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
Charlie Munger’s Final Warning for Investors in 2024
It’s a radically different world from the world we started in. I think it’s going to get tougher. That was Charlie Munger speaking at the Berkshire Hathaway shareholders’ meeting earlier this year. I was there, sitting alongside tens of thousands of peopl…
Charlie Munger's Final Advice For 2024.
I basically believe in a soldier on system. Lots of hardship will come, and you got to handle it well. I soldering through Charlie Munger, sadly passed away in November 2023, one month shy of his 100th birthday. But in a big stroke of luck for us investor…
Impact of media evolution on politics | US government and civics | Khan Academy
In this video, we’re going to talk about the impact of media on politics. In particular, we’re going to think about how media has changed over time and how that might change political discourse over time or how it might change people’s views over time. S…
How to 10x Your Intelligence
The best way to 10x your intelligence is to go on a difficult books reading regimen. That’s where you read ten or less books a year, and each one should be harder than the last. And this is probably the opposite of a lot of what you see and hear on YouTub…
Heat transfer | Thermodynamics | High school physics | Khan Academy
All right, so I don’t know about you, but I feel like talking about pizza. It’s pizza night over here. I am smelling pizza as it’s in the oven. It’s on my mind, and I know we’re supposed to be talking about heat and thermal equilibrium, but I think we can…
How I Choose Opportunities That Align With My Brand | Behind The Velvet Rope PT 2
The social media following and the celebrity makes my deal making better because I could deliver the company’s extraordinary reductions in customer acquisition costs. You can’t run around all day long worrying what people think about you. I don’t. You sho…