Yeah, all bubbles / ponzi schemes run out of money eventually. But 17 years (Madoff) is longer than most people's radar. If you decide to go short, you gotta be right not only in the direction of the stock, but also in the timing of it.
Timing is everything. Unfortunately, timing is also the most random.
If someone seriously thinks that DFV (or the entirety of WSB, for that matter) would even physically be able to notably move a ticker such as GME, then I don't have much to say to them, because this is completely inane. With some penny stocks that have almost no trading volume? Sure, technically possible. But with something like GME, it is quite not that simple.
For a solid frame of reference, the entire holdings of GME that DFV had after the gigantic pump were about $50mil, one of the largest retail traders by far. Institutional traders? They did individual GME trades in volumes of $700mil+ each on a daily basis. Not $700mil+ for all institutional investors combined, but individually. Cannot be bothered to find a citation for it now, but iirc institutional investors also held about 75-80% of all outstanding GME shares throughout the entire pump.
I think that KO stock you have might still be valued, and probably valued well. Just stay away from the stupid memes, and you'll find plenty of value.
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Does the stock O still have a good dividend? Does O still follow the general trends of real-estate as expected? (Ex: O's assets are mostly houses in residential areas. O largely goes up when the housing market is good, and goes down when the housing market is bad).
As such, O provides you with a low-cost way to expose yourself to the real-estate market without having to invest 6-figures to do so. That's plenty of value right there. Short-selling O, or buying call/put options on O can similarly provide more sophisticated financial instruments against the housing market.
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I don't know what your expectations of the stock market are. But... a quarterly dividend from my dividend stocks + exposure to hard to enter markets are the main jobs of it for me. And I think its pretty good at both.
There's more and more people who believe in this kind of nihilism that since there's corruption and bubbles in the real economy that it is entirely fiction.
And that is giving rise to things like this crazy pumping of GME for the lulz.
The trend seems to be that a larger fraction of people have complete disillusionment with all our institutions to the point where nothing matters.
That also seems incredibly dangerous to me. By believing that institutions are meaningless and beyond reform that could lead to a much larger systemic collapse in institutions / values / etc.
I think the feeling that the stock market is crap is completely rational for the working public. And hoping for the destruction of it is normal given that the normal person has experienced nothing good coming from it; in fact the normal person sees the stock market as something that the rich use to get richer.
Believing that the stock market is crap has nothing to do with our institutions beyond wall street† so it doesn’t necessitate towards this dangerous nihilism that you are so afraid of. In the current discord I see two avenues for this despair.
1. Susceptibility towards populism and fascism. This includes trumpism, and is indeed worrying. Minorities are blamed for all the inequalities even though this stems from wall street and the stock market being crap... (don’t ask me, I don’t understand the logic either).
2. Susceptibility towards socialism. The collapse of wall street is viewed as a favorable outcome in the current class war. The suffering of the Bourgeois is victory to be celebrated.
† Well perhaps tangentially the institutions which favors wall street; such as the white house; but that despair translates more to “we should improve our democracy somwhat” rather then “we should abolish democracy”.
The banks were willing to offer Tesla ~$1.3 Billion IIRC, but the cost of the factory would be $5 Billion total. Furthermore, wages would have to be paid during the "rampup" period.
I'd say "having a job at all" is a major advantage to the working public. All TSLA / Elon had to do was issue a secondary offering with a bit of hype to the public investors, and they shoved $Billions into the company, allowing it to expand.
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You need to work on building cars for months, or even years, before a factory churns a profit. Where do you get the money for that? Well, the Stock Market is absolutely full of people who are willing to risk money (for the promises of more money).
If you have a better plan for where a company can raise ~$4 Billion or so, please explain.
Note also that building a big factory to produce electric cars is exactly the kind of thing that the green new deal is advocating for. And this falls neatly into avenue of despair nr. 2: susceptibility towards socialism. As a taxpayer and a worker I would much rather want to see the profits of a big expensive factory—which the company it self cannot afford to build—go back to the state—or even better, to the workers; as opposed to faceless shareholders—or worse, to billionaires like Elon Musk.
