Absolutely right. Here's the section from the book about buybacks and dilution. Most buybacks are scams. The companies only buyback a fraction of the shares they print. ruclips.net/video/-XscM2GrKFU/видео.html
Yes, a company I invested in diluted and then paid management hefty bonuses soon after. Without turning a profit! My thought as an investing novice was ”what the fuck?”, but funnily enough most investors on the online discussion boards thought this was completely normal. Quit the stock market soon after.
@@ThePonziFactor why is the very first spider man comics in 1962 worth 1 million dollars today??? If you can answer this then your stock market a ponzi scheme is very false..
Wow, I had searched so much on the internet because I felt something was wrong with stock market, but nobody around me had recognised it. I am so amazed that so many people realise this. I am thankful to the creator of this video.
Thank you for being curious. You should read the book. Most finish it in one sitting: FREE PDF: bit.ly/ThePonziFactor2020 And if you debate and someone says you're crazy. Tell them I'm offering $50k to anyone who can show why TSLA BRK and GOOG (non-div stocks) don't meet the definition of a Ponzi Scheme: theponzifactor.com/the-ponzi-factor-proof-by-definition/
Something is wrong with the US stock market now in 2021: too many stocks are still far too over-priced.. By the time every amateur thinks he can make easy money by speculation, you can be sure you are at a dangerous stage of a crack-up boom . It does not follow that everything is a Ponzi.
Think About this if you have now the very first edition of a spider man comics, how much is it worth today??? Why does that spider man comics has value???
@@kangaroo3223 why it has value? its a collectible for people that like spiderman, they can read it, smell it, touch it, and most importantly OWN IT. imagine if you told people that the spider man comic is worth 10 bucks, but somebody buys it because they have the idea they will sell it for more, but then convince someone else to buy because they will think it will sell for more. so where is the value generated? no value was generated you just shuffled the same spiderman comic around for nothing. its the equivalent of making 1 bread, and just trading it around forever while you starve. it makes 0 sense. it has no fundamental use value other then to be traded for tradings sake.
@@witssen9954 just wrong to screw regular people who want a better life. They just hoard the money and treat everyone like worker-slaves. Instead of paying people with percentage of the sale.
This argument completely denies that money itself is only valuable because we believe it is, it could very well stop being valuable. Money used to be backed by some physical valuable thing such as gold, but not anymore. Crypto is the same, it's valuable because everyone wants one. Value is a subjective thing.
@@ThePonziFactorIn the case of Fiat currency system cash is just a piece of paper cash is backed by nothing only trust between individuals and government is the reason for existence of currency America is always print currency rapidly that's leads inflation and this also affect all global countries End of the road currency become worthless 🫤
Lmao us in the 3rd world counties know it for like a decade. In my country the stock market crashed hard in 2011 and couldnt recover in 2 years. Everyone came to the realization that the "share" doesnt represent shit. The price goes however it wants no matter how the comapny is doing. Also the company took our money, wont be sharing any profit and the only possible thing we can do with this "share" is sell it to someone else
@@ravantheoghacker863 It's quite the opposite actually. The country is Bangladesh. It's economy has been growing fast in the last decade, especially since the west is trying hard to replace Chinese manufacturing now with other Asian countries. Our quality of life has been increasing. But the stock market never reflects any of it. It did a random bull run during the pandemic but then started falling again. Stock prices dont rise much even if the company expands its business to 3x. Its because people are buying consumer goods and not stocks. There arent many institutional investors in the market either to buy up undervalued stocks in bulk and bump them up. So yeah, a stock's price is never connected to real world economy. Stocks are in their own eco chamber market where their price depends on whether people want to buy it or not
@@MashZ exactly you know it’s a scam if you look at unpopular countries and their markets. They almost never recovered from 2008 and there is no volume. No one trades their because they know it’s just made up bullshit
@@MashZ Thanks for sharing your views. I'm currently embarrassed about i didnt knew this, i thought shares represented ownership, but it seems they are all just fanboy tokens like any other worthless crypto memecoin
From the book: "In the words of Dr. Khaneman, 'we can be blind to the obvious, and we are also blind to our blindness.' The biggest lies are the ones hiding in plain sight. We look for hidden things in dark corners, but when something is obvious, it doesn’t even feel like anything is missing. "
Wow. There are so many things wrong about what's said in this video 😅 I don't have the time to address everything - maybe just two things: 1) there are still stocks that pay dividends. It's a decision of the company whether to pay out or reinvest their profits. Typically (and logically) companies that don't pay dividends and reinvest grow faster. 2) where tf did you pick up the idea that the money in circulation must match the value of all assets in a country? That's wrong, even if we disregard the stock market.
Its a big scam and everyone who's playing in these so called markets are making these companies money that they don't deserve on top of the fees for these brokers. Its a scam
Yup, and all those economists shilling stocks just wanna up their chances of making a profit. If more people throw money in (and whom are told that keeping stocks is a great form of investing your money), they can then carefully pull out, leaving the suckers with a loss once the stock crashes. And the cycle repeats.
It indeed is. It amazes me how many people that are into stocks are so quick to call crypto as scam but incest that buying stocks is "investing", while in both scenario's the earlier you're in, the greater the chance you will be better off in the future if others buy into it as well. And it doesn't even take a genius to realize that a lot of great companies that have been around forever and actually make good amount of profit have a significant smaller markercap than other more "hyped" companies. It's literally the same with crypto (alt-coins). But all hail Warren Buffet, the best to ever do it (read: stock market marketing genius). "Become rich by investing in the stock market (and help me become even richer while doing so)"
Yup. Berkshire hasn't paid dividends since 1967. Buffet was a champion of Ponzi assets, and played a critical role in facilitating the Ponzi structure.
@@flapjackmollases9633 The difference is you, well, ANYONE can’t just “cash them in”. You’d need to, hopefully, sell them to someone dumber than you who hasn’t yet realized they’re putting themselves in the same speculative position you were in the entire time you held your position. They hope to sell to the next guy, and so on and so forth but the no dividend stocks themselves are worthless. “The difference” is paying dividends isn’t spineless. The alternative is you’re not sharing earnings with the people that literally own a company with you because you can reinvest in the company, but then you continue to not share your earnings with them, and they never see any of those real earnings. You just keep telling them “Hey don’t worry, we’re gonna keep growing and ONE DAY someone who’s in your spot is gonna earn a LOT of profit (dividends) from us! You’re in a great spot” but unless that net income is ever PROPORTIONALLY shared amongst share holders, it’s a ponzie scheme.
MY portfolio has good companies, however, they have been red all this year. This is my first year of investing and have been down 35% in the January sell-off, and now down 17% in this sell-off. I work hard for my money, so investing is making me nervous and sad. I don't know if I should sell everything or just sit and wait.
Building a good investment portfolio is more complex, so I recommend you seek professional support. This way you can get strategies designed to address your unique long-term goals and financial dreams.
I’ve been trying to hire a professional. After all, it's what really wealthy people do, they hire more experienced persons to do the job but I can’t find anyone I can trust.
The financial markets will always have lucrative means for folks to earn decent payouts, be it a crash or rise. I’m just being inquisitive? how are you yielding gains?
Frugality is an attractive quality to the majority of the population. Being frugal is about putting your dollars towards the things you care about and not overspending on the things that don’t matter. Thank you for sharing I'll do that right away
Not fully true. Maybe partially true, depending on the company and class you invest in. For example, REIT, such as real estate are required by law to distribute at least 90% of its profits annually back to the shareholders in the form of dividends. So, you’re getting real cash back either monthly, or annually. Disney and ATT shareholders also have been earning a lot of money for decades through dividends. For growth stocks where there is no dividends, Company’s like Google, Apple, and many others also do share buy back. So if you invested in the company at $50/share and it grew to $2500/share, during the share buy back, you’re getting back a net profit of $2,450/share assuming you kept the shares for a long time. And then there are the 51% rule. If you buy enough shares to own at least more than anyone, or 51% of the company, then you’re in complete control of the company and can use that power to take over the company and do what you wish. Sure. There are many scam companies who make it to the public market. But this is not all companies. The SEC should do a better job filtering out the scams. Investing isn’t for everyone. And if you’re looking for a quick flip, best go look elsewhere, otherwise you’ll most likely get chewed by the huge hedge funds betting against you on the short term. Do your own research and never listen to anyone’s advice or analyst as they are most likely writing the article or rating for their own favor.
There is some truth in this video, but it is a little oversimplified. The fact that the stocks we buy in the market have no intrinsic value of their own is true. And it is true that the market fits the basic definition of a ponzi scheme, but the truth is even worse than this video lets on, as the American dollar itself that is used to denominate the worth of these hypothetical stocks does not have any intrinsic value either. The bottom line is that hard commodities and real estate (real things that you can touch and see), works of art, rare coins, etc. are the only investments that do not have the risk of total evaporation.
@@johnlocke_1 which is true for rare coins and almost everything. Every value for man is determine by man. For aliens or the universe POV, nothing we hold dear or we think of as intrinsic value has meaning. Just stuff.
Your wrong the government will just take it away from you. They took away gold and silver before they will do it again. The truth is governments are a ponzi scheme that are controlling countries to stay poor. If your rich you have no motivation to work and help economy grow so their job is to keep you poor.
In ponzi schemes the last investors lose all there money in the stock market you only lose a percentage. In the stock market you will only make big losses making risky investments for example look at the s and p 500. What ponzi scheme works more or less forever
@Belinda Knight I've changed my views. I have no idea if the stock market is a ponzi scheme. Seems like it to me but it could theoretically go on forever as each stock is its own ponzi.
@@itsalexhere8748 Yeah it could technically be classified as a ponzi scheme, but it is also an efficient vehicle for investing/funding companies that appear to show future potential. As long as the global financial system continues to build and grow in size and value, then the ponzi scheme will continue. In a way you are simply betting on stability and continued growth.
@@itsalexhere8748 Yeah, very true, especially with stagnating population growth, and even negative growth in some cases, among the first world countries. I could totally see how inflow of cash could slow down. But I am still happy to bet on innovation making production and inventions more efficient and economically viable, for at least the time being until the decrease of cash inflow breaks te system some time in the future (if).
I was that 18 year old who was encouraged to invest their money. "Make your savings work for you". I was encouraged to not only gamble my money, but invest it in places that were against my morals, in mining, fossil fuels and deforestation. Then the market crashed. I gained nothing from that experience. No joy, no satisfaction, no tangible assets.
Yeah but gambling in these long term Ponzi scheme can make you rich. Even the US dollars is a Ponzi scheme. So why work for a Ponzi system when you can be an investor in a Ponzi scheme (Investments)
It’s hilarious because even if you invested at the bottom of the COVID-19 market crash you would’ve still made 50% on your money. Your comment is mathematically untrue
Nice to see a video that explains the issue so well, it's shocking how hard it is to find people who are aware. It seems so obvious, but I guess you really can't expect much from people. The fact that casinos make so much money is a pretty strong indicator that even when people know the system is rigged, they are still stupid enough to enjoy the excitement of throwing their money away while hoping they magically get rich without providing any value to society.
