01-19-2018, 01:28 PM
(01-18-2018, 10:28 AM)Au165 Wrote: Are they? If the company liquidates and I have common stock (obviously preferred shares are different) do I get anything? Probably not. If that's the case then it truly isn't "backed" by the assets or income of the company but rather loosely tied to it. The reality is market cap for most companies far exceeds it's tangible value when looking at it's books. It is a fallacy to believe that common shares of stock without dividends are anything more than loose associations to companies and their performance. You are saying a piece of paper is worth something for no other reason than it has the name of a company on it and someone is willing to give you money for it. That company isn't going to do anything for you because you hold that piece of paper, so it doesn't qualify it as a service. You can't use that piece of paper to buy anything (only through exchanging it to someone else for real currency) so it isn't a currency. That paper doesn't "do" anything of real value for you to qualify it as a good (at least no more than a line on a ledger entitling you to digital currency). So why does it really have value? The answer is because everyone agrees it does.
Actually if a corporation with assets liquidates and you hols common stock you do have a claim against the assets. The fact that stock prices are based more on earning potential than asset value does not mean the stock has no value.
And even a "loose association" is a basis for value. There is something you can look at to determine if it is a good investment. If someone was thinking of investing in Bitcoin what factors would they look at to determine what the value of Bitcoin will be next year? There has to be something that sets the value other than just "people agreeing". What effects the opinion of these people that agree on the price of Bitcoin? If I buy one does my opinion matter?
