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Comment by uptrails | Hacker News Reader

How does your first premise follow from the second? Yes, you're not bullish on these companies specifically, but you're effectively giving them (and some others) your money and inflating their valuations. You're bullish on the status quo and they're a large part of the status quo.

In fact, it's arguably worse than deliberately investing in them, because you're completely indifferent to the soundness of their business model. The hope is just that through the magic of "efficient markets", someone else will arbitrage your errors away. I don't know if there are enough takers for a bet of this size.

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Being completely indifferent to the soundness of a publicly traded company's business model is the correct choice for most ordinary people trying to invest their retirement savings, because they have no basis for thinking any other choice of how to invest will result in superior returns. This is the entire line of thinking behind all passive index-fund-based stock investing.

And in the end you have a market where nobody has any basis for thinking anything has any value, and the market ends up being a random walk.

Nah. The more irrational it gets, the more margin available to active. There's always an incentive for active investors to participate in price discovery.

> And in the end you have a market where nobody has any basis for thinking anything has any value, and the market ends up being a random walk.

Companies have value: at the very least they can be liquidated and their assets sold off (book value). They also tend to generate profits and may choose to distribute them (dividends, share buybacks): this also has value to shareholders.

Where the random walk comes in is that the information of how healthy or profitable a company is gives it a (perceived) value of $x. But new information can be learned at any point about the company which can change the (perceived) outlook of its health and profitability, which may give it a value of $y. Now it could be that x>y or x<y.

It is the fact that this new information (real, rumoured, fake) can come at any random point in the future:

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

Book value is pretty much irrelevant unless your business is buying businesses and dismantling them for parts (vulture capitalism). A company's true value can also be less than its asset value because the dismantling process can be costly.

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