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. th-cam.com/video/-XscM2GrKFU/w-d-xo.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.
1:08 most companies return money, but not all are using dividends. Many companies (60 % or Something) are using buybacks, which does increase the price and therefore shareholder value (google distributed 31.4 billion through buybacks in 2024) 4:41 Managers are legaly obligated to act in shareholders interest. Shareholders do have a claim on all the profits that are ledt over after taxes, interest payment and reinvestment needs. If you are not happy with the Management you can vote against the current management or even sue them. 6:19 Stocks can be overvalued as well as undervalued. Its the buyers responsibility to judge if they want to pay the quoted price for the given asset. 7:37 if you consistantly invest in indexfunds you can profit from the long term growth of the Economy, given that you belive that the evonomy will grow and that you dont pay to high a price for your assets.
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
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).
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
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. "
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.
@@yankov-ink-bitsthings that are necessary to live, including enjoying life...but that aren't common, like air, has intrinsic financial value. If you had the last plate of food on earth, you'd get every dollar on earth for it.
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)"
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
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.
Don't sell covered calls, that's horrible advice unless you understand it. Invest in dividend payers that grow their dividend a lot, don't chase yield. Microsoft has grown theirs 10% yearly, better raise than most jobs give. Visa is currently about 15%, Texas road house has been about there also.
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.
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 .
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.
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.
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.
Yeah, it's so horrible, imagine if you invested into the S&P 500 in 2008, it would have lost some value over a couple years, but now your original investment would be up by about 5X. That would be so horrible for you.
@@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
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.
" 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.
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 🫤
@thomasjardanedeoliveirabou9993 even when it was backed by something physical it only had value because we say it does. People are more important than gold, diamonds, or any other "valued" resources. Only if we choose to value something is it valuable.
In a given economic system value is created by human labor. The idea that it is human labor what creates value goes back to economists like Adam Smith and David Ricardo. Mainstream marginalist economics has no real understanding of what value is, but schools and newspaper articles accept mainstream marginalist economic fallacies as articles of faith. Therefore it should not be surprising that people believe in absurdities such as: money has value. And NO, value is NOT a subjective thing. Human labor creates value.
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
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.
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
@@adriantaner7950 no, you can't just take out money, you have to sell it to someone else, so one person can't just crash the entire market, and even if it was possible, why would someone want to crash the market, that would also make his own shares worthless.
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.
@@seerar1 don’t get me wrong, not dissing crypto I invest myself. But the idea that crypto is something different is a fallacy. Just another form of the same scam. And don’t worry, everything is a lie really…my life, your life, everyone’s life.
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.
I remember when over 30 million people was buying Game Stop. The NYSE had a note saying that due to high volume, the trading of Game Stop was halted the price didnnot move at all. They even slowed the movement of price action that alone tell me they have power to control price action even if the retail traders are adding and increasing the value. They can create the value through their control of the computerized system.
@@gg6498 some books will just poison your mind you just need to be more realistic I can bet a million dollars the author has some investment in the stock market
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.
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.
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?
Hi, love this video. I’m new to finance and I’m wondering, how do the listed companies make money if the money invested by investors just simply go to other investors
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.
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.
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
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🤷♂️
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.
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.
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?
Owning a house isn't exactly an investment either since you will never see the money. Unless you sell the house but then you have nowhere to live. There are drawbacks to everything.
God... House has intrinsic value of craftsmanship and materials to build one. Second thing is you can't build more houses in the same exact spot, so if it location is good, there is also a value to it. You can rent the house and that creates cashflow. You can't gain cashflow from not-dividend stock.
there is no safe investment you just need to be smart enough to balance your risk levels which means you need to have a deep knowledge in the financial markets
This year started with my first 25000 and less than half year my value is almost gone, I should buy a car instead to investing, thank you for the video for open my mind.
This is a meeeeeeh video. When you buy stocks you own the company. The finance people know where the money come from. Its from the company selling products. Companies holding back money uses it to develop the firm. Making the future value go up, makes the stock price go up
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.
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
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.
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!
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!
No, the house has intrinsic value because of labor and materials used to build it. That's why it can't be worth zero, because it would mean you're giving away X hours of labor and X materials put into it under the current market value of labor and materials to build a new one. That's why real estate is anti-inflationary. You can't build one for zero, create from nothing. Yet you can emit shares even if your company profits haven't grown up. And on the case of stock, the past value of earnings has no meaning today, so the only way for a stock to keep value is that company backing it up to earn money. Once company stops doing so, stock is worthless. You can't say that for a house or flat because even after 10 years of being empty, it can still be used to live in. It has a value based on human work and limited resources.
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." th-cam.com/video/rv5xl1AEeQs/w-d-xo.html Fiat Money th-cam.com/video/hx16a72j__8/w-d-xo.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?
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.
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.