I guess most people are, at least subconsciously, aware of many of the points in the video (like that the value of a share is based on speculation and that they may lose everything they pour in), but they think they'll be the winners. Same with crypto bros, same with NFT shills.
I day trade, I’m and out I make returns. I don’t long term invest because no one stock lasts and certainly not in an uncertain economy. Learn to swing, day or scalping. I thought for a long time the market is rigged….the way I trade goes against all of that. I love to sell on a dive (I trade forex also not regular stocks) I’m happy with it
@@Holli.Michellefx yeah , but Theres a few compqnies that get Taken private. Thats the only way its Not a ponzi scheme. Because then every Share holder gets paid.
I've been saying this for 20 years. Everyone acts like I'm mistaken, but this video does a great job of putting my point of view in an easily digestible format. I do invest in stocks but only dividend stocks. It's still BS. For example, a Stock will pay a divided of 3% over a year and then the stock itself will lose 2-4% making my investment stagnate.
Read your book after thinking about this for long. Can’t find anything to disagree with. How did I come to think of this? I had a hunch that one company I had invested in was a scam stock. Management felt shady and were not delivering. I sold my shares ASAP. Then it hit me: some other sucker bought them from me and now pays the price. I like to think of myself as a man with high moral standards, so naturally I felt bad about this. Soon after my hunch turned out to be right and share prices have fallen 50+% since. Left the stock market with small losses. Don’t think I’ll ever go back. Perhaps some reliable European dividend stocks at most. Sure, owning land and real estate also has risks and bubbles, but at least they respond to real needs (a roof on top of my head) that won’t suddenly just disappear. I can’t believe more people aren’t seeing this. Valuations are sky high. When and if people realise they can’t provide for their families with imaginary stock money, things will get ugly. Rich get richer and suckers get stomach punched.
@@ThePonziFactor I think I just googled for books about stock markets and ponzis. Figured there had to be something written on the topic. Was surprised to only find one book covering it - yours, of course. It was a great read (actually, I listened to the audiobook) and you’re asking some fundamental questions. I’m a behavioural scientist and the question of ”why” people ”invest” has bothered me for some time. I’ll leave a review somewhere!
In September 2021, most stocks in the world are still over-priced, too many in bubble territory. The bubbles are a monetary phenomenon, as investors chase yield, accepting risk or ignoring it altogether. Many a speculator hoping to snatch short-term profits from unsustainable prices will lose money. This boom may die soon, but that has nothing to do with Ponzi schemes.
In 200years, stock market has been 6.3% up. I think you mean day trading, that is scam. But holding stocks is not. And, of course there is crashes in the market. 1932, 1987, 2009, 2020 biggest crash years that i know. But how many years there is upside?
Man I just discovered this channel because I was searching if someone else thought that the stock market was a Ponzi scheme too. And what a surprise it was to discover that you made a entire book about it. I'm going to read it. By the way, what are your thoughts about bonds market and Future markets? Keep up with this awesome work. Finally I think you should apply for a Ted or Ted ex talk.
Yup. I discovered this about a year ago when I was starting to look into "investing" in the stock market (quotes used on purpose). But when I started to look deeper into what I would actually be purchasing, I realized I wouldn't own anything at all (in any way that really matters). My only hangup with Tan's book is that I wish he did not call it a Ponzi scheme, since the rules of the game are openly available. It's just that most people do not care to understand them.It's really just a zero-sum (or negative sum) game where the odds are heavily against you.
I couldn't agree more! I was watching James Asquith's explanation about Ponzi Scheme (which was short but detailed) before I came across this video. Very helpful and informative!
@@bytecode36 investing in the stock market is like investing in the future if you think you can predict some things in the future then it's all good but if not bye bye
This isn't how it works. The stock market creates value, through a number of methods it is always worth on average than the amount of money that has been put into it. It isn't zero sum.
your right its negative sum because early birds take out more than they put in, meaning there is a continual loss of money by the new investors, so basically the losses run inversely to how well the stock is doing, stock is doing good? means many people would loose money if they pulled out
" Companies like Google, Tesla, Facebook never pay their investors." So I avoid buying into companies like G, T,F, and instead, hold others that do pay dividends.( In the past 12 months, certain of my ETFs paid out over 7% in dividends of what I paid. )
No one ever goes broke from holding dividend stocks. However, I updated the book and mentioned that Ponzi assets like TSLA SHOP PTON have unrealized returns that far exceeded legit ownership like VZ LMT IBM over the past 12 months. Ultimately, I just want people to know how stocks really work. The rest is up to the reader.
Yeah, this makes sense. Although once the non-dividend bubble pops, it will probably take the legit dividend stocks down with it. At least for a good while.
I am retired buying stock that don't pay a dividend like tesla, amazon, facebook, netflix etc. All the money you collected on dividends I have made within a few years in capital gains. And I still kept half the shares after I got all my gains back and they still continue to make more money for me. Paying out a dividend is also a scheme cause they take the money out of the stock every time they pay you so there is no real gain.
Just invest in a CD. Youll get a smaller return but its much safer. right now im getting 4%. However i am aware that if i had put it in the market I would have made 20% but I know the market will crash soon. I just don't know when. And i don't want my hard earned cash there when it does
I'm thinking about this too. They sell this dream of making all this money in the market, but slow and steady can win the race too. What did our ancestors do before the stock market? Thank you for sharing .
Read the common sense of investing by John c bogle, it explained how investing is a zero sum game where one loss is another’s gain. Everything is perceived value. That why index funds are the safest bet. I say bet because stocks are gambles no matter how much research you do.
I don't know who Bogle is, but business by its nature requires a willingness to take risk. Bogle should draw a distinction between speculation and investment. I will agree with one suggestion: index funds do a lot of the work for the ordinary investor. Whoever blunders into any stock market without study is heading for a painful loss. That has nothing to do with zero-sum games, however.
The speaker in the video failed to define a most important and fundamental concept -- that of "OWNERSHIP". What is ownership of the common variety, as in you owning your shoes? Ownership of X consists of two rights: the right to use X as one pleases, and the right to prevent others from using X. The ownership of most COMMON STOCKS gives you the right to vote in company matters and prevents others who do not own stocks to vote. To be sure, there do exist stocks that are non-voting, but they are in minority and have different purpose. All common stocks have voting power. For each single common stock you own, you get to cast one vote only. If more than 50% of the company stocks vote for the policy of no dividends, then it is the majority will of the collective company ownership that has so decided, not some unaccountable salaried managers of the company. I am sure what I have said so far is pretty much common knowledge. If so, then some of the claims of the video do not seem to be accurate. One way to model the stock market is to view all investors as a single investing unit (in which the individual investors buy and sell the stocks amongst themselves) and to view all the companies as a single company unit. The question then is this: Given the aggregate dollars generated from the original investors during the IPOs, how much dividends have historically been paid out and how much dividends are 'realistically' expected to be paid out in all future time? Of course, in such a (virtually impossible) computation, it is the present value (or value as of a certain definite point in time) of all the dividends and IPO dollars that must be considered to make a sensible comparison and analysis. Toward a first approximation, one can approach this issue probabilistically. From a list of all publicly traded companies that have ever existed, a random but sizable sample can be taken and studied along the lines suggested above. Is anyone aware of such a study that is published? If so, where, what website or article or book? Thanks in advance!
Do you believe in Bitcoin? I bet you do. Stock is a note with zero value unless someone’s willing to give you cash for it. That’s done by other buying into it. There’s been a huge push to get everyone into stocks through the 401k. Why? To keep the ponzi going. Your missing his point and that’s my opinion based on reality.
Yes. The fact that the people are called investors and not gamblers is crazy. The stock purchase does not lead to any investment into the company and vice versa. Except during IPOs. I try to explain this to people but it's a very hard thing to explain. Great video.
@@j0sh145 because it does not lead to any proceeds to the underlying company to help them build something and its value totally depends on next "investor" to buy at higher price from current "investor". And the underlying company if it goes bust pays shareholders last, that too small percentage of the stock value.
I knew something was weird when we in lock down during covid and they were still saying the stock market was doing well and I was asking myself how when many people are not working or shopping.
I remember when the market crash back in 2008 and we had investment company coming to our job and talk to us about 401k and what stood out most now now that I think back and after I watch this video he said the market needs new money. I always thought it was a Ponzi scheme but this video pretty much but validate what I was thinking.
@@brybry111 But once the majority realize that the king is not wearing clothes, what will you do? redeem your shares for 0.001 $ each ? non redeemable coupons always go to 0, this is very key to understand and that is what im taking away with me from here, after this shocking discovery that google stocks is no better than a SafeshibainucumdogeElon memecoin
epic effort putting forth a thesis, supporting it well, and offering the only conclusion a logical mind can come to. shared. of course, irritating to junkies.. LoL. folks with skin in the game so to speak, but even buffet boy Munger gave this gem a while back "Show me the incentive and I will show you the outcome.” - Charlie Munger
Ok, that makes quite a bit of sense. But I thought that share holders were paid back, if the company makes money, regardless of wether anyone new invests or not. Also, a Ponzi scheme is unsustainable, because you will eventually run out of new investors. I think the stock market can sustain itself, because companies make money. Or maybe I have no clue what I'm talking about. Who knows.
For non-dividend stocks, shareholders are not paid back and the underlying companies have no legitimate obligations to pay them back either. As of now, AMZN, GOOG, TSLA, etc have never paid their shareholders and have no plans to pay them either. The idea that shareholders get paid from non-dividend companies is massive misconception that many, including "finance experts" believe and advocate. (Don't worry if that's what you assumed.) Ponzi schemes are not unsustainable as long as there is an inflow of money from new investors. The "unsustainability element is doesn't validate whether something is or isn't a Ponzi scheme. The zero-sum nature of a system where investors pay out other investors--shuffling money between investors makes it Ponzi. From the book: "Regardless of how long a Ponzi scheme can stay afloat, the general consensus is that they are all destined to collapse. This idea isn’t proven but sounds sensible for a scam that sells itself as having infinite potential in a world that has finite resources and cash. Ponzi schemes experience signs of trouble when there is an absence of cash from new investors or if enough of the current investors want their money back and realize what they thought they had isn’t really there. Both scenarios will lead to a collapse or a massive pullback at best. "
@@ThePonziFactor bruh you lost me after the first sentence. Also, what kind of investment would not be a ponzi scheme? Is it possible for some companies on the NY stock exchange to be genuinely using invested money the way we think it is being used?
@@nickjohnston7513 I don't understand how you got lost. If the textbook nonsense about how stocks are backed was true, investors would know exactly how much TSLA or AMZN is backed by and when investors will see that money. If you buy TSLA for $600 today, and it drops to $300, well all know Tesla will not reimburse you for the losses. "What kind of investment would not be a Ponzi scheme?" The video addresses this. Every company that issues stocks invests that money into the company (absence of fraud). The issue is, they use stocks as a way to borrow money they never have to pay back.
