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
Elon Musk On Fear
One thing I really like about you is you are unusually fearless and willing to go in the face of other people telling you something that’s crazy. I know a lot of pretty crazy people; you still stand out. Uh, where does that come from, or how do you think …
The SEC Wants to Ban Passive Income | Crypto Under Attack
Here, Grammits guides you up what’s which, by the way, is my intro backwards. Today, we need to address a few unexpected curveballs that were just thrown at the markets. Because whether you’re invested in stocks, cryptocurrency, retirement accounts, or ev…
15 BEST MONEY ADVICE | ALUX Edition
You are watching the Sunday motivational video: The 15 Best Pieces of Money Advice. Welcome to a luxe calm, the place where future billionaires come to get inspired. Halloway, lack sirs, and welcome back to this special Sunday motivational video. We’ve be…
2015 AP Chemistry free response 3d | Chemistry | Khan Academy
Calculate the pH at the half equivalence point. So let’s just remind ourselves what the half equivalence point even is. The equivalence point is when the titrant, in this case the hydrochloric acid, completely reacts with the potassium sorbate, the thing…
Transitioning from Academia to Data Science - Jake Klamka with Kevin Hale
So Kevin, for those of our listeners that don’t know who you are, what’s your deal? I’m a partner here at Y Combinator. I actually was in the second ever batch. I was in Winter 2006 and I founded a company called Wufoo, ran that for five years, and then …
Metaverse: Beyond Human
Imagine a world where you wake up, head to the office in the morning, to a party with friends in the evening, and then a live concert at midnight, all while sitting in the warmth of your home or from the comfort of your bed. That might just be part of hum…