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 isn't a ponzi scheme because the value is backed by something. The stock owners *are* the company owners and can have a vote on the fate of the company and also whether there's a dividend or not. In case of one company buying up another, or a going private the shareholders will get paid that amount. There are still companies paying dividends but all studies about paying dividends doesn't affect profitability. Questioning the stock market because there isn't the equivalent in cash is also nonsense because that way any asset can be questioned. The reason why stock prices go up and down quickly is that it's price reflects the assumptions about the future and those outlooks can change quickly with certain news happening. Additionally to that, any market that allows for transparent, real time price movements will end up having a price that isn't stable. And because of the future looking aspect currently negative earning companies can be valuable because it's expected that they'll end up making big money in the future.
No. Stocks are not ownership and it's not backed by anything. If you think they're backed, tell us how much GOOG is backed by and exactly when shareholders will see that money (without hypothetical assumptions about the future). Let me help because I already know what you're going to say: 1) You can't tell us how much $$ GOOG is backed by (because it's not backed). 2) You're going to try and allude to some values on their balance sheet and say that's what it's backed by. 3) You're going to realize that point #2 about the valued on the balance sheet is your personal assumption and hope, but not what Google agreed to at all. You will not find anything in writing from Google to support your assumption in #2. You're not sharing anything new. You haven't thought about how stocks work at a deeper level.
You shill your project, I assume a book, on biz yet you can't refute a simple statement further than denial. LEGALLY, the share holders are owners of the company and if they make such decision, the assets of a company can be sold and divided among shareholders. Class A shares with voting rights still exist in most publically traded companies and their owners can vote on decisions regarding the company. Many companies still opt to pay a dividend, and those that don't do so because the owners believe that growth of the underlaying assets of the company will provide the profit from owning it
@@jankapuscinski8456 No. LEGALLY/IN PRACTICE, investors don't own anything and will never see any of those assets, ever. If you really believe what you said, then go look at Google's SEC-10k and tell us "exactly how much" their stocks are backed by and WHEN people can see that money ;-) You're not sharing anything new. You haven't thought about those fallacies at deeper levels. Please read the research before assuming you know something that wasn't covered. From the book: "The value of a stock is a cerebral idea. It is a figment of our imagination, which is why the price can rise and fall sharply at any given moment. The value is not backed by an-yone, which is why investors don’t know how much their stocks are backed by or when they will see that money. But what we do know is that if someone buys a share of Google for $1,100 and it drops to $900, Google will not make up that $200 difference and Google has no obligations to pay that person anything close to $900 either."
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.
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...
I want to invest, but I dont want to make all my earning from other people losing money on stock market. Would dividend stocks and reit be a better bet?
Dividends are non-Ponzi and no one ever goes broke from holding dividend stocks. But with that said, this Ponzi scheme is currently backed by the US government and the unrealized returns from Ponzi assets like TSLA SHOP UBER have exceeded that of dividend stocks from VZ IBM LMT, etc. Ultimately, I don't care what people do with their money. I just want them to know the truth about how the stock market works.
@@ThePonziFactor no one ever goes broke from holding dividend stocks. This is incorrect - sometimes the dividend yield are what lead you to a false sense of security that a company is doing well I.e Dividends are not well covered.
@@ThePonziFactor thats not my point. my point was that "no one ever goes broke from holding dividend stocks" is false and a terrible statement when you are giving financial advise to people, all stocks have a risk.
If you purchase 51% of class A common stock, the joke is on you when you find out about all the other types of preferred stock the company has and the fact the company can dilute your ownership on a whim.
Excellent video! I've been trading for 24 years and was taught by old school traders. What you say here is what they told me I need to know first before trading. Of course there is more to it, but this is the gist of it. I was in shock to learn how things work behind the curtain. But knowing that and knowing I cannot do anything about it, helped me to invest for me and my family. I trade options on the ES and that's all I do. Thanks for this video. This video should be a prerequisite for anyone learning to trade.
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. th-cam.com/video/-XscM2GrKFU/w-d-xo.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.
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.
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.
"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
If only it was just one thing...
@@FlintWoodI’m here after researching the Petro military industrial complex. I’ve already fallen too far down the rabbit hole.
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.
But its true tho.
LOL.
It's ignorance and lies.
@ you’re alcoholic?
@@onlydivergences what would be an alternative to stock investing? Something better that's not a ponzi scheme?
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?
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?
If u trade with commission these days, u deserve to lose money
This video deserves a million views, seriously interesting stuff.
1:08
most companies return money, but not all are using dividends. Many companies (60 % or Something) are using buybacks, which does increase the price and therefore shareholder value (google distributed 31.4 billion through buybacks in 2024)
4:41
Managers are legaly obligated to act in shareholders interest. Shareholders do have a claim on all the profits that are ledt over after taxes, interest payment and reinvestment needs. If you are not happy with the Management you can vote against the current management or even sue them.