While cryptos and some hype stocks behave like Ponzi schemes this is not true of the general stock market. You apparently haven't heard of dividends. And yes many companies don't pay dividends because they're reinvesting their profits so they make bigger profits in the future so they can pay larger dividends in the future instead of small dividends in the present. Also some companies that are in trouble may decide to suspend their dividend for a time.
This video itself seems to be promoting a number of fallacies, with faulty reasoning and little in the way of data or facts to support its claims. For instance, the claim, "stocks do not have legitimacy, because no one has any obligations to pay the shareholders anything" is false. Firstly, shares of a company represent ownership of a company. For instance, If a CEO of a publicly traded company owns 50% of the company, that means he owns 50% of the total number shares of the company. Secondly, since a share of a company's stock represents ownership of the company and a claim to the company's profits, a stockholder should be indifferent as to whether or not a company pays a dividend. Lastly, stocks have had higher expected returns compared to real estate and bonds precisely because stocks do not have guaranteed cash flows (even dividends are not guaranteed because management can cut dividend payments). The value of a stock is the present value of the future cash flows to the firm divided by the number of shares outstanding, and that present value is calculated by discounting those cash flows at an appropriate discount rate, which reflects the risk of the stock. Therefore, the disadvantages of stock ownership are priced into the current price of the stock, so their expected returns are higher than investments with stable cash flows. I would like to have a conversation with the author of the video to discuss this in further depth. Overall, I believe that this is yet another video on RUclips that spreads misinformation about the stock market.
I disagree .. he’s basically put all the big lies in a video. A stock is only worth what the next guy is willing to buy it for like Bitcoin. Like any ponzi it’s dies when nobody is willing to invest more money or everyone cashes out. In case of the stock market TRIES to cash out.
Such a powerful video I’ve been investing over ten years and few professionals explain it so well This could’ve stopped @2:30 but kept delivering Thankyou.
Well a stock is also a way to store illegal money... It's those guys who want to pump in illegal money into stock market that make it a positive sum game...
It's why I only invest in dividend paying stocks and riets. (Riets must pay 90% of profits back to investors but anyone can play with the books these days)
Buying real ownership in up and coming businesses is the way forward. Or even start your own companies, take it to wall street by not playing their rigged game.
6:30 your definition of "money" is severely lacking. It is also only valuable because others seek to obtain it, it is not "backed by the government" total cop out statement.
This video is good, but does have some important flaws. It's irrelevant that the amount of cash in circulation is far less than wealth held in stocks. The cash is simply for exchange purposes, whereas stocks are acting as a store of wealth. When the video talks about a house as having intrinsic value, there is no such thing as intrinsic value. Value is established by the price the market will pay. While some companies do not pay dividends, some do. It's worth researching that. It is true that price to earnings ratios these days are unreasonably high for most stocks, so dividends rarely matter as much as they should. Be careful out there folks, it's too easy to lose money in markets!
Most stocks don't offer dividends, so where does the money come from to invest in the markets? 67 companies have been removed from the DOW since 1929. It is impossible for the DOW to go down, because they just replace loser stocks/bankrupt companies with winner companies.
If you believe this, now you are more ignorant. Buying a action you will have a % of a company and the value is decided by the people, not by the amount of capital de company haves. This is just leftie propaganda ignoring the difference between value and price. Price is what you pay and value if what you get.
If you closely look at most of the things, it'll be a scam of some kind where someone would be making unfair profits. World is not fair but this is the world we live in and it's the only option. . . . Why do you think real estate prices have been so high and keeps going up, isn't that because new people keep coming to pay the builder higher amount which funds future development and the cycle continues. When this cycle slows down or stops, Real estate prices would crash and so would stocks. This is how our civilization works🤷♂️
Very good presentation. I started investing 3 years back and definitely got some profit. But I can clearly see through how all the "analytics" part is plain bullcrap. It's just greater casino, you might have some tricks but mostly luck.
i can do this better: the stock market is a big game of hot potato. And also, I feel personally attacked having been an 18 year old that wanted to enter the market. A few months into it, I realized it is all a lie and all of it is bullshit. Nevertheless, while it does exist, it is possible to make some money from it. But I, now as a 19 year old, hate the idea of the stock market. I merely use it as a method to invest some few grand into, leave until it appreciates, then pull out when I feel like I've made my fair share. Once I can stop depending on it, I'm never looking back.
You could also invest in tangible companies and that pay divedence (long term). Like FedEX who actually provide a service and pay divedence. Their profits and value are real, because it's based on them shipping items
@@hark9447 Dividends are practically a waste of time, unless you have a ton of money to start out with. other than that expect less than $100 every 3 months or so.
Shouldn’t be. The same thing can be said about cash money. What makes USA paper value more than China paper? Let alone who decides paper has value?? Who decides what has value and doesn’t. A black man was once valued to be 2/3 of man. Who gave such men to have an authority to decide where value is?
@@sdiz3509exactly but yet the probability of a currency loosing a value altogether vs a stock loosing it's value suddenly is not equal. So generally value itself changes based on demand and stock. But the stock market was an altogether a seperate system that, unlike the currency of a country, only the rick would actually benefit.
A lot of them as their ability to fund operations is financed by borrowing against enterprise value quantified in stock prices which together represent total market cap. If people started selling and asset prices dropped that would mean the cost of raising capital/money in exchange for borrowing against enterprise value by issuing stocks and bonds would be very expensive as yields that would need to be offered on stocks and bonds would be high. That is what QE and ZIRP is about. Keep enterprise value high so businesses can get money cheaply and keep expanding as the yield they need to offer on their stock and bond offerings stay low.
None. No comapny would declare bankruptcy as everyone cant possibly sell their stocks at the same time. Someone needs to be buying for you to sell. Also the companies already took the money when they released their share to the stock market. They wont be losing any money to go bankrupt
I describe the stock market as pass the parcel or musical chairs game. Last person standing ends up losing as they end up buying shares at the highest price before the market crashes.
The ability for businesses to fund operations is financed by borrowing against enterprise value quantified in stock prices which in turn is determined by credit money inflation which together represent total market cap. If people started deleveraging and selling, asset prices would drop which would mean the cost of raising capital/money in exchange for borrowing against enterprise value by issuing stocks and bonds would be very expensive as yields that would need to be offered on stocks and bonds would be high. That is what QE and ZIRP is about. Keep enterprise value high so businesses can get money cheaply and keep expanding as the yield they need to offer on their stock and bond offerings stay low as asset prices and yields move inversely. The mistaken assumption is that money is fixed in supply but it's not in fact the cost of creating money has dropped since the 1980s dramatically and its supply has thus exploded and what has enabled this is an explosion in the deflationary pressures of globalization and technological innovation. The price to create more money is the interest rate. The primary channel through which new money creation flows is through asset prices via the credit channel. Think about what that means. "In accordance with the Cantillon effect, inflation can increase inequality depending on the route it takes, but increasing inequality is not a necessary consequence of inflation. If it happened that the poorest in society were the first receivers of the newly created money, then inflation could very well be the cause of decreasing inequality since they get the money first. Under modern central banking however, money is created and injected into the economy through the credit route and first affects financial markets. Under this system, commercial banks and other financial institutions are not only the first receivers of the newly created money but are also the main producers of credit money. This is because banks can grant loans unbacked by base money." ruclips.net/video/rv5xl1AEeQs/видео.html Fiat Money ruclips.net/video/hx16a72j__8/видео.html
Bond markets do not function like they should due to suppressed interest rates. Companies borrow cheap money to buy back shares to artificially increase earnings per share. From a shareholder point of view that's not productive use of capital. From a speculators point of view it is. See the difference?
I keep trying to tell people this but no one believed me. I'm just glad that there's people out there who see the scam market for what it is! but the real question is, what do we do with this information?
Cash is ponzi as well... they keep printing new and old loses value... bttr to be in aapl stock or something which is reducing its share count (deflation rather than inflation), where as new cash is printed each year, which eventually goes into the stock market making your richer
@@rahulsampat8698 cash is backed by the monopoly on force which is the state that issues the cash. notice that in unstable countries (where the state is in flux) the currency always hyperinflates or tanks in value. The currency, tho fiat, is tied to something REAL, which is the state issuing the currency and using(or lacking) force(political, military) to back it.
1:49 whether the company loses of gains money is relevant to the stock price. When you list tesla motors as a money burning company that’s stock continues rising. This can be explained by the fact that a companies stock can rise on speculation. An example of this are all of the “crazy” valuations that AI stocks currently have despite posting very little of no profit.
The amount of misinformation in this video is simply shocking. Where to even begin? Par value comes from bonds, and is simply a regulatory figure for stocks. Common stock holders still have first rights to business profits, surplus liquidation proceeds etc. They own the company's assets and income, regardless of dividends and voting rights. John Bogle once accurately said, "The stock market is a giant distraction to the business of investing". But this video describes exactly why the stock market is necessary at the same time. It provides liquidity for monetizing business profits, especially for non-dividend-paying stocks. Good stocks represent fractional ownership of income-generating businesses, and are backed by inflation-hedged assets. Modern fiat currencies have neither. As for equating cash inflow with market capitalization and other baseless arguments made here, perhaps it would be best to end saying that investing is an advanced science with potentially extreme consequences. No one should get into it, or dismiss it, so lightly.
Baseless? Sorry but that was spot on! If the stock market was real it would have crashed when the world shut down and nobody produced anything. Why didn’t it? Because it’s a huge ponzi with numbers not backed by anything other then someone’s willingness to buy air. Lol
@@playinragz8183 Thank you for the reply! While the economy did slow down, the only businesses that actually shut down were the customer facing ones such as retail and travel. Most of the real economy today happens in the background. Essentials and supplies were still being produced and delivered. The same goes for the stock market. Most trading now happens online, and not on the exchange floor. While a large number of popular stocks truly have poor underlying foundations, the system is based on solid economic principles which most people don't bother studying. Asset-backed income-generating stocks are always better investments than real estate; and way better than fiat currencies and cryptocurrencies, which truly are nothing more than thin air.
Anybody who really understands the stock market will see how baseless this video is. To say the value of a stock is imaginary is absolutely preposterous. Please everybody don’t listen to this video. If you disagree with me let’s have conversation.
Ok, I'll bite. If a stock doesn't pay dividends, then where does its value come from other than other investors willing to pay for it? Isn't a "stock" or a "share" basically just a piece of paper saying you invested a certain amount of $$$ in a company and are entitled to a particular percentage of returns?
@@yearofthedawgs8581 actually no not at all. All dividends are is just profits from the company. There are MANY companies that pay dividends and there are many that choose not too. The ones choose not to pay can commonly be called growth stocks. These types of stocks are primarily focused on returns of the company rather and maximizing shareholder value. So when a growth stock decides to not pay a dividend they are more likely than retaining those earnings to reinvest back into the overall business. So then where does the value come from? The value of stocks has a lot to do with the fundamentals with companies, more specifically their profits, revenues, forward looking statements, profit and operating margins, free cash flow, and others as well. Big jumps in either direction for any of those metrics can have a big impact on the price of a stock. One of the most widely used metrics is what’s called the Price/Earnings ratio (P/E Ratio) This is a ratio of the price of a stock relative to its earnings per share (EPS) So you can then see and analyze how expensive a stock might be among looking at other metrics of course. What I’m explain are pretty summed up explanations and you can look into them a lot more. And to your last point, a share in a company I guess can be looked at as a “piece of paper”. It doesn’t just necessarily say what price you bought it at rather the actual value of 1 share of a company. The only thing you would be “entitled” to when it comes to returns is if the company pays a dividend and you own the share as it goes ex-dividend. It is up to you as the shareholder to decide when to sell your share weather it be for a profit or a loss. And I just want to say in this day and age, stocks are VERY liquid investments compared to others, you can buy and sell stocks really easy. It literally takes a minute or two MAX to place an order to sell or buy shares.
