I see lots of articles from the media expressing the negative aspects of how gold is bought because people expect they will be able to sell it to another buyer for a higher price in the future.
A stock that pays zero dividends still has an expected rate of return equal to its the sum of its discounted future cashflows.
I wasnât really speaking of stocks when I said assets. I would have said stocks if I were. But yes, people buy stocks expecting them to go up too.
This isnât true for all coins. For instance there is a coin that pays out 100% of the fees earned by a platform for trading NFTs. Other coins provide the owners with a percent of the fees from various crypto exchanges, crypto bridges, etc.
Quite a difference when the price of a particular asset also fluctuates based on the underlying value of a company vs the price fluctuating based off of collective hype with no underlying value.
I wasnât talking about stocks in my original post, but it doesnât change the fact that people also buy stocks expecting the price to go up.
Okay, but itâs certainly true of Bitcoins and Dogecoins.
Iâm tempted to split this into two threads - one for actual discussion of crypto and one for the LC stuff. So itâll give people the option to discuss actual questions about crypto, without having to wade through all the LC stuff.
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mebâs larger point is obviously true: tons and tons of assets are âponnzi schemesâ if ponzi just means that you expect to sell a thing for more to someone else down the road.
but tradfi bros love their technicalities!
Most people buy stocks because they have a positive expected real return in the form of retained earnings and dividend distributions. Thereâs an important distinction between that and simply hoping you can sell something to someone else for a higher price than you bought it. Thereâs a bit of nuance there, so if you donât understand it, I can understand the anger and confusion.
Hardly a technicality; in the other thread people have argued that stocks are Ponzi schemes
I mean, cutting to the chase, the assumption that all investing just amounts to pure speculation and therefore investing in fake money is the same as investing in profitable companies, belies the true attraction to all these bullshit âassets.â Itâs just a garden variety get rich quick scam indistinguishable from the ones that have been a staple of humanity since forever.
the reason i buy gold is so i can trade it for toilet paper and toothpaste when the apocalypse comes
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I take his point to be that you would never see NYT and the rest write about how stocks are ponzis. Everything is a ponzi except pleasure.
If only some of this newfangled defi stuff could figure out a way to have yields independent of token value. Man, that would be revolutionary! There could be, like, savings and loans with interest. Mining, staking and validating rewards. Fee-generating liquidity pools for automated market makers. Such a pity that none of this can exist with crypto.
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Uber, Lyft, and every other bullshit tech company seems like pure speculation plays, similar to crypto, no? None of them are profitable or really have any hope of being profitable in the future.
Sometimes stocks can also be in a speculative bubble!
They were certainly overvalued and in my opinion they still are, but there was a plausible argument for owning the stocks as a lottery ticket. If Uber had in reality developed driverless taxis before anyone else, or forced Lyft out of business or had any legitimacy to autonomous trucking or whatever, and dominated those industries, their market cap would have justifiably exploded. A company with a 10% chance of being a trillion dollar company and a 90% chance of bankruptcy is still worth a lot of money.
All stock investments are perfectly valued. The market is pure and wise and based solely on fundamentals.
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How is this different from crypto?