The Stock Market has been participating on these expensive projects since the 1500s Dutch Traders swapped stocks so that one shipwreck could be supported by many traders. You needed tons of money to fill a Treasure Ship, that treasure ship left for India with common / cheap European goods, filled up with expensive spices, and came back.
The idea of selling stock to raise money is literally older than our government.
1. Provides initial funding for large, risky projects.
2. These projects (and jobs), such as the sailing jobs associated with those 1500s Treasure ships, would not exist without investment from a large number of investors.
3. The rewards (such as the Treasure Ship successfully returning from India) offers exponential growth. $100 investment becomes $200. Or $200 initial investment becomes $400, due to the difference in prices between Europe and India. As such, all investors of all classes who can afford a share can benefit. (Ex: A millionare may offer $100k, but a billionaire may offer $100 million. Both are awarded by proportion of the initial investment).
4. The value of the shares change based on information. If you hear that the Treasure Ship has sunk, the value is zero. If you hear that the Treasure Ship has made successful stops in Madagascar, India, or is nearly home, the value of those shares increases (less chance of failure, since its almost done with the trip). To fairly trade the shares innately means changing the value of the shares as various information comes in.
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So my point is multi-fold.
1. Exponential growth isn't really from the Stock Market per se, but from the opportunities that arise from pooling money together.
2. The Stock Market makes those trades possible.
3. There are other ways to make such investments (such as US Government). But its not very clear that the government should be the one solely responsible for these sorts of risky behaviors. For better or worse, people understand the risks on the Stock Market (ex: if the Treasure Ship sinks, the value of that stock loses everything). If a Government-sponsored ship sinks, that's a huge loss for the Government. These sorts of risks are almost better handled by private citizens: the risk-takers, the Entrepreneurs, rather than stable governments or workers.
4. It is natural for the value of shares to change.
I never said that, I said it was crap. Things that are crap can still offer things of value, they just do so in a crappy way. Global capitalism is a prime example of that.
I did say—in a different thread—that to a worker, the stock market offers nothing of value. I still stand by that. To a worker the shareholder-board of director relationship is such that it monopolizes job opportunities. The average worker has no choice but to hand over the fruit of their labor to shareholders and hope that their union will successfully negotiate a better wage—or worse hope they are allowed to unionize.
As to your example of the Dutch treasure ships, we don’t live in a Mercantile world any more. We now have insurance companies which offers insurance on ventures like these. And if the risk is to great, the Dutch traders could ask their government to insure them to a point (and in return pay higher parts of their profits in taxes).
There are more questions that arise when you bring this mercantile example to the modern setting: How are the Dutch traders the once that are making the millions off of this scheme? I would want to ask how much are the farmers growing and drying the spice making from this? Perhaps they deserve more. Perhaps the farmers should band together and use a more favorable distributor that offers them a fair share of the profits, rather then relying on these shady colonialists. Maybe the profits being made up in Holland shouldn’t be going there in the first place. Maybe we should standardize shipping such that distributors could rely on a global trade network, say by buying a container at a freight that departs from Bangkok and heads towards Rotterdam every 2 weeks. Then maybe the Dutch treasure ships won’t be needed at all, and their old unfair business model can rot along with their falling stock prices and their aging ships.
The ship-hands of the hypothetical 16th century Treasure Ship, what job would they have if investors didn't give them a ship to work on?
> I would want to ask how much are the farmers growing and drying the spice making from this?
Well, without Europeans to consume those spices, I presume they'd also be out of the job. Because they were growing those spices hoping that someone would come by and trade with them. That's why India was exporting spices: because they had far more / excesses of spices, while Europeans were importing spices (they couldn't grow those spices in Europe).
The trade, and Treasure Ship, in fact benefited everyone.