@@yearofthedawgs8581 on top of that I just want to say that literally most retirement plans, with some exceptions, are tied to the stock market. So if you would like to retire comfortably, weather it be from retirement plans from or investing on your own, you will have to be in the market.
@@j0sh145Imagine being an owner of the business who doesn’t pay you any share of the profits they make most of the companies today have a very low dividend yield when compared to the companies when Mr Warren Buffet started investing Over the years companies have reduced their dividend payments plus all those retained earnings that belong to the shareholders is kept by the company just to be later used by the owner to fund their expensive business vacations or buying private jets in the name of the company I want my investment to put money in my pocket whats the point of seeing your money compounding when you can’t use it for daily expenses 😂😂😂😂
@@autofill5073ok so what you’re referring to are growth stocks. They retain their earnings and instead of paying them in dividends they reinvest them back into the business to generate more gains for shareholders. If income is what you desire then there are specific funds etfs and even a certain compiling of individual stocks that can achieve that for you. It’s still possible so I’m not sure what the issue is. Roughly half the stocks on the nasdaq pay a dividend. You just need to know where to look.
In HEX, no one owes you anything. You mint your own HEX rewards yourself when you end your stake. Like how Bitcoin miners mint their own Bitcoin rewards. You are the network. There are no middlemen or managers in HEX. HEX rewards are dynamic like Bitcoin mining rewards. No one in the world can promise you how much you might make running HEX, because no one knows how valuable HEX will become. HEX puts you in charge!
Great video but the background music is too loud. It over powers the speaker and the focus well my focus goes to the music instead of the message. I'd cut the music down by half.
Also the part of profiting off of other investors has been a known thing for a long time. Heck, it's why the saying 'There's no such thing as a free lunch' exists. As for lack of dividends, there's common, and preferred stocks, which common stock holders have a say in the company (via voting), and preferred wave the say in company voting for a dividend. Some stock symbols offer both as a common stock, but at a significantly lower dividend. Not saying the dynamics of how the stock market works isn't corrupt, or shady. But a lot of what's said in this video isn't exactly true. Also I can't get over the whole FIAT thing, as if saying the US dollar is the defacto mark of truth. When it's value is literally based on itself.
@@KuiperShaina I could never pay you as all I have is fiat scam money and you knowing this means there is no scam. I will sell you a cup of coffee for the fiat scam money you do not want. Its complicated...
Hi! Thanks for the vid. You make a point that NYSE + NASQA = 30T but US only generates 1.6T. But you seem to overlook the key point that its not just people in the US that invest in NYSE + NASDQ... the whole WORLD can invest in these. Most of my money is in US equities and I don’t live there.
Hi, I'm aware of that. The world's money supply is around $36.8t worth of USD (not in USD). Companies like Google and Apple also hide a lot of USD/currency abroad, so a lot of USD isn't even in our banks. Also, most of the money being shuffled in US equities are form domestic pension plans (details in the book).
If stocks don't have a direct connection to the company , then why do they dilute the shares to raise money for the company and reverse split, is that just the MM money grab.
I remember when my stockes were stolen, the stock went Way Up and I thought I made money. When I checked my account, they stole ALL but one share, IT'S CALLED A REVERSE SPLIT. They steal your shares and leave you one or two, then push the price up dramatically in your face...Just another way to rig the game "legally".
I came to this same conclusion after trading cryptocurrency for two months. If you use the DeFi (De-centralized Finance) way of calculating exchange rates for currency pair pools, you will see how small changes in supply can cause huge swings in exchange rates. If you want to "invest" in the stock market, you might as well cut the BS and try your hand at crypto. Just make sure you cash in regularly and don't get caught with your pants down when the market tanks.
This is a very good overview of the market for the uninitiated in the modern era. The point about the value of stocks having no necessary relationship the the actual value of the company is fundamental. The whole game now is to convince people of the “potential” for new reservoirs of wealth creation. Whether it’s true is clearly less important than whether the investors can be made to believe it’s true. So much so that the market now is totally dominated by professional influence pedlars who bombard the public with pure hype on future outcomes. There are two things I would say as caveats here. One, it’s not accurate to say that in general stock brokers don’t know what the market is. That may have true in the past but no longer. Most traders and insiders know exactly what the market is. The second thing is that one can make a distinction between classes of companies and their stock valuation. There is the company with factories that produces x number of physical products, with reported annual sales, consistently across many years. This was typical of investment pools in previous generations. They are somewhat different from businesses that have little history aimed at presumed emerging markets based on mere projections of potential value. While the former is subject to risks from the ups and downs of consumer demand , the latter is pure gambling that exposes the investor to devastating losses - precisely because they were enticed by the prospect of remarkable profits. Many brokers and individuals deliberately invest in such companies knowing full well what the future holds but simply aim to ride the wave and exit before the inevitable crash.
They are suppose to pay back the lenders, and then the debts/bonds first. The shareholders are dead last to get whatever is left over, which is typically sh-t.
So, you take your company public to insulate the initial investors/owners from risk? Then you manipulate stock prices to encourage speculation in your company? How is this not an obvious fraud to people?
Great video explanation, now the questions. Do you suggest than not invest in stocks or what strategy to follow? Because many companies provide their stocks as a benefit package? Thanks for answers and suggestions in advance
The whole argument is based on tangible money. I have not used that for years. So I am fine having my money in fictional stocks that raise my fictional cash by over 10% a year and let me buy real food. Only companies that have no valid reinvestment pay dividends. And I even prefer stock buybacks. But if they have a good investment, like Google mostly does, I am very fine if they reinvest my share of their gains. It might be though, that the whole system of economic growth is a huge Ponzi scheme, but the stock market would do well even without growth. Stocks would have the same price and just pay some dividend because there is no other option to invest.
I agree with you and what make it more crazy is inside Trading companies who kill the value of the stock, they pay a lot of share when it's cheap and sell it when it's high and those who pay it in the top lose almost %80 or more because those companies sell it all and buy again when it's cheaper. The best option for you as an investor is the companies that pay dividends to shareholders, and also, that company should not be trading its shares in this way. There are companies that allow you to sell only by buying by one of the shareholders, this prevents the share’s value from suddenly dropping. The value does not decrease or increase suddenly. You may see an increase of 6% within a year or a decrease of 10% within a year and in the same Time to get profits from the company. The problem with such stocks is that you will not be able to sell quickly. You may wait days, weeks, or months until you find a new investor wiling to buy your shares.
This felt like telling a kid Santa isn't real but to a 40 year old 😂
🤣🤣
i mean i just started a robin hood acct 2 months ago.
all 12 of the stocks i bought are negative now.
a bit odd isnt it?
Haha, that is a hilariously accurate way of putting it.
You couldn't have said it better
And to make it better these 40 years old take it harder than toddlers learning santa is not real haha
I was JUST thinking something similar...when you realize the market is a ponzi scheme, you're on your way to being a full adult.
Also mention that companies can print new stocks, sell them for money they keep, and dilute existing shares.
Absolutely right. Here's the section from the book about buybacks and dilution. Most buybacks are scams. The companies only buyback a fraction of the shares they print. ruclips.net/video/-XscM2GrKFU/видео.html
Yes, a company I invested in diluted and then paid management hefty bonuses soon after. Without turning a profit! My thought as an investing novice was ”what the fuck?”, but funnily enough most investors on the online discussion boards thought this was completely normal. Quit the stock market soon after.
why does humanity keep finding ways to do this to each other?
imagine where we would be by now if only we just work together...
@@ThePonziFactor why is the very first spider man comics in 1962 worth 1 million dollars today??? If you can answer this then your stock market a ponzi scheme is very false..
@@kangaroo3223 There's only a handful of "very first" spiderman comics. Companies print Ponzi assets at will.
"Something's wrong with the world.
You don't know what, but it's there. Like a splinter in your mind...driving you mad." -Morpheus
Follow the rabbit
just got red pilled
Wow, I had searched so much on the internet because I felt something was wrong with stock market, but nobody around me had recognised it. I am so amazed that so many people realise this. I am thankful to the creator of this video.
Thank you for being curious.
You should read the book. Most finish it in one sitting: FREE PDF: bit.ly/ThePonziFactor2020
And if you debate and someone says you're crazy. Tell them I'm offering $50k to anyone who can show why TSLA BRK and GOOG (non-div stocks) don't meet the definition of a Ponzi Scheme: theponzifactor.com/the-ponzi-factor-proof-by-definition/
Something is wrong with the US stock market now in 2021: too many stocks are still far too over-priced.. By the time every amateur thinks he can make easy money by speculation, you can be sure you are at a dangerous stage of a crack-up boom . It does not follow that everything is a Ponzi.
@@ThePonziFactor thank you for sharing this
Think About this if you have now the very first edition of a spider man comics, how much is it worth today??? Why does that spider man comics has value???
@@kangaroo3223 why it has value? its a collectible for people that like spiderman, they can read it, smell it, touch it, and most importantly OWN IT.
imagine if you told people that the spider man comic is worth 10 bucks, but somebody buys it because they have the idea they will sell it for more, but then convince someone else to buy because they will think it will sell for more.
so where is the value generated? no value was generated you just shuffled the same spiderman comic around for nothing.
its the equivalent of making 1 bread, and just trading it around forever while you starve. it makes 0 sense. it has no fundamental use value other then to be traded for tradings sake.
basically the broker wins no matter if the investor is selling or buying
@@witssen9954 just wrong to screw regular people who want a better life. They just hoard the money and treat everyone like worker-slaves. Instead of paying people with percentage of the sale.
Not anymore, most don't have comissions anymore.
Broker is doing a job he gets paid for that as commission whats wrong in that?
I’m here because the thought suddenly came to me.
That's what happened to me, but back in 2010:) Welcome.
PDF Book: bit.ly/ThePonziFactor2020
Dropbox: bit.ly/Dropbox_TPF
ibwas suspecting a particular company is doing ponzy and i landed up here.Glad!
Did it suddenly come to you...?
Or were you...
chosen?
@@lilbeangrowthagreen7664 chosen?? This is very interesting..
suddenly?
This argument completely denies that money itself is only valuable because we believe it is, it could very well stop being valuable. Money used to be backed by some physical valuable thing such as gold, but not anymore. Crypto is the same, it's valuable because everyone wants one. Value is a subjective thing.
