[jariel]

"Most stock owners hope this very thing, t"

Stocks imply ownership of assets.

Sure, in terms of 'hoping that someone willy buy' is similar to BTC, but the valuation is completely different.

A stock is valued based on the performance of it's actual profit generation.

BTC is just a made up number. It's what people think the crowd will buy it for. Granted, this mechanism itself can be useful in some scenarios, but BTC itself isn't useful, at least not right now.

[_huayra_]

I think people with BTC FOMO forget that it was always some sort of "hype Ponzi scheme". Back in 2011, I worked in an office that had one guy who was really into BTC. Looking back now, everyone thinks "wow he was such a genius to get in so early", but back then it was not profitable to mine, even if the difficulty was far lower. We'd constantly roast this coworker over his seemingly loony efforts to put solar on his house to cover the cost of mining neglecting to consider the solar panels would (in our opinions back then) put him in the red for a long time. (good on him for at least going green with it). I must admit I'm quite jealous of his insistence despite us roasting him (he's probably a multimillionaire now on BTC), but anyone who says "Oh yeah I could totally tell that BTC would take off in 2011" is being disingenuous at best.

Unlike stocks which imply ownership of assets of a company, BTC is a pure hype machine, with the most hype given out by people who are already bought in.

If any product or service has ONLY people who use it hyping it up (e.g. BTC, and especially NFTs!) or only people who are NOT using it hyping it up (e.g. the myriad get-rich-quick schemes about some drop-shipping Amazon thing, real estate, or "hOw To BE aN eNTrePreNeUR" in a vague sense of the term (whatever the Gary V & friends stuff is); all those guys make money not by doing what they're telling you to do but by telling you what to do...), it's usually a bad sign.

[ccortes]

> A stock is valued based on the performance of it's actual profit generation.

I'm not sure that's the case any more. I mean we've seen billion dollar companies that just can't reach profitability.

[XorNot]

You still can't call it till they actually go bankrupt. And most of them don't - the underlying business and assets get sold off or absorbed somewhere else. And at the end of the day there's an actual service they provide - value is being created, just potentially not profitably.

Bitcoin is the opposite: what value it had (international transfers for Americans who live with one of the first world's worst banking systems) has been completely wiped out by the cost of transactions.

At the end of the day the hashes are valueless, no one has a product, or designs, or even any useful code.

[jariel]

The stock is valued of the basis the net present value of future earnings.

The obvious difficulty there is determining the future earnings (and discount rate).

But that doesn't mean they don't exist - it's a rational premise of valuation.

Amazon is worth a lot because it's a giant machine with $350B in revenues - so investors can quibble over their earnings and 'how much that is worth' in future earnings - but it's based on those numbers.

BTC valuation is just whatever the crowd wants to pay.

A BTC is a magic number, and that's it.

[ccortes]

> But that doesn't mean they don't exist - it's a rational premise of valuation.

Some times they do and some times they don't. That means it's not a fundamental property for stock valuation.

What was the rational premise of valuation behind Gamestop? There was one, but it had little or nothing to do with Gamestop's future earinings.

[jariel]

"That means it's not a fundamental property for stock valuation."

Sorry this is not true let me illustrate:

If there is a 9/10 chance that the profits will be $1, and a 1/10 chance that it will be $0, then we can value those profits in present terms at $0.9 (Edit: assuming no issues with cost of capital, time value of money etc. i.e. constant real dollars)

If we can reasonably calculate the profits and risk, then we can make a valuation.

GameStop was not a valuation, it was a stampede.

Also note that everything is subject to whims of speculation, fads etc. etc..

[ccortes]

> If there is a 9/10 chance that the profits will be $1, and a 1/10 chance that it will be $0, then we can value those profits in present terms at $0.9 (Edit: assuming no issues with cost of capital, time value of money etc. i.e. constant real dollars)

Yes, you can do that. You can argue that that's the smart way of doing it. But you don't have to and that's the point.

Elon musk tweets can manipulate the stock market almost at will. There is no profit analysis there, just the mob following Musk.

So again, future profits have nothing to do with a stock valuation. So times it does, but sometimes it doesn't. And if some times it doesn't, then it's not a fundamental property of it.

[jariel]

Saying 'people can or cannot use it means that it's not a fundamental property' -> is not an argument.

Nobody has to use anything to value a stock - including current profits. Therefore even current profits would not be 'a fundamental property'.

And of course, nobody has to use any data or logic when valuing absolutely any financial asset anywhere, ergo - the statement is completely pointless.

Again: we value stock based on it's estimated book value, future earnings and other assessments. We can argue a little bit about all of that, fine, that's why we let the market decide.

BTC is just a fantasy speculation.

[saalweachter]

I also like to point out in these contexts that a trillion dollars a year flow back from the profits of the companies of the S&P to the investors in the S&P 500, in the form of dividends and stock buybacks.

It's not just a zero-sum game, making money off fellow investors who bet the stock will go one way when it goes the other.