zlacker

Depends on the time horizon of investors.

>>bumby+(OP)
The value of a stock is based on long term results. If the investors catch wind of the company sacrificing the long term for the short term, the stock price will go down accordingly.

>>Walter+32
Not really. It’s based on expected future results. Sometimes that’s based in reality, sometimes it’s hopes and dreams. How else do you explain companies that have never made money being having any positive stock price? There are no “results” just projections.

We probably agree that the stock will eventually reflect value. I think we’d quibble about how long that takes. As the saying goes, the market can remain irrational longer than you can remain solvent. In other words, don’t bet on the market always reflecting reality.

>>Walter+32
I dunno, stock prices seem pretty volatile despite no material change in the company.

The value of a stock is all pure speculation about how much you can sell it for later.

>>Walter+32
So what is your thesis on GME? Long term play? It is literally a brick and mortar selling physical video games in an era where consoles are increasingly shipping without the ability to play physical media. And yet…

>>Walter+32
why do the companies with the shortest planning horizons have the highest P/E ratios then?

>>Walter+32
Stock price is pretty much completely unrelated to the performance of a company because the vast majority of investors have no idea what the fuck is going on in the company.

Look at Tesla. They're doing extremely poorly right now and have been for about a year, and if you look at their stock price you wouldn't think that. They're valued more than, like, every other auto manufacturer combined. Looking at that you'd expect them to hold 50% of the market in all markets they're in. But they don't get anywhere close to that.

The stock market is just gambling. You can't see the other person's hand.

>>bumby+(OP)
The short term spanning multiple decades undermines the argument.