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Joined 1 year ago
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Cake day: October 17th, 2023

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  • Something that is very easy to forget is that stock value is only very loosely tied to actual company value.

    Stock value is based on what people are prepared to pay for the stock, not what the company is worth.

    Say that I create a company that makes newspaper hats for tanks in Ukraine, something utterly worthless, I am the only employee and my inventory is just yesterday’s newspapers that I found in the gutter.

    My company has zero actual value, but I decide to create 50000 shares of my company, sell one to my friend for €2, and suddenly my company’s market value would look like €100000.