No. The only reason companies issue stocks is to get money. Stocks are a sh-t class below money. Go look up "legal tender"
@@ThePonziFactorIn the case of Fiat currency system cash is just a piece of paper cash is backed by nothing only trust between individuals and government is the reason for existence of currency
America is always print currency rapidly that's leads inflation and this also affect all global countries
End of the road currency become worthless 🫤
Lmao us in the 3rd world counties know it for like a decade. In my country the stock market crashed hard in 2011 and couldnt recover in 2 years. Everyone came to the realization that the "share" doesnt represent shit. The price goes however it wants no matter how the comapny is doing. Also the company took our money, wont be sharing any profit and the only possible thing we can do with this "share" is sell it to someone else
well your countries economy won't have grown enough to sustain the stock market. That's why it came crashing down
@@ravantheoghacker863 It's quite the opposite actually. The country is Bangladesh. It's economy has been growing fast in the last decade, especially since the west is trying hard to replace Chinese manufacturing now with other Asian countries. Our quality of life has been increasing. But the stock market never reflects any of it. It did a random bull run during the pandemic but then started falling again.
Stock prices dont rise much even if the company expands its business to 3x. Its because people are buying consumer goods and not stocks. There arent many institutional investors in the market either to buy up undervalued stocks in bulk and bump them up.
So yeah, a stock's price is never connected to real world economy. Stocks are in their own eco chamber market where their price depends on whether people want to buy it or not
@@MashZ exactly you know it’s a scam if you look at unpopular countries and their markets. They almost never recovered from 2008 and there is no volume. No one trades their because they know it’s just made up bullshit
@@MashZ Thanks for sharing your views. I'm currently embarrassed about i didnt knew this, i thought shares represented ownership, but it seems they are all just fanboy tokens like any other worthless crypto memecoin
@@pilotgfx yup they are. Its really Bad actually because Pension Funds rely on the Market.
I was wondering if the stock market is a pyramid scheme, and I found this. Well explained.
How did I miss this... This was right under our noses
From the book: "In the words of Dr. Khaneman, 'we can be blind to the obvious, and we are also blind to our blindness.'
The biggest lies are the ones hiding in plain sight. We look for hidden things in dark corners, but when something is obvious, it doesn’t even feel like anything is missing.
"
Wow. There are so many things wrong about what's said in this video 😅 I don't have the time to address everything - maybe just two things: 1) there are still stocks that pay dividends. It's a decision of the company whether to pay out or reinvest their profits. Typically (and logically) companies that don't pay dividends and reinvest grow faster. 2) where tf did you pick up the idea that the money in circulation must match the value of all assets in a country? That's wrong, even if we disregard the stock market.
Its a big scam and everyone who's playing in these so called markets are making these companies money that they don't deserve on top of the fees for these brokers. Its a scam
ruclips.net/video/MKQPIRydhDY/видео.html
So why is the very first spider man comics has value?
@@kangaroo3223 Because people want them for their own sake.
Yup, and all those economists shilling stocks just wanna up their chances of making a profit. If more people throw money in (and whom are told that keeping stocks is a great form of investing your money), they can then carefully pull out, leaving the suckers with a loss once the stock crashes. And the cycle repeats.
It indeed is. It amazes me how many people that are into stocks are so quick to call crypto as scam but incest that buying stocks is "investing", while in both scenario's the earlier you're in, the greater the chance you will be better off in the future if others buy into it as well.
And it doesn't even take a genius to realize that a lot of great companies that have been around forever and actually make good amount of profit have a significant smaller markercap than other more "hyped" companies. It's literally the same with crypto (alt-coins).
But all hail Warren Buffet, the best to ever do it (read: stock market marketing genius). "Become rich by investing in the stock market (and help me become even richer while doing so)"
TIL Warren Buffet is a facilitator of Ponzi Schemes, and runs one himself. He's just such an adorable old man it catches you off guard.
Yup. Berkshire hasn't paid dividends since 1967. Buffet was a champion of Ponzi assets, and played a critical role in facilitating the Ponzi structure.
@@flapjackmollases9633 The difference is you, well, ANYONE can’t just “cash them in”. You’d need to, hopefully, sell them to someone dumber than you who hasn’t yet realized they’re putting themselves in the same speculative position you were in the entire time you held your position. They hope to sell to the next guy, and so on and so forth but the no dividend stocks themselves are worthless.
“The difference” is paying dividends isn’t spineless. The alternative is you’re not sharing earnings with the people that literally own a company with you because you can reinvest in the company, but then you continue to not share your earnings with them, and they never see any of those real earnings. You just keep telling them “Hey don’t worry, we’re gonna keep growing and ONE DAY someone who’s in your spot is gonna earn a LOT of profit (dividends) from us! You’re in a great spot” but unless that net income is ever PROPORTIONALLY shared amongst share holders, it’s a ponzie scheme.
I'm shocked by the number of fools who call that guy a genius investor. He's genius alright...at stealing from them
MY portfolio has good companies, however, they have been red all this year. This is my first year of investing and have been down 35% in the January sell-off, and now down 17% in this sell-off. I work hard for my money, so investing is making me nervous and sad. I don't know if I should sell everything or just sit and wait.
Building a good investment portfolio is more complex, so I recommend you seek professional support. This way you can get strategies designed to address your unique long-term goals and financial dreams.
I’ve been trying to hire a professional. After all, it's what really wealthy people do, they hire more experienced persons to do the job but I can’t find anyone I can trust.
The financial markets will always have lucrative means for folks to earn decent payouts, be it a crash or rise. I’m just being inquisitive? how are you yielding gains?
Christine Lynn Saitta. She is famous and has got a website. So, you can check her out online and subsequently contact her from there.
Frugality is an attractive quality to the majority of the population. Being frugal is about putting your dollars towards the things you care about and not overspending on the things that don’t matter. Thank you for sharing I'll do that right away
Not fully true. Maybe partially true, depending on the company and class you invest in. For example, REIT, such as real estate are required by law to distribute at least 90% of its profits annually back to the shareholders in the form of dividends. So, you’re getting real cash back either monthly, or annually. Disney and ATT shareholders also have been earning a lot of money for decades through dividends. For growth stocks where there is no dividends, Company’s like Google, Apple, and many others also do share buy back. So if you invested in the company at $50/share and it grew to $2500/share, during the share buy back, you’re getting back a net profit of $2,450/share assuming you kept the shares for a long time. And then there are the 51% rule. If you buy enough shares to own at least more than anyone, or 51% of the company, then you’re in complete control of the company and can use that power to take over the company and do what you wish. Sure. There are many scam companies who make it to the public market. But this is not all companies. The SEC should do a better job filtering out the scams. Investing isn’t for everyone. And if you’re looking for a quick flip, best go look elsewhere, otherwise you’ll most likely get chewed by the huge hedge funds betting against you on the short term. Do your own research and never listen to anyone’s advice or analyst as they are most likely writing the article or rating for their own favor.
There is some truth in this video, but it is a little oversimplified. The fact that the stocks we buy in the market have no intrinsic value of their own is true. And it is true that the market fits the basic definition of a ponzi scheme, but the truth is even worse than this video lets on, as the American dollar itself that is used to denominate the worth of these hypothetical stocks does not have any intrinsic value either. The bottom line is that hard commodities and real estate (real things that you can touch and see), works of art, rare coins, etc. are the only investments that do not have the risk of total evaporation.
Works of art are only worth what someone is willing to pay....
@@johnlocke_1 which is true for rare coins and almost everything. Every value for man is determine by man. For aliens or the universe POV, nothing we hold dear or we think of as intrinsic value has meaning. Just stuff.
Your wrong the government will just take it away from you. They took away gold and silver before they will do it again. The truth is governments are a ponzi scheme that are controlling countries to stay poor. If your rich you have no motivation to work and help economy grow so their job is to keep you poor.
that is what I have thought , the stock market is a legal, regulated and well organized ponzi scheme, is like a machine never stops
In ponzi schemes the last investors lose all there money in the stock market you only lose a percentage. In the stock market you will only make big losses making risky investments for example look at the s and p 500. What ponzi scheme works more or less forever
@Belinda Knight I've changed my views. I have no idea if the stock market is a ponzi scheme. Seems like it to me but it could theoretically go on forever as each stock is its own ponzi.
@@itsalexhere8748 Yeah it could technically be classified as a ponzi scheme, but it is also an efficient vehicle for investing/funding companies that appear to show future potential. As long as the global financial system continues to build and grow in size and value, then the ponzi scheme will continue. In a way you are simply betting on stability and continued growth.
@@andrewjensen8189 in a world with limited resources its guaranteed growth cant go on forever
@@itsalexhere8748 Yeah, very true, especially with stagnating population growth, and even negative growth in some cases, among the first world countries. I could totally see how inflow of cash could slow down. But I am still happy to bet on innovation making production and inventions more efficient and economically viable, for at least the time being until the decrease of cash inflow breaks te system some time in the future (if).
I work at a traditional 'fundamental analysis' investment firm and if I explained this to anyone I work with I would be fired on the spot.
This video deserves a million views, seriously interesting stuff.
I was that 18 year old who was encouraged to invest their money. "Make your savings work for you". I was encouraged to not only gamble my money, but invest it in places that were against my morals, in mining, fossil fuels and deforestation. Then the market crashed. I gained nothing from that experience. No joy, no satisfaction, no tangible assets.
Yeah but gambling in these long term Ponzi scheme can make you rich. Even the US dollars is a Ponzi scheme. So why work for a Ponzi system when you can be an investor in a Ponzi scheme (Investments)
ruclips.net/video/MKQPIRydhDY/видео.html
It’s hilarious because even if you invested at the bottom of the COVID-19 market crash you would’ve still made 50% on your money. Your comment is mathematically untrue
Lol then it recovered so hard u lost money so u think it’s a scam haha u deserve to loose ur money
@@ShawnRrr Enjoy your losses itry
Nice to see a video that explains the issue so well, it's shocking how hard it is to find people who are aware. It seems so obvious, but I guess you really can't expect much from people. The fact that casinos make so much money is a pretty strong indicator that even when people know the system is rigged, they are still stupid enough to enjoy the excitement of throwing their money away while hoping they magically get rich without providing any value to society.
I guess most people are, at least subconsciously, aware of many of the points in the video (like that the value of a share is based on speculation and that they may lose everything they pour in), but they think they'll be the winners. Same with crypto bros, same with NFT shills.
@@_piulin_ Crypto is far worse because its unregulated and Theres so much Fake liquidity
I day trade, I’m and out I make returns. I don’t long term invest because no one stock lasts and certainly not in an uncertain economy. Learn to swing, day or scalping. I thought for a long time the market is rigged….the way I trade goes against all of that. I love to sell on a dive (I trade forex also not regular stocks) I’m happy with it
When people want money so badly, they'll see what they want to see.
@@Holli.Michellefx yeah , but Theres a few compqnies that get Taken private. Thats the only way its Not a ponzi scheme. Because then every Share holder gets paid.
I've been saying this for 20 years. Everyone acts like I'm mistaken, but this video does a great job of putting my point of view in an easily digestible format.
I do invest in stocks but only dividend stocks. It's still BS. For example, a Stock will pay a divided of 3% over a year and then the stock itself will lose 2-4% making my investment stagnate.
