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
Jeff Clavier and Andrea Zurek - Startup Investor School Day 3
Jeff is someone that I met in the very beginning of my venture into venture. When I first started investing a long time ago, he taught me as many lessons about how to be a good investor. In two senses, how to be a good investor by making good choices and …
Taxes intro | Taxes and tax forms | Financial Literacy | Khan Academy
So, a lot of folks are familiar with government doing things like building roads and bridges, or providing schooling, or parks, or at the federal level, National programs, or say the military. The natural question is: how does the government pay for all o…
Ideology and social policy | US government and civics | Khan Academy
In this off-white color, I have a handful of statements that you might hear folks say, especially in the United States. What we’re going to think about is, are these statements that you would typically hear from a liberal? I’m gonna make a little key here…
How Imaginary Numbers Were Invented
Mathematics began as a way to quantify our world, to measure land, predict the motions of planets, and keep track of commerce. Then came a problem considered impossible. The secret to solving it was to separate math from the real world, to split algebra f…
THIS Common Mistake Ruins Small Businesses | Tom Segura
But within families, there’s always ego intention. Always. There’s the brother, the sister, the mother, the cousin, whatever. If you are unable to fire your own mother, you shouldn’t run the family business because you’ve got to think about the business f…
The book that changed my social life
So when I first got into self-improvement, I had really bad social anxiety. Talking to somebody I didn’t know very well, especially if they were a girl, was really difficult for me. Even carrying on a basic human conversation was something that I didn’t r…