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On the contrary, you would be demonstrating that, to at least one buyer, it was worth that. By definition. I think the argument you’re really looking to contra
by wrs 1mo ago
On the contrary, you would be demonstrating that, to at least one buyer, it was worth that. By definition.
I think the argument you’re really looking to contradict is this: if 1% of a company is worth $1B to somebody, then somebody would pay $100B for the whole company. That does not follow (and indeed the acquisition price of a company is almost never exactly its “market valuation”).
- watutalkinbout 1mo agoNo. You are assuming that the money that I buy the sweet shop for is what I evaluate the value of the sweet shop to be worth. That's not necessarily true. You're also assuming I'm not insane. If I offer to buy an apple from you for 1 trillion dollars because I believe consuming that specific apple will make me a god, that apple is not actually worth 1 trillion dollars.
- paxys 1mo agoItems don’t have an inherent “worth”. If I have an apple and you agree to buy it for $1T, then the apple is indeed worth $1T at that moment. After the purchase is complete it is worth ~$0, or whatever the next person is willing to pay you for it. Alternatively you can say “it is still worth $1T to me” and that would be true as well. When we are specifically talking about companies, their value is where buyers meet sellers in the order book.
- watutalkinbout 1mo agoWhat if I say, "it's not worth $1T to me but I'm doing it for the memes" Are you selling me just the apple?
- hananova 1mo agoDoesn't change anything. If you buy something for a certain price, regardless of whatever reasons you have for doing so (including but not limited to, being rich and irresponsible, being insane, or doing it for the memes.) Then that thing has that value to you at that point in time. Whether someone else will share your judgment of its worth is highly unlikely, but it is also entirely irrelevant. Worth has never meant "objective value to literally everyone."
- watutalkinbout 1mo agoIf I deliberately ridiculously over pay for an item to create publicity then as the buyer it explicitly doesn't have that value to me. The value isn't in the item purchased. I think your definition of value / worth should be based on the seller, not the buyer.
- wrs 1mo agoThat’s fair, there are cases where the transaction itself has some worth to the buyer for reputational or other reasons, independent of the item being purchased. Those are rather unusual cases, but they happen. There are contracts that involve exchanging $1 to satisfy some legal requirement of consideration, but the relationship created is worth much more than $1. And of course there are barter transactions where items are exchanged directly without any specific valuation in money involved at all.
- paxys 1mo ago> and indeed the acquisition price of a company is almost never exactly its “market valuation” The acquisition price is almost always significantly more than its market value. The reason is that if you start buying shares on the open market each transaction of yours will raise the stock price, and eventually you will price yourself out of the purchase. So what buyers do is negotiate directly with the board and propose an inflated price that >50% of shareholders are okay with.
- rightbyte 1mo agoIn some sense I would argue that it is the next highest bid that determine the worth. I.e. what the buyer could hope to resell for.