Sell covered calls to enhance the cashflow.
Thats why get out and earn real money like a real man
Read your book after thinking about this for long. Can’t find anything to disagree with.
How did I come to think of this? I had a hunch that one company I had invested in was a scam stock. Management felt shady and were not delivering. I sold my shares ASAP. Then it hit me: some other sucker bought them from me and now pays the price. I like to think of myself as a man with high moral standards, so naturally I felt bad about this. Soon after my hunch turned out to be right and share prices have fallen 50+% since.
Left the stock market with small losses. Don’t think I’ll ever go back. Perhaps some reliable European dividend stocks at most. Sure, owning land and real estate also has risks and bubbles, but at least they respond to real needs (a roof on top of my head) that won’t suddenly just disappear.
I can’t believe more people aren’t seeing this. Valuations are sky high. When and if people realise they can’t provide for their families with imaginary stock money, things will get ugly. Rich get richer and suckers get stomach punched.
Thank you!
How did you hear about the book?
@@ThePonziFactor I think I just googled for books about stock markets and ponzis. Figured there had to be something written on the topic. Was surprised to only find one book covering it - yours, of course. It was a great read (actually, I listened to the audiobook) and you’re asking some fundamental questions. I’m a behavioural scientist and the question of ”why” people ”invest” has bothered me for some time. I’ll leave a review somewhere!
@@robbykay8194 Great. It's always nice to hear that people are finding the book organically through searches:)
@@ThePonziFactor Yes, and I think you’ll have a whole lot more readers once the current bubble pops (my guess: soon).
In September 2021, most stocks in the world are still over-priced, too many in bubble territory. The bubbles are a monetary phenomenon, as investors chase yield, accepting risk or ignoring it altogether. Many a speculator hoping to snatch short-term profits from unsustainable prices will lose money. This boom may die soon, but that has nothing to do with Ponzi schemes.
In 200years, stock market has been 6.3% up. I think you mean day trading, that is scam. But holding stocks is not. And, of course there is crashes in the market. 1932, 1987, 2009, 2020 biggest crash years that i know. But how many years there is upside?
This is an eye opener. Damn.
Man I just discovered this channel because I was searching if someone else thought that the stock market was a Ponzi scheme too. And what a surprise it was to discover that you made a entire book about it. I'm going to read it. By the way, what are your thoughts about bonds market and Future markets?
Keep up with this awesome work. Finally I think you should apply for a Ted or Ted ex talk.
Yup. I discovered this about a year ago when I was starting to look into "investing" in the stock market (quotes used on purpose). But when I started to look deeper into what I would actually be purchasing, I realized I wouldn't own anything at all (in any way that really matters). My only hangup with Tan's book is that I wish he did not call it a Ponzi scheme, since the rules of the game are openly available. It's just that most people do not care to understand them.It's really just a zero-sum (or negative sum) game where the odds are heavily against you.
it is a legal and regulated ponzi scheme a machine that never stops , well it stops in every crash and the starts againg
I couldn't agree more! I was watching James Asquith's explanation about Ponzi Scheme (which was short but detailed) before I came across this video. Very helpful and informative!
@@BolivarArquitectos it never stops lol the "big losers" just get bailed out while the small folks fold and retreat back under their caves
@@bytecode36 investing in the stock market is like investing in the future if you think you can predict some things in the future then it's all good but if not bye bye
This isn't how it works. The stock market creates value, through a number of methods it is always worth on average than the amount of money that has been put into it. It isn't zero sum.
your right its negative sum because early birds take out more than they put in, meaning there is a continual loss of money by the new investors, so basically the losses run inversely to how well the stock is doing, stock is doing good? means many people would loose money if they pulled out
Stock market is just a casino and you are betting against other greedy people and need to cash out before they do i.e. "buy low sell high"
thats why there has never been a good raise since covid. One big sh&thole
" Companies like Google, Tesla, Facebook never pay their investors." So I avoid buying into companies like G, T,F, and instead, hold others that do pay dividends.( In the past 12 months, certain of my ETFs paid out over 7% in dividends of what I paid. )
No one ever goes broke from holding dividend stocks. However, I updated the book and mentioned that Ponzi assets like TSLA SHOP PTON have unrealized returns that far exceeded legit ownership like VZ LMT IBM over the past 12 months. Ultimately, I just want people to know how stocks really work. The rest is up to the reader.
Yeah, this makes sense. Although once the non-dividend bubble pops, it will probably take the legit dividend stocks down with it. At least for a good while.
@@robbykay8194 My main holdings already took a hit in 2020, but two out of three fully recovered. All pay dividends, though.
I am retired buying stock that don't pay a dividend like tesla, amazon, facebook, netflix etc. All the money you collected on dividends I have made within a few years in capital gains. And I still kept half the shares after I got all my gains back and they still continue to make more money for me. Paying out a dividend is also a scheme cause they take the money out of the stock every time they pay you so there is no real gain.
Just invest in a CD. Youll get a smaller return but its much safer. right now im getting 4%. However i am aware that if i had put it in the market I would have made 20% but I know the market will crash soon. I just don't know when. And i don't want my hard earned cash there when it does
I'm thinking about this too. They sell this dream of making all this money in the market, but slow and steady can win the race too. What did our ancestors do before the stock market? Thank you for sharing .
Mann this is so true I’ve been tempted years ago but NEVER officially got into it.
Read the common sense of investing by John c bogle, it explained how investing is a zero sum game where one loss is another’s gain. Everything is perceived value. That why index funds are the safest bet. I say bet because stocks are gambles no matter how much research you do.
I don't know who Bogle is, but business by its nature requires a willingness to take risk. Bogle should draw a distinction between speculation and investment. I will agree with one suggestion: index funds do a lot of the work for the ordinary investor. Whoever blunders into any stock market without study is heading for a painful loss. That has nothing to do with zero-sum games, however.
Lol Bogler is the godfather of indexing
The speaker in the video failed to define a most important and fundamental concept -- that of "OWNERSHIP". What is ownership of the common variety, as in you owning your shoes? Ownership of X consists of two rights: the right to use X as one pleases, and the right to prevent others from using X. The ownership of most COMMON STOCKS gives you the right to vote in company matters and prevents others who do not own stocks to vote. To be sure, there do exist stocks that are non-voting, but they are in minority and have different purpose. All common stocks have voting power. For each single common stock you own, you get to cast one vote only. If more than 50% of the company stocks vote for the policy of no dividends, then it is the majority will of the collective company ownership that has so decided, not some unaccountable salaried managers of the company. I am sure what I have said so far is pretty much common knowledge. If so, then some of the claims of the video do not seem to be accurate.
One way to model the stock market is to view all investors as a single investing unit (in which the individual investors buy and sell the stocks amongst themselves) and to view all the companies as a single company unit. The question then is this: Given the aggregate dollars generated from the original investors during the IPOs, how much dividends have historically been paid out and how much dividends are 'realistically' expected to be paid out in all future time? Of course, in such a (virtually impossible) computation, it is the present value (or value as of a certain definite point in time) of all the dividends and IPO dollars that must be considered to make a sensible comparison and analysis. Toward a first approximation, one can approach this issue probabilistically. From a list of all publicly traded companies that have ever existed, a random but sizable sample can be taken and studied along the lines suggested above. Is anyone aware of such a study that is published? If so, where, what website or article or book? Thanks in advance!
Do you believe in Bitcoin? I bet you do. Stock is a note with zero value unless someone’s willing to give you cash for it. That’s done by other buying into it. There’s been a huge push to get everyone into stocks through the 401k. Why? To keep the ponzi going. Your missing his point and that’s my opinion based on reality.
Yes. The fact that the people are called investors and not gamblers is crazy.
The stock purchase does not lead to any investment into the company and vice versa. Except during IPOs.
I try to explain this to people but it's a very hard thing to explain. Great video.
Explain how purchasing a stock is not an investment?
@@j0sh145 because it does not lead to any proceeds to the underlying company to help them build something and its value totally depends on next "investor" to buy at higher price from current "investor".
And the underlying company if it goes bust pays shareholders last, that too small percentage of the stock value.
I knew something was weird when we in lock down during covid and they were still saying the stock market was doing well and I was asking myself how when many people are not working or shopping.
Same bro
I remember when the market crash back in 2008 and we had investment company coming to our job and talk to us about 401k and what stood out most now now that I think back and after I watch this video he said the market needs new money. I always thought it was a Ponzi scheme but this video pretty much but validate what I was thinking.
Who is here in 2024? 😂 only people who know this are the ones making real money in the stock market. As I put it, it is wild wild west.
This video is so helpful. From now on, if the business don't pay dividends, I will not invest! We need more videos like this!
ruclips.net/video/MKQPIRydhDY/видео.html
this is not a good philosophy, dividends cost the company meaning less funds to expand the company
that's where growth stocks shine
@@brybry111 i think you need to re-watch the video
@@brybry111 But once the majority realize that the king is not wearing clothes, what will you do? redeem your shares for 0.001 $ each ? non redeemable coupons always go to 0, this is very key to understand and that is what im taking away with me from here, after this shocking discovery that google stocks is no better than a SafeshibainucumdogeElon memecoin
I like gambling (poker) but would never "invest" my money in the stock market.
epic effort putting forth a thesis, supporting it well, and offering the only conclusion a logical mind can come to. shared. of course, irritating to junkies.. LoL. folks with skin in the game so to speak, but even buffet boy Munger gave this gem a while back "Show me the incentive and I will show you the outcome.”
- Charlie Munger
That's exactly what my thought was since i came to know ab't Stock Market ..
Ok, that makes quite a bit of sense. But I thought that share holders were paid back, if the company makes money, regardless of wether anyone new invests or not. Also, a Ponzi scheme is unsustainable, because you will eventually run out of new investors. I think the stock market can sustain itself, because companies make money.
Or maybe I have no clue what I'm talking about. Who knows.
For non-dividend stocks, shareholders are not paid back and the underlying companies have no legitimate obligations to pay them back either. As of now, AMZN, GOOG, TSLA, etc have never paid their shareholders and have no plans to pay them either. The idea that shareholders get paid from non-dividend companies is massive misconception that many, including "finance experts" believe and advocate. (Don't worry if that's what you assumed.)
Ponzi schemes are not unsustainable as long as there is an inflow of money from new investors. The "unsustainability element is doesn't validate whether something is or isn't a Ponzi scheme. The zero-sum nature of a system where investors pay out other investors--shuffling money between investors makes it Ponzi. From the book:
"Regardless of how long a Ponzi scheme can stay afloat, the general consensus is that they are all destined to collapse. This idea isn’t proven but sounds sensible for a scam that sells itself as having infinite potential in a world that has finite resources and cash.
Ponzi schemes experience signs of trouble when there is an absence of cash from new investors or if enough of the current investors want their money back and realize what they thought they had isn’t really there. Both scenarios will lead to a collapse or a massive pullback at best.
"
@@ThePonziFactor bruh you lost me after the first sentence. Also, what kind of investment would not be a ponzi scheme? Is it possible for some companies on the NY stock exchange to be genuinely using invested money the way we think it is being used?
