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
Shark Tank Star Kevin O'Leary's Morning Routine - A Day in the Life of a Multi-Millionaire
I’m Mr. Wonderful here, and I want to talk about this week’s episode of Ask Mr. Wonderful. It’s inspired by an email question from Atlanta. I’m gonna read it to you; you see what I mean. Hi, my name is Elizabeth from Atlanta. I’m one of your Instagram fo…
Worked example: Calculating concentration using the Beer–Lambert law | AP Chemistry | Khan Academy
So I have a question here from the Cots, Trickle, and Townsend Chemistry and Chemical Reactivity book, and I got their permission to do this. It says a solution of potassium permanganate has an absorbance of 0.53 when measured at 540 nanometers in a 1 cen…
Median in a histogram | Summarizing quantitative data | AP Statistics | Khan Academy
Miguel tracked how much sleep he got for 50 consecutive days and made a histogram of the results. Which interval contains the median sleep amount? So, they’re saying, is it this interval on the histogram from 6 to 6.5, or this one, or this one, or any of …
The Key To A Long-term Relationship
How do you know when you meet your perfect partner that you think is going to be with you for life? Maybe you get married, maybe you don’t. But my point is, why are they the right one for you? You have to think long term. Are they your partner because th…
LearnStorm Growth Mindset: Khan Academy's math content creator on learning strategies
I’m Jeff Dodds. I’m a math content creator here at Khan Academy. I had a fixed mindset for a really long time. I was convinced that I was a math person and I was smart and I was just good at math. So, I remember the first time I really struggled. I was t…
15 Things To Do When Life Doesn’t Go Your Way
In the novel of Our Lives, plot twists are essential to the richness of the story. They’re here to make your Ted Talk more interesting. Maybe you got fired, lost someone, or your flight got delayed, missed your connection, and now you’re writing a script …