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
The Second Amendment | National Constitution Center | Khan Academy
Hi, this is Kim from Khan Academy, and today I’m learning about the Second Amendment to the US Constitution, which states that a well-regulated militia, being necessary to the security of a free State, the right of the people to keep and bear arms shall n…
Politics in the Animal Kingdom: Single Transferable Vote
Queen Lion is looking to make the elections in her animal kingdom more fair. Currently, she divides her citizens into ranges, each of which selects one representative to go to the jungle council, which makes laws for the kingdom. But her citizens are unha…
Getting The Shot - Behind the Scenes | Life Below Zero
[Music] Working, that’s getting super frustrating. This is what it’s like on Life Below Zero: down tough conditions all around, a filament, no heat, no power, do anything, won’t even turn on, and falling too many times we have balance. It’s just a typical…
AP US history DBQ example 3 | The historian's toolkit | US History | Khan Academy
This is the third in a series of videos about answering the document-based question, or DBQ, on the AP US History exam. In the last video, we started taking a look at and analyzing some of the primary documents provided for this exam. So, the first one w…
Playing Sci-Fact or Sci-Fiction | StarTalk
Now we’re going to play a game called SFA or SCI fiction, and you’re going to identify whether you think it is SFA or a sci fiction or maybe you don’t know if I don’t know either. I won’t claim to know. That sounds good. The days were shorter millions of…
Does Your Startup Need To Be In San Francisco?
We’re working together. We’re in the same room right now. Yes, we get to live in the same area, even though our personal decisions about where we live are wildly different. Yeah, very different lives. I don’t have a yard. I have kids too. [Music] All ri…