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Comment by throwaway613834 | Hacker News Reader

> Even higher-ups are replaceable. Gov'ts need to really catch the shareholders, they own the misbehaving company, and they push them so hard for profits that the workers/managers are lured into cheating the system.

OK, I was with everyone saying higher-ups need to be held accountable, but now you're spewing utter nonsense. It's not like the shareholders knew what was going on. What are they going to be "held accountable" for? For being lied to by a cheating company? It's almost like going after taxpayers because they subsidized a criminal's public transportation.

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Also, lots of shareholders did lose big? Take a look at VOW 2014 - 2018. The price is basically just now recovering.

Not really a loss unless they had to sell in that timeframe. Earnings and dividends are a more appropriate metric for impact to shareholders.

No, that's not really how that works.

They have had a loss, which they may or may not have felt (e.g. if they had to sell, they most certainly did; If those shares were collateral, which is extremely common, they most certainly did). And then there was a gain, which they only had if they did not have to sell.

There's also the issue of opportunity cost.

Really, the only way economics make sense is if you assume that everything is valued at its real value at any time -- not just when it changes hands.

> Really, the only way economics make sense is if you assume that everything is valued at its real value at any time -- not just when it changes hands.

Why? The other way seems to make sense to me.

It only makes sense if you have complete information about every market participant, their plans, liabilities, obligation, etc.

If I had VW stock that I had to sell in between to pay my down payment, i most definitely have lost, regardless of it going up later. If I used my VW stock as collateral for something else, I would have had much less collateral to pledge.

Assuming a “buy and hold” universal is not a reasonable assumption.

Assuming anyone might need to liquidate at any minute is not necessarily more reasonable, but it is more consistent with reality

> Really, the only way economics make sense is if you assume that everything is valued at its real value at any time -- not just when it changes hands.

“When the price of a stock can be influenced by a "herd" on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical.”

“Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper.” — Warren Buffett

It would be great to recite that as response when you get a margin call. But your broker is still going to seize your collateral based on its price, not value.

I thought we were talking about shareholders, not speculators.

Your premise of "the only way economics make sense is if you assume that everything is valued at its real value at any time -- not just when it changes hands" is absurd on its face; one only need look back nine or ten years for confirmation of this. If what you say were true, Bear Stearns would still exist, and you would have to claim that those real estate hedge funds were at their "real value" both in 2006 and in 2007 even though the latter was pennies on the dollar. Is it any comfort to say, "well, that stock collapsed but I at least I bought it at its 'real value' that it had up until yesterday?"

Unless your point is that economics cannot possibly make any sense, I suppose.

Speculators are shareholders.

Bear stearns had pledged 104% of their capital. They weren’t the only one in such a condition, and in this sense it is unfair, but the closing down was justified.

The law was changed from “mark to market” (the standard evaluation for decades) to “Mark to fantasy” specifically so that many bankruptcies would not need to be declared - but without a $700B injection at the time, many more would have happened.

You cannot have consistent book keeping if two entities can book the same item at the same time for materially different values at the same time. It is as simple as that.

The more excepted model is that capital gains (and losses) are equivalent to dividends[0]. So yes it was a loss. [0]https://en.m.wikipedia.org/wiki/Modigliani%E2%80%93Miller_th...

If they didn’t sell any stock, there was no capital gain or loss.

The board are responsible to shareholders; most shareholders are simply too small to have any effect though. I wonder if diluting the shares is in any way a reasonable or feasible solution. You could put the newly created shares in Trust for the country’s pension system or something.

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