Hacker News Reader

Comment by hcks | Hacker News Reader

Why would someone sell the share for less than this "inherent" value then? Or conversely why would some buy for more than that?

View on HN

> Why would someone sell the share for less than this "inherent" value then?

Because the inherent value includes things we know about such as the assets the company has, but it also includes the speculative future earnings which we can't be sure about.

Because people don't always agree on what that value is. Information is never perfect.

And sometimes some people just need the cash, and are willing to sell at a discount.

They don't though? Share buy/sale price is directly correlated to the value of the company.

Which changes depending on how many buy the stocks. Was gamestop really worth billions at the top of the mania?

The market cap of its stock might but if you looked at the financial press during that episode it was full of people pointing out that there was no change in the fundamental value of the company. That’s because real businesses have things like sales volume, profit margins, property rights, etc. which aren’t entirely arbitrary and dampen the swings considerably. That’s not perfect or immune to abuse as Boeing shareholders are no doubt aware but it’s very different from something which has no grounding beyond momentary social consensus.

While I agree that there is a lot of hot air in crypto, what gives value to something like ethereum is the fact that you need it to use the network. Given people think it's useful to use that network it will give value to ether.

That does add some value but it’s fairly weak - people can always choose to switch to something cheaper, capping the maximum - and it adds its own risks: price spikes might leave you unable to perform transactions within your budget.

No, people cannot always. Sometimes, often maybe, yes.

Network effect, security, are some of the reasons.

Yes, people can always switch. Unlike a sovereign currency nobody has a legal obligation to use any cryptocurrency, which means everyone is going to assess whether they’d be getting better value using something else.

Likely not, but it's a little weird to point to outliers as counterexamples to how things generally work.

the outlier is being used to point out that the system works on ~vibes~, and to illustrate how silly and shitty of a system we have.

Reply on news.ycombinator.com