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Comment by undefined1 | Hacker News Reader

how does it compare to the gambling of stocks on Robinhood?

It is probably very similar when it is stocks that are nearing bankruptcy or otherwise have horrid fundamentals.

If the stocks do have fundamentals and the PE ratio makes sense relative to the growth factor, then it isn't pure gambling.

The S&P hit 4,000 today, with a P/E ratio of about 40:1.

On Jan 1st 2020 it had a P/E radio of 25:1

Does that make sense?

Given the past few months have seen conditions that led to abnormally low "E" that are not expected to be repeated, and at the same time the amount of cash available to inflate "P" increased dramatically... maybe?

Disclaimer: I know nothing

I think there is an argument to be made that as stock growth has outpaced GDP growth for many years now that the connection between the markets and the real world has become tenuous. The fundamentals become less important over time as crazy speculation continues to win out.

GME is a symptom of a broken system.

What is broken about it? People were over leveraged and others acted on it. Seems to be working as intended. If GME is at this P/E a year from I'll agree with you

The complete disconnect from reality? How much of that money is going to be available to Gamestop to turn their business around? How is this different than gambling on horse races except that instead of horses you have corporations?

Difference is all about ownership. You don't own a portion of the horse, you own a stake of the outcome of one race. When you buy a share of a company, you own 0.00001% of said company. Gamestop does not have access to that money as they sold their stake in exchange for cash at a past date. As a shareholder, you can use your stake to vote in shareholder meetings and if large enough be on the board to help turn the business around

Stocks can have cashflow. It is possible that GME will come up with a new business plan that makes money. Maybe unlikely, but it is something you can make a bet on. BTC is more like a lottery. You don't know what day will be the peak price. So you buy your BTC sell to someone else and hope you guess the top. BTC will never turn a profit, all you can do is hope that you sell before it crashes.

Similarly a lottery ticket will never produce dividends or cashflow. You pick a number and hope it is the lucky one.

if you read the article you’re commenting on, they mention that and forums like Wallstreetbets

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