How To Get Into Stocks?

[OpenGambit]

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Now we've come the full circle and back to my original point. The market value of a house is variable, prone to fluctuations, frequently based on irrational factors, etc. and therefore hard to determine. The true value of the house - the cost to (re)produce it - is .

1. production cost as value is outated as a theory and its also wrong.
2. your example proves it because if the true value of a house is the cost to produce it, then a house in the middle of nowhere would cost the same as the same house on the waterfront of the mediterrian, the value of the underlying land comes form scarcity and exclusivity, not from "production cost".

and your original point was the a share cert is somehow ficitious. that could not be further from the truth, unless you also think your ownership papers for your bike/deed to your house are somehow ficitous.

 

[viper84737]

It's not just the cost to produce it. There's a utility to it, too.

But speaking of price fluctuations, that's what I'm trying to say about price vs value. The value of something isn't what the last price on it was. That's just the price. Value is much harder to pinpoint.

In the world of stocks, the last trade does not at all reflect what the company's real value is, because it doesn't take into account the desires of the liquidity that is trying to act (which can't be known, practically speaking). Just because I trade a stock up a few cents or dollars with my single-intentioned order(s) doesn't make that company worth that much in market capitalization whatsoever.

This was the entire premise behind the 2008 liquidity crisis. Everyone saw high prices and tried to pour sell orders into bids that dried up or weren't there in the first place.

Price vs Value.

 

[Vlad]

1. production cost as value is outated as a theory and its also wrong.

That's the only value that can be determined independently of the laws of supply and demand.

2. your example proves it because if the true value of a house is the cost to produce it, then a house in the middle of nowhere would cost the same as the same house on the waterfront of the mediterrian, the value of the underlying land comes form scarcity and exclusivity, not from "production cost".

One last time: true value does not equal market value.

and your original point was the a share cert is somehow ficitious. that could not be further from the truth, unless you also think your ownership papers for your bike/deed to your house are somehow ficitous.

Share certificate / stock becomes fictitious currency the moment it is used as a payment for goods and services. That equally applies to any other certificate of ownership. Currency not tied to gold is also of totally arbitrary and essentially fictitious value. The only true value always stays with tangible assets themselves, not with certificates of ownership of those assets. The value of tangible assets is measured by the human effort needed to produce them and that effort is measured by food (simplified, but that's what it ultimately is) needed to sustain and reproduce that human.

All this does not mean that an asset cannot or will not be sold on an open market above or below it's true value. Market price is directly dictated by supply and demand and only partially and indirectly by the cost of production.

I have started to repeat myself and have nothing more to add to this discussion. I rest my case.

 

[OpenGambit]

I never saw the relevance of your currency tangent to "how to get into stocks" to begin with.

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