@@nickjohnston7513 I don't understand how you got lost. If the textbook nonsense about how stocks are backed was true, investors would know exactly how much TSLA or AMZN is backed by and when investors will see that money. If you buy TSLA for $600 today, and it drops to $300, well all know Tesla will not reimburse you for the losses.
"What kind of investment would not be a Ponzi scheme?" The video addresses this.
Every company that issues stocks invests that money into the company (absence of fraud). The issue is, they use stocks as a way to borrow money they never have to pay back.
@@ThePonziFactor ohhhhhhh, thank you. Your video was very helpful and interesting.
@@nickjohnston7513 2 options....1.live off the grid. Or 2. Invest in yourself. Only jerk can become rich. Accept it, use it
This is what I always knew but was never able to articulate. Very well made video. Can we stop people from investing?
You mean, "Can we stop people from GAMBLING?" ;)
@@ThePonziFactor .. Yes
While cryptos and some hype stocks behave like Ponzi schemes this is not true of the general stock market. You apparently haven't heard of dividends. And yes many companies don't pay dividends because they're reinvesting their profits so they make bigger profits in the future so they can pay larger dividends in the future instead of small dividends in the present. Also some companies that are in trouble may decide to suspend their dividend for a time.
This video itself seems to be promoting a number of fallacies, with faulty reasoning and little in the way of data or facts to support its claims. For instance, the claim, "stocks do not have legitimacy, because no one has any obligations to pay the shareholders anything" is false. Firstly, shares of a company represent ownership of a company. For instance, If a CEO of a publicly traded company owns 50% of the company, that means he owns 50% of the total number shares of the company. Secondly, since a share of a company's stock represents ownership of the company and a claim to the company's profits, a stockholder should be indifferent as to whether or not a company pays a dividend. Lastly, stocks have had higher expected returns compared to real estate and bonds precisely because stocks do not have guaranteed cash flows (even dividends are not guaranteed because management can cut dividend payments). The value of a stock is the present value of the future cash flows to the firm divided by the number of shares outstanding, and that present value is calculated by discounting those cash flows at an appropriate discount rate, which reflects the risk of the stock. Therefore, the disadvantages of stock ownership are priced into the current price of the stock, so their expected returns are higher than investments with stable cash flows.
I would like to have a conversation with the author of the video to discuss this in further depth. Overall, I believe that this is yet another video on RUclips that spreads misinformation about the stock market.
I disagree .. he’s basically put all the big lies in a video. A stock is only worth what the next guy is willing to buy it for like Bitcoin. Like any ponzi it’s dies when nobody is willing to invest more money or everyone cashes out. In case of the stock market TRIES to cash out.
Like when Robinhood had to put a stop to individual investors making money
Such a powerful video
I’ve been investing over ten years and few professionals explain it so well
This could’ve stopped @2:30 but kept delivering
Thankyou.
30 Trillion? No wonder they are throwing the USD under the bus, instead of dumping the Dow Jones
That's a good one made me laugh 😆
Underrated video. This should have at least a million views.
Well a stock is also a way to store illegal money... It's those guys who want to pump in illegal money into stock market that make it a positive sum game...
On second falacy, there are foreign investors also investing so comparing USD in circulation in US and Market cap may not be right.
Two thumbs up good content, verifiable by those in the know, great presentation, video and host recommended.
I appreciate the highlighted comment, more than you may ever know, thank you!
It's why I only invest in dividend paying stocks and riets. (Riets must pay 90% of profits back to investors but anyone can play with the books these days)
Buying real ownership in up and coming businesses is the way forward. Or even start your own companies, take it to wall street by not playing their rigged game.
6:30 your definition of "money" is severely lacking. It is also only valuable because others seek to obtain it, it is not "backed by the government" total cop out statement.
Playing Chris Mansell in the background does not make you profound -- or, any less incorrect than you blatantly are.
This video is good, but does have some important flaws. It's irrelevant that the amount of cash in circulation is far less than wealth held in stocks. The cash is simply for exchange purposes, whereas stocks are acting as a store of wealth. When the video talks about a house as having intrinsic value, there is no such thing as intrinsic value. Value is established by the price the market will pay. While some companies do not pay dividends, some do. It's worth researching that. It is true that price to earnings ratios these days are unreasonably high for most stocks, so dividends rarely matter as much as they should. Be careful out there folks, it's too easy to lose money in markets!
wrong. with enough shares you control the company. Then you can do as you wish with profits. This is what gives stocks their value
Common stock doesn't represent company ownership and have no voting rights.
Most stocks don't offer dividends, so where does the money come from to invest in the markets?
67 companies have been removed from the DOW since 1929.
It is impossible for the DOW to go down, because they just replace loser stocks/bankrupt companies with winner companies.
Debt.😅
Wow! I've been completely ignorant of this.
If you believe this, now you are more ignorant. Buying a action you will have a % of a company and the value is decided by the people, not by the amount of capital de company haves. This is just leftie propaganda ignoring the difference between value and price. Price is what you pay and value if what you get.
I always felt this is true. Finally someone proves it.
If you closely look at most of the things, it'll be a scam of some kind where someone would be making unfair profits. World is not fair but this is the world we live in and it's the only option.
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Why do you think real estate prices have been so high and keeps going up, isn't that because new people keep coming to pay the builder higher amount which funds future development and the cycle continues. When this cycle slows down or stops, Real estate prices would crash and so would stocks. This is how our civilization works🤷♂️
Plenty of stocks still have dividends still this is stupid
I don't know why this doesn't have a few hundred million views.
This information is so hard to find
Very good presentation. I started investing 3 years back and definitely got some profit. But I can clearly see through how all the "analytics" part is plain bullcrap. It's just greater casino, you might have some tricks but mostly luck.
i can do this better:
the stock market is a big game of hot potato. And also, I feel personally attacked having been an 18 year old that wanted to enter the market. A few months into it, I realized it is all a lie and all of it is bullshit. Nevertheless, while it does exist, it is possible to make some money from it. But I, now as a 19 year old, hate the idea of the stock market. I merely use it as a method to invest some few grand into, leave until it appreciates, then pull out when I feel like I've made my fair share. Once I can stop depending on it, I'm never looking back.
You could also invest in tangible companies and that pay divedence (long term). Like FedEX who actually provide a service and pay divedence. Their profits and value are real, because it's based on them shipping items
@@hark9447 Dividends are practically a waste of time, unless you have a ton of money to start out with. other than that expect less than $100 every 3 months or so.
I only invested once, I understood to ponzy scheme. Took out all money
“The value of a stock is just an idea. It is just a thought something completely imaginary”. This is WILD
Shouldn’t be. The same thing can be said about cash money. What makes USA paper value more than China paper? Let alone who decides paper has value?? Who decides what has value and doesn’t. A black man was once valued to be 2/3 of man. Who gave such men to have an authority to decide where value is?
@@sdiz3509exactly but yet the probability of a currency loosing a value altogether vs a stock loosing it's value suddenly is not equal. So generally value itself changes based on demand and stock. But the stock market was an altogether a seperate system that, unlike the currency of a country, only the rick would actually benefit.
Never believe in stocks that much, im old school i guess
Iv'e warning ppl about this for 20 years. Brilliant video and graphics.
Take all your money out of your bank account before you learn that an economy LOANS money to generate returns
this extremely rare case , and if it happens in 0.00001% of chance it happen to every extra dollar you have above 250K
I wonder what would happen if everyone stopped trading and cashed out their stocks and profits. How many companies would declare bankruptcy ?
A lot of them as their ability to fund operations is financed by borrowing against enterprise value quantified in stock prices which together represent total market cap. If people started selling and asset prices dropped that would mean the cost of raising capital/money in exchange for borrowing against enterprise value by issuing stocks and bonds would be very expensive as yields that would need to be offered on stocks and bonds would be high.
That is what QE and ZIRP is about. Keep enterprise value high so businesses can get money cheaply and keep expanding as the yield they need to offer on their stock and bond offerings stay low.
The same thing that would happen to a ponzi scheme. Literally the same.
None. No comapny would declare bankruptcy as everyone cant possibly sell their stocks at the same time. Someone needs to be buying for you to sell. Also the companies already took the money when they released their share to the stock market. They wont be losing any money to go bankrupt
@@MashZ what if the company were the buyers?
@@antiquarian1773 why would they be stupid enough to buy their shitty stock? Haha
I describe the stock market as pass the parcel or musical chairs game. Last person standing ends up losing as they end up buying shares at the highest price before the market crashes.
The ability for businesses to fund operations is financed by borrowing against enterprise value quantified in stock prices which in turn is determined by credit money inflation which together represent total market cap. If people started deleveraging and selling, asset prices would drop which would mean the cost of raising capital/money in exchange for borrowing against enterprise value by issuing stocks and bonds would be very expensive as yields that would need to be offered on stocks and bonds would be high.
That is what QE and ZIRP is about. Keep enterprise value high so businesses can get money cheaply and keep expanding as the yield they need to offer on their stock and bond offerings stay low as asset prices and yields move inversely.
The mistaken assumption is that money is fixed in supply but it's not in fact the cost of creating money has dropped since the 1980s dramatically and its supply has thus exploded and what has enabled this is an explosion in the deflationary pressures of globalization and technological innovation.
The price to create more money is the interest rate. The primary channel through which new money creation flows is through asset prices via the credit channel. Think about what that means.
"In accordance with the Cantillon effect, inflation can increase inequality depending on the route it takes, but increasing inequality is not a necessary consequence of inflation. If it happened that the poorest in society were the first receivers of the newly created money, then inflation could very well be the cause of decreasing inequality since they get the money first.
Under modern central banking however, money is created and injected into the economy through the credit route and first affects financial markets.
Under this system, commercial banks and other financial institutions are not only the first receivers of the newly created money but are also the main producers of credit money. This is because banks can grant loans unbacked by base money."
ruclips.net/video/rv5xl1AEeQs/видео.html
Fiat Money
ruclips.net/video/hx16a72j__8/видео.html
Bond markets do not function like they should due to suppressed interest rates. Companies borrow cheap money to buy back shares to artificially increase earnings per share. From a shareholder point of view that's not productive use of capital. From a speculators point of view it is. See the difference?
I keep trying to tell people this but no one believed me. I'm just glad that there's people out there who see the scam market for what it is!
but the real question is, what do we do with this information?
Make money with this information
Cash is ponzi as well... they keep printing new and old loses value... bttr to be in aapl stock or something which is reducing its share count (deflation rather than inflation), where as new cash is printed each year, which eventually goes into the stock market making your richer
@@rahulsampat8698 at least if you have cash, whatever its value, it can buy your needs and wants.
@@rahulsampat8698 cash is backed by the monopoly on force which is the state that issues the cash. notice that in unstable countries (where the state is in flux) the currency always hyperinflates or tanks in value. The currency, tho fiat, is tied to something REAL, which is the state issuing the currency and using(or lacking) force(political, military) to back it.
