[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.

[ccortes]

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

Correct, so:

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

Is incorrect. The correct sentence should be "Some times stock is valued based on the performance of it's actual profit generation."

> BTC is just a fantasy speculation.

Absolutely, jut like the stock of some companies.

[jariel]

"Anything can be valued at anything" is not an argument.

It's just some weird rhetoric you're using to somehow show a parallel between BTC and Stocks.

The material issue here is that stocks can be rationally valued by determining the underlying value of the implied asset ownership - and mostly are - whereas BTC cannot.

That someone can pay $1 Trillion for a pair of shoes, a BTC, or an Amazon shares is not relevant.