yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

Stock are not backed by the company. Simple Logic


2m read
·Nov 3, 2024

Busted open, our stock went down to six. It went from 113 to six in less than a year. That whole period is very interesting because the stock is not the company, and the company is not the stock. Stocks are not backed by the company; that is why investors don't know how much their stocks are backed by.

If something is backed, it means you're going to get a definitive amount of money back for whatever you're holding, or there's some kind of accessible collateral. So if Google is trading for two thousand dollars, and the assets on their balance sheet amount to something like a thousand dollars a share, it would be fair for you to assume that Google stocks are backed by a thousand dollars.

The problem is, that's not how it works. If you look at their SEC filings, there isn't a single public company that says they will back their stocks by some defined price. So in practice, they don't have to give you anything.

Now, hypothetically speaking, stocks are backed in the sense that if Google goes out of business, liquidates, pays back their debts, and insiders, whatever's left over will go to the shareholders. The problem is, when the hell is that going to happen? And how much is going to be left over in this hypothetical liquidation?

The potential for a future liquidation or buyout are considered unfalsifiable ideas. No one can show to be right or wrong. It is pseudoscience nonsense that cannot be used in a logical debate. Hypothetically speaking, anything can happen, but you can't use a hypothetical idea to debate the observable fact that if Google crashes tomorrow, as per their SEC filings, they have no definitive obligation to pay their shareholders anything for the stocks they are holding.

More Articles

View All
Why Don't Any Animals Have Wheels?
Hey, Vsauce, Michael here, and today we are going to ask a question—why don’t any animals have wheels? I mean, animals use a plethora of complicated locomotive techniques—slithering, fins, legs, wings—but yet, no animal has wheels. What’s really paradoxi…
Financial Institutions Need To Solve This Problem! | Andrew Rossow
And these CEOs probably don’t have as much innovation in their behemoth organizations as a young entrepreneur sitting in the basement typing out code and solving problems to make DeFi faster, smarter. I think we’re going to see a lot of change, a lot of d…
You Swallowed a Tapeworm – What Now? #kurzgesagt #shorts
BL, you swallowed a tapeworm by accident. What now? Maybe you ate infected raw meat, or perhaps you drank contaminated water. Well, that’s less important now; they’re in your body. How bad it might get depends on whether it’s a lava or an egg. Option on…
How To Use Your Intuition
Hello, Airlock! Sir, welcome back. You know, some people have got the intuition of a wooden spoon, right? They struggle to make quick decisions, they can’t read a room, and they lack in the creativity department. Intuition is one of those things that’s no…
Selling corporate jets isn't easy!
How long can that process take? Days, weeks; sometimes you’re working on a transaction for a year or two. Sometimes it’s a month, still right up to the line. I’ve had a transaction where we’ve signed the contract, they put up a deposit, and we’re going t…
Vidit Aatrey on Building Meesho, India's Top Reselling Platform, with Adora Cheung
This is a door from YC. I’m excited to have a detox light CEO and co-founder of Meesho, which was founded in 2015, and you went through YC in 2016. So today, Meesho is probably one of the hottest startups in India, if not the hottest startup, and I’m supe…