yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

Tesla : The Ponzi Factor


2m read
·Nov 3, 2024

When we think about the stock market, we think about money, the finance industry, businesses, and making money from investing in successful businesses. The belief is investing in successful businesses is what leads to investment profits, and there's a direct connection between the success of the underlying company and the profits investors experience. This is a reasonable idea, which is why it's in textbooks and recited by finance professionals who sell stocks and stock-related services.

However, this is not how stocks actually work. Most finance professionals have no idea where profits from stocks come from; they just assume it gets magically generated from the complexities of the market. The myth is profits from stocks are generated from the earnings and growth of the underlying companies, and when a company makes money, they share the profits with their investors. But in practice, most public companies never pay dividends on their stocks, and when they make money—which can be millions or even billions—they keep everything.

The reality is profits from stocks come from other investors who are buying and selling stocks. When an investor buys a stock for ten dollars and sells it for eleven dollars, then eleven dollars comes from another investor. Someone who will then start hunting for yet another investor who will give him twelve dollars, and so on. This is technically a negative-sum scenario for investors because they are contributing all the money, and there are fees attached to every transaction.

The company that issued the stock isn't involved in these transactions, so whether the business is making or losing money is irrelevant. This is why companies like Tesla Motors, who has lost billions since they became a public company, can still have stocks that appreciate in value. But in a situation where investors' profits are strictly dependent on money from other investors, investors can make or lose money regardless of whether the company they invested in is making or losing money.

In reality, the stock market is a massive system that shuffles money between investors. It is a system where current investors' profits are directly dependent on the inflow of money from new investors, and such a system is also known as a Ponzi scheme.

More Articles

View All
Solving square-root equations: no solution | Mathematics III | High School Math | Khan Academy
Let’s say that we have the radical equation: the square root of 3x minus seven plus the square root of 2x minus one is equal to zero. I encourage you to pause the video and see if you can solve for X before we work through it together. Alright, so one t…
Alligator Moms Are Nature's Helicopter Parents | National Geographic
[music playing] NARRATOR: What would you do if you could not chew? Did Dr. Seuss write this script or maybe Roald Dahl? [singing] What would you do if you could not chew? Simple. You just thrash your food apart. Alligators go through 2,000 to 3,000 tee…
There is NO HARD language -A polyglot's perspective
As a polyglot, I always get this question: Is Chinese like Japanese, as Turkish is… blah blah? Language hard to learn? The answer is, there is no hard language. Hard language doesn’t exist. Hi, guys! It’s me, Dory. For those who are new here, I’m a polygl…
Firefighters Reflect on 9/11 | 9/11: One Day in America
[Music] Thanks. [Applause] Stay together, stay together. Let me know what’s going on. Um, we knew at that moment that our problem just doubled in size. [Music] So at that point, we met in the football huddle. I’m going to send him out. Deputy Chief, the D…
How Caleb Hammer Met His Girlfriend
How did you meet your girlfriend? Fish shop. Fish shop? Yeah, she was shopping for some shrimp. I was there looking for some puffer fish. She was very attractive, and I went up to her. I was like, “I like your glasses. Can I have your number?” You wen…
Top 5 Video Game WTFs!!
Today we are going to be looking at some of the Top 5 Video Game WTF’s. There are way more than 5 out there, but guess what, 5 is a nice round number, and it’s the number of girlfriends I have. And by 5, I mean 0. Definitions: I’m not including things th…