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Comment by smallmancontrov | Hacker News Reader

> if you tried to sell all Nvidia shares at once

That is something different: liquidation value. Market cap tells you the sum total of the numbers next to this ticker symbol in everyone's brokerage account. It tells you the collective expectations about future returns and also the wealth effect that people feel based on their ability to individually obtain cash for shares.

It is true that neither of those things is liquidation value, but also liquidation value is neither of those things. If you expect a liquidation scenario, sure, use liquidation value. If you don't expect a liquidation scenario but want to measure collective expectations of and confidence in a stock, use market cap.

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but it’s still so wrong. Like if I fund a company and I sell 1% to my mum who really believes in me for 100.000 USD I’m suddenly worth almost 10 million and the market cap of my company is 10 million, even though nobody might even pay a penny for my company. I don’t think most people are aware that this is how it works and crypto currencies have abused this a lot, by just selling a part of their shares, creating scarcity in the market and reaching high market caps. The traditional financial market is not that much different I feel like.

If Elon Musks sells all his shares the value of SpaceX and Tesla would drop dramatically I don’t know how much realistically he would be able to liquidate from his shares.

So the headline "is wiped" is misleading. I think it’s all ultimatively to get money in the markets and support growth

Many simplifying financial concepts only apply to liquid markets. Market cap is one of them. The entire notion that a stock can have a price is another (if liquidity is low, you need to sweat the order book). Our modern financial system has opted to use these simplifications and limit casually-accessible trading to times of day (and days of week and options strikes and expirations etc) with enough liquidity to support the simplifications.

The alternative would be to gate everything behind the more sophisticated concepts and limit access to people who had demonstrated competence -- and that's exactly what we do for illiquid markets. It's not like exchange servers turn off at 4pm, if you want to step outside the high-liquidity kiddie pool after-hours and OTC trading exist. However, I am not scandalized that the kiddie pool is full of toys and you shouldn't be either.

I mean there definitely have been people exploited by these numbers. It doesn’t hurt to let people know.

The point is still appropriate and relevant. I would have probably described it more like the same kind of con of American retailers that constantly run 80% off sales, which they come to by staking the fake sale percentage to a fake, fraudulent, made up number that the majority of the goods never sell for, i.e., MSRP.

Same clownish nonsense with this OP story, the S&P is still up 7.5% YTD, all that was lost is fabricated made up numbers on paper/screens. Now, if people sold stock and booked $2.5T in losses, then call me out please.

I can't stand the constantly lying, fraud, conning, and gaslighting. Maybe the market will drop more, maybe the counterfeit dollar market will go up. But reality is that noting is lost or made until you sell.

A huge volume of stocks are traded at market price every day. I don't think that's a dishonest valuation at all.

Valuation is a terrible name for that number because this number has nothing to do with value and everyone knows that. Everyone knows that if shares were sold by their current owners, their income wouldn't be anywhere close to that number. So a company value is a ridiculously small fraction of that number and absolutely impossible to determine from it.

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