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
Snitches Get Stitches | Wicked Tuna
Oh no, called the Coast Guard! Yo, Coast Guard’s coming! You think that called the Coast Guard on you? Yeah, see that boat there? All my friends are on that boat. He set that out just for us. Safety is a big issue out here, and messing with people, you kn…
Origins of the Dragon | StarTalk
How good could be unless it’s got dragons? It’s no fantasy unless you have a dragon. Yeah, you need the dragon. Yeah. You need the dragons. And in my home institution, the American Museum of Natural History, we had an exhibit a few years ago that was al…
Mr. Freeman, part 64
Ooops! Uh… Close the door! Get all of the young children out of here, and put your hands where I can see them! Do it! Today I’m going to tell you about a joyful and pleasant pastime, a piece of pocket-size happiness for anyone, a path to pure pleasure th…
How to Stop Procrastinating Homework - The Secret Force That's Stopping You
So I just finished watching Budweiser’s new Superbowl ad called “Born the Hard Way,” and while a lot of people are using it as a means to get into a political flame war, another one, my first reaction when I saw it was that it reminded me of a concept tha…
Ray Dalio: Bearish On Bitcoin, But Still Buys
Well, you thought that I was done talking about Ray Dalio? No way! Because, interestingly, while most of his interviews at the moment talk about macroeconomics and investing in China and so on, I was very surprised to hear him bring up the fact that he ha…
Fiscal and monetary policy in parallel | AP Macroeconomics | Khan Academy
In previous videos, we have talked at length about fiscal policy, and in other videos, we’ve talked at length about monetary policy. But now we’re going to talk about them together. Because at any given time in a country, there is some type of fiscal poli…