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
Impact of transforming (scaling and shifting) random variables | AP Statistics | Khan Academy
Let’s say that we have a random variable x. Maybe it represents the height of a randomly selected person walking out of the mall or something like that. Right over here, we have its probability distribution, and I’ve drawn it as a bell curve, as a normal …
Office Hours with Kevin & Qasar at Startup School SV 2014
All right, so my name is Kevin Hail. Uh, my name is Cas Unice, and we’re Partners at Y Combinator. What that means really, Billy, is that especially when we’re not in batch, we’re out there trying to recruit and talk to as many founders as possible. In…
Volume of rectangular pyramids using rectangular prisms | Grade 7 (TX TEKS) | Khan Academy
Now let’s look at a rectangular prism. This is not a cube because we can see that all the sides have different lengths. We have the length, the width, and the height, and those are all different. To find the volume of this, I would still multiply the leng…
Lets talk about Grant Cardone and why I don’t buy 16+ unit properties
What’s up you guys? It’s Graham here. So, I’m not gonna lie. One of the most common questions I’ve been asked on my channel is, “Why aren’t you buying 16 units or more? Grant Cardone says you should buy 16 units. Why are you going against Grant Cardone?” …
Charlie Munger: We're Playing With Fire (Interview)
[Music] Hey guys, welcome back to the channel. We got something really cool to talk about today: Charlie Munger. As you guys know, one of my favorite investors, he recently did a 45-50 minute interview with the California Institute of Technology, which i…
Safari Live - Day 32 | National Geographic
[Music] you [Music] [Music] this program features live coverage of an African safari and may include animal kills and carcasses. Viewer discretion is advised. It’s a cool breezy afternoon. There’s some cloud cover in the perfect conditions for a young ma…