they can wait for it to come back. (A similar argument could be made for larger drops.) The real suffering comes from whatever effect there is on the rest of the economy due to a recession, more layoffs, etc.
- Qhemlomo 4mo ago
  They can sit it out but that doesn't mean no one paid the bill. And some others might need to pull out when its down. Money doesn't appear out of thin air. Why would it lead to recession if a handful of big companies lose money they have? It will show that the USA is in a recession for sure, but otherwise
  - somewhereoutth 4mo ago
    > Money doesn't appear out of thin air. In fact [fiat] money does appear out of thin air (well, created by banks when they originate loans) - and has to to support a growing economy. Unfortunately, for various reasons, rather too much has been appearing, and has been funneled to the already wealthy.
  - skybrian 4mo ago
    No, asset values are not like energy. There's no conservation rule. When stocks get bid up, market valuation goes up far more than the amount of money that changed hands. Most of the market cap appears "out of thin air." It's just what people think it's worth. And when the stock goes down again, it goes back where it came from. The investors who bought stock at too high a price lose some of the money they put in, but there are others who never paid that price.
    - Qhemlomo 4mo ago
      But thats the point. Your last sentence is the problem: Investors proping up stuff by 20%, 401k and etf etc. regularly invest, investor drop out. Who loses? 401k and etf. Money was transfered. Same shit happen to my company share: Price jumps 40%, company has to buy them because of employer benefits, I auto buy them, price falls back by 40%, what happened? Investors extracted money out of the company and me.
xiaoyu2006 4mo ago
I always think 401k is not fair at all. It kinda forces one to invest and pump the stock prices.
- jdale27 4mo ago
  You don’t have to invest your 401k in stocks.
- brokencode 4mo ago
  With most 401k plans, you can choose what you invest in to an extent. You can put it in bonds or other investments if you want.
  - idiotsecant 4mo ago
    This doesnt fix the systemic issue. Most people put their money in a target fund and leave it alone. Those target funds are at risk of being forced to buy these over-inflated assets. The incentive to do this is there because those target funds and naive investors exist.
    - JumpCrisscross 4mo ago
      > Those target funds are at risk of being forced to buy these over-inflated assets Target funds are diversely managed. This isn’t a real concern.
      - idiotsecant 4mo ago
        The diverse investment is the reason that funds will be forced to buy these worthless stocks. It's a direct transfer of money from the working class to the extreme capital class. If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?
        brokencode 4mo ago

TSiege 4mo ago

If Alphabet can afford it why are they issuing $80B in new shares for fresh capital?

skybrian 4mo ago
It makes good financial sense for a company to sell shares when the price is high and do stock buybacks when it's low. I guess they think the price is on the high side? Also, selling shares puts them in a better position to survive a downturn (more cash, less debt).
- Analemma_ 4mo ago
  Google is also issuing a bunch of debt this year. It sounds like they need a lot of capital and want to keep a particular debt/equity ratio, rather than having a strong opinion on their share price.
- jorvi 4mo ago
  In a real competitive market it would never make financial sense to do stock buybacks because competition is so fierce you need to invest it all in R&D and sharp prices for your customers. See the Chinese EV market. Stock buybacks are also a tax trick. They're just holistically evil and should have never been made legal.
Qhemlomo 4mo ago
Just look at the net income of alphabet. Whatever financial games they play in the background, doesn't matter when you make that much per 2 quarters alone.
matwood 4mo ago
When money is cheap you take it. Google sees all the capital waiting to pour into these AI IPOs, and correctly assumed they could tap into that with little dilution.

skybrian 4mo ago

If the S&P 500 dropped 20%, that's about a year's growth. Long-term investors who bought before that would be poorer than they thought they were, but they're not worse off than they started and there wouldn't be any particular bill to pay. If they're a long term investor then they can wait for it to come back. (A similar argument could be made for larger drops.) The real suffering comes from whatever effect there is on the rest of the economy due to a recession, more layoffs, etc.

Qhemlomo 4mo ago
They can sit it out but that doesn't mean no one paid the bill. And some others might need to pull out when its down. Money doesn't appear out of thin air. Why would it lead to recession if a handful of big companies lose money they have? It will show that the USA is in a recession for sure, but otherwise
- somewhereoutth 4mo ago
  > Money doesn't appear out of thin air. In fact [fiat] money does appear out of thin air (well, created by banks when they originate loans) - and has to to support a growing economy. Unfortunately, for various reasons, rather too much has been appearing, and has been funneled to the already wealthy.
- skybrian 4mo ago
  No, asset values are not like energy. There's no conservation rule. When stocks get bid up, market valuation goes up far more than the amount of money that changed hands. Most of the market cap appears "out of thin air." It's just what people think it's worth. And when the stock goes down again, it goes back where it came from. The investors who bought stock at too high a price lose some of the money they put in, but there are others who never paid that price.
  - Qhemlomo 4mo ago
    But thats the point. Your last sentence is the problem: Investors proping up stuff by 20%, 401k and etf etc. regularly invest, investor drop out. Who loses? 401k and etf. Money was transfered. Same shit happen to my company share: Price jumps 40%, company has to buy them because of employer benefits, I auto buy them, price falls back by 40%, what happened? Investors extracted money out of the company and me.

xiaoyu2006 4mo ago

I always think 401k is not fair at all. It kinda forces one to invest and pump the stock prices.

jdale27 4mo ago
You don’t have to invest your 401k in stocks.
brokencode 4mo ago
With most 401k plans, you can choose what you invest in to an extent. You can put it in bonds or other investments if you want.
- idiotsecant 4mo ago
  This doesnt fix the systemic issue. Most people put their money in a target fund and leave it alone. Those target funds are at risk of being forced to buy these over-inflated assets. The incentive to do this is there because those target funds and naive investors exist.
  - JumpCrisscross 4mo ago
    > Those target funds are at risk of being forced to buy these over-inflated assets Target funds are diversely managed. This isn’t a real concern.
    - idiotsecant 4mo ago
      The diverse investment is the reason that funds will be forced to buy these worthless stocks. It's a direct transfer of money from the working class to the extreme capital class. If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?
      - brokencode 4mo ago