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
Stop Hiding Who You Really Are | The Philosophy of Friedrich Nietzsche
Your growth in life depends on how you spend your energy, and the best way to spend your energy is on solving the right problems. But which problems are the right ones to solve? I can’t stress how important, how critical, this question is. How do you kno…
12 STOIC SECRETS FOR DOING YOUR BEST | STOICISM INSIGHTS
Imagine going through your entire life believing that every single setback, every challenge, was actually setting you up for something greater. Now, I know that might sound like just another inspirational quote you scroll past on your social media feed, b…
Interpreting confidence level example | Confidence intervals | AP Statistics | Khan Academy
[Instructor] We are told that a zookeeper took a random sample of 30 days and observed how much food an elephant ate on each of those days. The sample mean was 350 kilograms, and the sample standard deviation was 25 kilograms. The resulting 90% confidence…
Momentum | Physics | Khan Academy
You have a baseball and a ping-pong ball being hurled at you, let’s say at pretty much the same speed. Now, if you try to catch it, you probably know that catching a baseball is going to hurt your hand more compared to the ping pong ball, right? But why? …
Contaminate | Vocabulary | Khan Academy
Careful wordsmiths, mind where you step. This word’s been contaminated. Yes, contaminate! It’s a verb; it means to make something dirty or unsafe. You can think of it as another word for “pollute,” but it can also mean something’s been added that shouldn’…
Warren Buffett & Bill Gates - University of Washington
You ought to be happy where you are working, and I always worry about people who say, “You know, I’m going to do this for 10 years. I really don’t like it very well, and then I’ll do 10 more years of this.” I mean, that’s a little like saving up sex for y…