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> Maybe we should standardize shipping such that distributors could rely on a global trade network, say by buying a container at a freight that departs from Bangkok and heads towards Rotterdam every 2 weeks.
Those ships and trading networks cost money. How will you build those networks?
Answer: raise money, then with that money, buy ships. You can't just magically assume ships appear from nothingness. Someone has to make those, someone has to be the risk-taker to assume the risk when disasters (ex: hurricane sinks treasure ship) happens.
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Lets take another example: Solar Panels. How do you expect for solar panels to be deployed? The Stock Market is really good at that: tons of solar panel companies got literal billions of dollars so that Solar Panels could be bought, and they hope for a slow-and-steady profit over the next 20 years (or whatever the lifespan of solar panels is).
This is true for solar panel manufacturers, utility solar panel deployers, as well as solar-panel installers. All of them got large investments from the modern stock market. Sure, the US Government put down a few incentives, but the stock market created the possibility.
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How about this. Try to build a 20MW Solar Panel array. Maybe not "really build it", but really try to think through the steps of how you'd raise money and actually build the darn thing.
And no magic thinking. You can't just imagine that money / resources pop out of no where. If you get money, tell me where you get the money from, and why they'd give it to you. If you say the government will do it, explain how easy it will be to make a law to increase taxes so that the government has the funds to take on the project. (Maybe you have some special legal scheme that you think everyone would agree too. I dunno, I can't think of anything on that front. I'd probably have the government tap into the Bond market honestly...)
I’m sure that the majority of all businesses are able to fund their own ventures (including solar panel manufacturers), if they don’t have the savings, there are also loans, government (and community) support, etc. I think your overestimate of the value (or rather the necessity) of the stock market stems from big, expensive, and risky ventures. Perhaps you are right and those would suffer if the stock market would suddenly collapse on it self.
However like I said previously, I think you underestimate the resourcefulness of the private enterprise. In a world where there are no stocks, and a company wants to venture in a risky and expensive project, that nobody wants to loan for (not even the government) perhaps they would find a way to scale down the project, start earning profits (or demonstrate how the profits will come as the project is scaled up). Perhaps some loan agency will specialize in large risky loans (at a higher price), and perhaps we will (god forbids) re-invent the stock market.
If I am wrong and I overestimate the resourcefulness of the private enterprise. Then the government can always kick in and fund the deployment of those solar panels. After all we do need them, and there is no risk for the government (well the risk is the other direction of letting those solar panels go undeployed and risk a runaway climate disaster; hence the green new deal).
Lets just look at the top companies in the world by revenue, shall we?
1. Walmart (Public, stock ticker WMT) -- 560 Billion/year revenue
2. Amazon (Public, AMZN) -- 386 Billion
3. Apple (Public, AAPL) -- 274 Billion
4. CVS (Public, CVS) -- 268 Billion
5. ExxonMobil (Public XOM) -- 264 Billion
(Etc. etc. etc.)
By revenue, we have to drop down all the way to #25: Bank of America ($113 Billion/year) before we find public companies close to the size of private ones.
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In fact, most private companies seek to go public. So that those private-shares can be "Cashed out" on the public market. Private companies do not have access to a market: you cannot leave your seat of ownership very easily.
In contrast: public companies trade their ownership ("shares") millions of times a day on the public stock market. Its extremely easy to become an owner... or to leave your seat of power. As such, as large private companies's owners grow old (and eventually die), their successors naturally transition to public ownership models.
As such, figures such as Bill Gates, can easily leave their seat as owner of Microsoft and move on with their life, doing something else. All Bill Gates had to do was sell his shares.
The latter opinion is, honestly, the kind of attitude that I think is going to lead directly to fascism.
Lots of people thinking "nothing matters anymore".
There's too much of our lives that's as distanced and separated from fundamentals as GME.
Once it was found out what they were doing, the market acted rationally again, but dumping their value to zero.