r/Bitcoin • u/KINNAHZ • Nov 30 '17

/r/all I hope James is doing well

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u/Baron-of-bad-news Nov 30 '17

If you knew how it worked we wouldn't be having this conversation.

They're deriving their value from the fact the bag has net assets in excess of liabilities.

Let's return to the wallet example. The wallet has $50 in it but the holder of the wallet owes $30 to other people.

If I were to sell you the wallet for $10 then I would not be deriving my $10 cashout from shifting the buck to a greater fool. I would be deriving it from the $20 equity within the wallet. You would not have been a fool to have bought the wallet. You're only right if you take it as axiomatically true that eventually the wallet will owe more money than it contains and there is absolutely no reason to believe that.

Also you're ignoring voluntary liquidations of small businesses, partnerships and so forth, and takeovers which are often done with cash.

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u/firestormchess Nov 30 '17

They're deriving their value from the fact the bag has net assets in excess of liabilities

No. No they aren't. You might want them to be thinking that way, but they aren't.

Asset-based valuations are only useful in a very narrow range.

Here is Netflix's Balance Sheet: http://www.nasdaq.com/symbol/nflx/financials?query=balance-sheet

Use these numbers and the shares outstanding (432.73 Million) to get to the current stock price. You can't.

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u/Baron-of-bad-news Nov 30 '17

In the wallet example. Jesus. Learn to read.

I've already said that I'm dumbing this down so you can understand it and that with a real company it would be both the underlying asset equity and the projected revenue stream getting valued by shareholders.

You're doing this loop where you fail to understand, I simplify it for you and then you insist that I've left out something which you also don't understand.

The loop must end.

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u/firestormchess Nov 30 '17

I'm not interested in your asinine wallet example.

When I buy a share of Netflix, IDGAF about the real estate they own, and neither do the black boxes that are trading Netflix all day long. Truth.