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
Band of Sisters | Explorer
The Peshmerga number roughly 150,000, and they’re revered in Kurdish society. When ISIS first attacked, they were taken by surprise and driven back in some places. Since those early days, they’ve transformed themselves into a powerful fighting force—one o…
Introducing Khan Academy Learnstorm 2019!
Hello teachers, I’m Sal Khan, founder of the not-for-profit Khan Academy, and I’m here to announce a nationwide back-to-school learning challenge called LearnStorm. LearnStorm is an exciting way to jumpstart your school year around learning activities. I…
Rick Astley - Never Gonna Give You Up (Official Music Video)
Rick Astley: [Music] We’re no strangers to love, you know the rules and so do I. I full commitments while I’m thinking of you, wouldn’t get this from any other guy. I just want to tell you how I’m feeling; got to make you understand. Never Going To Give Y…
What Makes The Top 10% Of Founders Different? - Michael Seibel
One of the questions I get often during the batch of YC is what separates out a top 10% founder versus everyone else. When I started at YC, I didn’t really have enough context to know as a founder. My own company, of course, had my own friends, but that w…
The Future of The Past
I recently came across a magazine cover from 1962. Created by Italian artist Walter Molino, it depicts a busy road in the 21st century with what looks like a four-wheeled scooter. Walter called it the Cingulata. While our roads today don’t exactly look li…
Why Four Cowboys Rode Wild Horses 3,000 Miles Across America (Part 3) | Nat Geo Live
10 years ago we had um 6 8,000 horses a year being adopted out and that number has plummeted to about 2500 a year. Part of it’s an awareness thing; part of it’s people don’t know horses. But I found one story um that really touched me. After the unbrande…