Comment "Stock analysts" have little connection to reality (Score 2) 165
A common saying is that stock is worth whatever people will pay for it. IOW, printing up double stock on the same assets doesn't deflate its value as long as the market doesn't seem to notice. When the market crashes, then you'll see lots of blame aimed at these practices, but not before.
Bill Parish is needlessly hostile in his wording, and so comes off as a conspiracy theorist, but he's got the facts right. Employees are getting stock options and selling them (or holding them); consider the exactly equivalent situation of Microsoft selling the stock options and giving the money to employees who then keep the money (or buy stock options).
If this happened, MS would be reporting a loss, because the money from selling stock options is investment capital, not revenue, and cash salary is an expense, though giving out stock options as salary isn't.
This is common practice, because funding your business partly with a Ponzi scheme lets you lower prices below cost, and thus outcompete competitors. If someone is doing it, everybody has to do it, or be driven out of business.
The problem is its fundamental similarity to a pyramid scheme: the ones who get in and out before the crash get rich, but an ever-expanding pool of capital must be tapped. When it reaches its limit, either by running out of new investors, or people realizing that eventually they're going to run out of new investors, it crashes. It can still go for a few years yet, though, maybe as much as a decade, before all the suckers looking for easy money, and all the retirement and college funds are tapped out. Even longer if messed up countries get their act together long enough for their citizens to accumulate real wealth to gamble on bubble stocks.
It could even lead to a third world war, if China and India decide that their citizens shouldn't hand off half the country to pay debts to foreigners who got out in time.
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Bill Parish is needlessly hostile in his wording, and so comes off as a conspiracy theorist, but he's got the facts right. Employees are getting stock options and selling them (or holding them); consider the exactly equivalent situation of Microsoft selling the stock options and giving the money to employees who then keep the money (or buy stock options).
If this happened, MS would be reporting a loss, because the money from selling stock options is investment capital, not revenue, and cash salary is an expense, though giving out stock options as salary isn't.
This is common practice, because funding your business partly with a Ponzi scheme lets you lower prices below cost, and thus outcompete competitors. If someone is doing it, everybody has to do it, or be driven out of business.
The problem is its fundamental similarity to a pyramid scheme: the ones who get in and out before the crash get rich, but an ever-expanding pool of capital must be tapped. When it reaches its limit, either by running out of new investors, or people realizing that eventually they're going to run out of new investors, it crashes. It can still go for a few years yet, though, maybe as much as a decade, before all the suckers looking for easy money, and all the retirement and college funds are tapped out. Even longer if messed up countries get their act together long enough for their citizens to accumulate real wealth to gamble on bubble stocks.
It could even lead to a third world war, if China and India decide that their citizens shouldn't hand off half the country to pay debts to foreigners who got out in time.
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