1:49 whether the company loses of gains money is relevant to the stock price. When you list tesla motors as a money burning company that’s stock continues rising. This can be explained by the fact that a companies stock can rise on speculation. An example of this are all of the “crazy” valuations that AI stocks currently have despite posting very little of no profit.
The amount of misinformation in this video is simply shocking. Where to even begin?
Par value comes from bonds, and is simply a regulatory figure for stocks. Common stock holders still have first rights to business profits, surplus liquidation proceeds etc. They own the company's assets and income, regardless of dividends and voting rights.
John Bogle once accurately said, "The stock market is a giant distraction to the business of investing". But this video describes exactly why the stock market is necessary at the same time. It provides liquidity for monetizing business profits, especially for non-dividend-paying stocks.
Good stocks represent fractional ownership of income-generating businesses, and are backed by inflation-hedged assets. Modern fiat currencies have neither.
As for equating cash inflow with market capitalization and other baseless arguments made here, perhaps it would be best to end saying that investing is an advanced science with potentially extreme consequences.
No one should get into it, or dismiss it, so lightly.
Baseless? Sorry but that was spot on! If the stock market was real it would have crashed when the world shut down and nobody produced anything. Why didn’t it? Because it’s a huge ponzi with numbers not backed by anything other then someone’s willingness to buy air. Lol
@@playinragz8183 Thank you for the reply!
While the economy did slow down, the only businesses that actually shut down were the customer facing ones such as retail and travel. Most of the real economy today happens in the background. Essentials and supplies were still being produced and delivered.
The same goes for the stock market. Most trading now happens online, and not on the exchange floor.
While a large number of popular stocks truly have poor underlying foundations, the system is based on solid economic principles which most people don't bother studying. Asset-backed income-generating stocks are always better investments than real estate; and way better than fiat currencies and cryptocurrencies, which truly are nothing more than thin air.
Anybody who really understands the stock market will see how baseless this video is. To say the value of a stock is imaginary is absolutely preposterous. Please everybody don’t listen to this video. If you disagree with me let’s have conversation.
Ok, I'll bite. If a stock doesn't pay dividends, then where does its value come from other than other investors willing to pay for it?
Isn't a "stock" or a "share" basically just a piece of paper saying you invested a certain amount of $$$ in a company and are entitled to a particular percentage of returns?
@@yearofthedawgs8581 actually no not at all. All dividends are is just profits from the company. There are MANY companies that pay dividends and there are many that choose not too. The ones choose not to pay can commonly be called growth stocks. These types of stocks are primarily focused on returns of the company rather and maximizing shareholder value. So when a growth stock decides to not pay a dividend they are more likely than retaining those earnings to reinvest back into the overall business.
So then where does the value come from?
The value of stocks has a lot to do with the fundamentals with companies, more specifically their profits, revenues, forward looking statements, profit and operating margins, free cash flow, and others as well. Big jumps in either direction for any of those metrics can have a big impact on the price of a stock. One of the most widely used metrics is what’s called the
Price/Earnings ratio (P/E Ratio)
This is a ratio of the price of a stock relative to its earnings per share (EPS)
So you can then see and analyze how expensive a stock might be among looking at other metrics of course.
What I’m explain are pretty summed up explanations and you can look into them a lot more.
And to your last point, a share in a company I guess can be looked at as a “piece of paper”. It doesn’t just necessarily say what price you bought it at rather the actual value of 1 share of a company. The only thing you would be “entitled” to when it comes to returns is if the company pays a dividend and you own the share as it goes ex-dividend. It is up to you as the shareholder to decide when to sell your share weather it be for a profit or a loss. And I just want to say in this day and age, stocks are VERY liquid investments compared to others, you can buy and sell stocks really easy. It literally takes a minute or two MAX to place an order to sell or buy shares.
@@yearofthedawgs8581 on top of that I just want to say that literally most retirement plans, with some exceptions, are tied to the stock market. So if you would like to retire comfortably, weather it be from retirement plans from or investing on your own, you will have to be in the market.
@@j0sh145Imagine being an owner of the business who doesn’t pay you any share of the profits they make most of the companies today have a very low dividend yield when compared to the companies when Mr Warren Buffet started investing
Over the years companies have reduced their dividend payments plus all those retained earnings that belong to the shareholders is kept by the company just to be later used by the owner to fund their expensive business vacations or buying private jets in the name of the company
I want my investment to put money in my pocket whats the point of seeing your money compounding when you can’t use it for daily expenses 😂😂😂😂
@@autofill5073ok so what you’re referring to are growth stocks. They retain their earnings and instead of paying them in dividends they reinvest them back into the business to generate more gains for shareholders. If income is what you desire then there are specific funds etfs and even a certain compiling of individual stocks that can achieve that for you. It’s still possible so I’m not sure what the issue is. Roughly half the stocks on the nasdaq pay a dividend. You just need to know where to look.
The real owners wont share their money with the ordinary person there is no hack
In HEX, no one owes you anything. You mint your own HEX rewards yourself when you end your stake. Like how Bitcoin miners mint their own Bitcoin rewards. You are the network. There are no middlemen or managers in HEX. HEX rewards are dynamic like Bitcoin mining rewards. No one in the world can promise you how much you might make running HEX, because no one knows how valuable HEX will become. HEX puts you in charge!
Great video but the background music is too loud. It over powers the speaker and the focus well my focus goes to the music instead of the message. I'd cut the music down by half.
Here's a version without music: ruclips.net/video/Az1dpnC4AxA/видео.html
Boy oh boy, wait till you hear about FIAT currency.
Also the part of profiting off of other investors has been a known thing for a long time. Heck, it's why the saying 'There's no such thing as a free lunch' exists. As for lack of dividends, there's common, and preferred stocks, which common stock holders have a say in the company (via voting), and preferred wave the say in company voting for a dividend. Some stock symbols offer both as a common stock, but at a significantly lower dividend.
Not saying the dynamics of how the stock market works isn't corrupt, or shady. But a lot of what's said in this video isn't exactly true.
Also I can't get over the whole FIAT thing, as if saying the US dollar is the defacto mark of truth. When it's value is literally based on itself.
@@KuiperShaina Investors buy stocks to get fiat currency. Stocks are a sh-t class below fiat
@@KuiperShaina I could never pay you as all I have is fiat scam money and you knowing this means there is no scam. I will sell you a cup of coffee for the fiat scam money you do not want. Its complicated...
I had a feeling that this was the case, researched for videos on it and it lead me to this video.
Very good analysis on it.
I came hear after questioning the crypto industry followed by the stock market, something is definitely not right when the majority always lose.
I can almost hear the voice over the music
Hi! Thanks for the vid. You make a point that NYSE + NASQA = 30T but US only generates 1.6T. But you seem to overlook the key point that its not just people in the US that invest in NYSE + NASDQ... the whole WORLD can invest in these. Most of my money is in US equities and I don’t live there.
Hi, I'm aware of that. The world's money supply is around $36.8t worth of USD (not in USD). Companies like Google and Apple also hide a lot of USD/currency abroad, so a lot of USD isn't even in our banks. Also, most of the money being shuffled in US equities are form domestic pension plans (details in the book).
Tesla back to $38.50 ...
If stocks don't have a direct connection to the company , then why do they dilute the shares to raise money for the company and reverse split, is that just the MM money grab.
It's a tool .... means to an end
I remember when my stockes were stolen, the stock went Way Up and I thought I made money. When I checked my account, they stole ALL but one share, IT'S CALLED A REVERSE SPLIT. They steal your shares and leave you one or two, then push the price up dramatically in your face...Just another way to rig the game "legally".
I came to this same conclusion after trading cryptocurrency for two months. If you use the DeFi (De-centralized Finance) way of calculating exchange rates for currency pair pools, you will see how small changes in supply can cause huge swings in exchange rates. If you want to "invest" in the stock market, you might as well cut the BS and try your hand at crypto. Just make sure you cash in regularly and don't get caught with your pants down when the market tanks.
So all these investment type products including cryptos are pretty much shams. Not saying a scam but not everyone can win in other words.
This is a very good overview of the market for the uninitiated in the modern era. The point about the value of stocks having no necessary relationship the the actual value of the company is fundamental. The whole game now is to convince people of the “potential” for new reservoirs of wealth creation. Whether it’s true is clearly less important than whether the investors can be made to believe it’s true.
So much so that the market now is totally dominated by professional influence pedlars who bombard the public with pure hype on future outcomes.
There are two things I would say as caveats here. One, it’s not accurate to say that in general stock brokers don’t know what the market is. That may have true in the past but no longer. Most traders and insiders know exactly what the market is.
The second thing is that one can make a distinction between classes of companies and their stock valuation. There is the company with factories that produces x number of physical products, with reported annual sales, consistently across many years. This was typical of investment pools in previous generations.
They are somewhat different from businesses that have little history aimed at presumed emerging markets based on mere projections of potential value.
While the former is subject to risks from the ups and downs of consumer demand , the latter is pure gambling that exposes the investor to devastating losses - precisely because they were enticed by the prospect of remarkable profits. Many brokers and individuals deliberately invest in such companies knowing full well what the future holds but simply aim to ride the wave and exit before the inevitable crash.
What happens when a publicly traded company goes bankrupt?
My guess is, owners lose nothing, shareholders lose everything.
Somebody help me understand
They are suppose to pay back the lenders, and then the debts/bonds first. The shareholders are dead last to get whatever is left over, which is typically sh-t.
So, you take your company public to insulate the initial investors/owners from risk?
Then you manipulate stock prices to encourage speculation in your company?
How is this not an obvious fraud to people?
Great video explanation, now the questions. Do you suggest than not invest in stocks or what strategy to follow? Because many companies provide their stocks as a benefit package? Thanks for answers and suggestions in advance
The whole argument is based on tangible money. I have not used that for years. So I am fine having my money in fictional stocks that raise my fictional cash by over 10% a year and let me buy real food. Only companies that have no valid reinvestment pay dividends. And I even prefer stock buybacks. But if they have a good investment, like Google mostly does, I am very fine if they reinvest my share of their gains. It might be though, that the whole system of economic growth is a huge Ponzi scheme, but the stock market would do well even without growth. Stocks would have the same price and just pay some dividend because there is no other option to invest.
I agree with you and what make it more crazy is inside Trading companies who kill the value of the stock, they pay a lot of share when it's cheap and sell it when it's high and those who pay it in the top lose almost %80 or more because those companies sell it all and buy again when it's cheaper.
The best option for you as an investor is the companies that pay dividends to shareholders, and also, that company should not be trading its shares in this way.
There are companies that allow you to sell only by buying by one of the shareholders, this prevents the share’s value from suddenly dropping. The value does not decrease or increase suddenly. You may see an increase of 6% within a year or a decrease of 10% within a year and in the same Time to get profits from the company.
The problem with such stocks is that you will not be able to sell quickly. You may wait days, weeks, or months until you find a new investor wiling to buy your shares.
If it weren't for all those stock buybacks, the market would be in the toilet.
It's impossible to make money from the stock market.
This should have millions of views
I think about this idea a lot. But it seem not very well known common sense among general public. This video has only 100k view proves that.