6:19
Stocks can be overvalued as well as undervalued. Its the buyers responsibility to judge if they want to pay the quoted price for the given asset.
7:37
if you consistantly invest in indexfunds you can profit from the long term growth of the Economy, given that you belive that the evonomy will grow and that you dont pay to high a price for your assets.
Thank you for making these points. These videos that misinform people about the stock market is there reason so many people remain poor.
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)
th-cam.com/video/MKQPIRydhDY/w-d-xo.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
Mann this is so true I’ve been tempted years ago but NEVER officially got into it.
If you got in years ago you'd probably be much better off.
@ Yeah sure…
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).
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
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.
"
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.
Paying millions for art or sportscards is often ACTUALLY money laundering and covering for illegal goods & services.
@@yankov-ink-bitsthings that are necessary to live, including enjoying life...but that aren't common, like air, has intrinsic financial value. If you had the last plate of food on earth, you'd get every dollar on earth for it.
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
th-cam.com/video/MKQPIRydhDY/w-d-xo.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)"
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 don't know why this doesn't have a few hundred million views.
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.
Riskier though is it not ? @@ThePonziFactor
Don't sell covered calls, that's horrible advice unless you understand it. Invest in dividend payers that grow their dividend a lot, don't chase yield. Microsoft has grown theirs 10% yearly, better raise than most jobs give. Visa is currently about 15%, Texas road house has been about there also.
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.
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 .
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.
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.
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.
Yeah, it's so horrible, imagine if you invested into the S&P 500 in 2008, it would have lost some value over a couple years, but now your original investment would be up by about 5X. That would be so horrible for you.
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!
th-cam.com/video/MKQPIRydhDY/w-d-xo.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.
Underrated video. This should have at least a million views.
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
There's a problem with you if you think buffet is adorable
@@KBTadiehhe's mainly a genius to the many many millionaires he made over the years.
No better way to describe it as someone else said it’s like finding out at 40 that Santa Claus doesn’t exist
" 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.
Iv'e warning ppl about this for 20 years. Brilliant video and graphics.
so if we cant invest in stocks, what do we do to make our money grow and prepare for retirement?
So if they've listened to you how much did their assets grow in that time?
Well… they were right to not listen to you When we see the return of the stock market
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 🫤
@thomasjardanedeoliveirabou9993 even when it was backed by something physical it only had value because we say it does. People are more important than gold, diamonds, or any other "valued" resources. Only if we choose to value something is it valuable.
In a given economic system value is created by human labor. The idea that it is human labor what creates value goes back to economists like Adam Smith and David Ricardo.
Mainstream marginalist economics has no real understanding of what value is, but schools and newspaper articles accept mainstream marginalist economic fallacies as articles of faith.
Therefore it should not be surprising that people believe in absurdities such as: money has value.
And NO, value is NOT a subjective thing. Human labor creates value.
you havent been in an economics class
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
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.
Glad to know that I am not alone. Will shift my investments to metals and real estate.
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
@@adriantaner7950 no, you can't just take out money, you have to sell it to someone else, so one person can't just crash the entire market, and even if it was possible, why would someone want to crash the market, that would also make his own shares worthless.
So… buy Heinz calls?
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
This is one of the most eye opening videos I have ever watched on TH-cam. 6:45
Bro I discovered the banks and then fiat currency was a legal Ponzi scheme and now this. I’m mind blown
@@seerar1 I don’t know if you are into crypto or not, but that’s a major scheme
@@docwillis1443 wait really bruh my life’s been a lie , could you explain
@@seerar1 don’t get me wrong, not dissing crypto I invest myself. But the idea that crypto is something different is a fallacy. Just another form of the same scam. And don’t worry, everything is a lie really…my life, your life, everyone’s life.
@@docwillis1443 pension and insurance is also a legal Ponzi scheme
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.
I remember when over 30 million people was buying Game Stop. The NYSE had a note saying that due to high volume, the trading of Game Stop was halted the price didnnot move at all. They even slowed the movement of price action that alone tell me they have power to control price action even if the retail traders are adding and increasing the value. They can create the value through their control of the computerized system.
best video ever on explaining stock market. god bless you
Thank you. Here's the book if you want to know more: FREE PDF Book: bit.ly/ThePonziFactor2020
worse video ever he is just trying to sell a book that is the real objective.🤔
@@paulnyagini reading books is great thing don't you really know that?
@@gg6498 some books will just poison your mind you just need to be more realistic I can bet a million dollars the author has some investment in the stock market
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 should have millions of views
Plenty of stocks still have dividends still this is stupid
Plus he avoids the conversation on buybacks
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.
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?
Only us because that one got lucky for now. Now look at aex or stoxx europe 600. What a scam
@@pietjan2650 then just don't invest it those. How is that a scam if you can just choose to not put your money in that
@@pietjan2650 how about invest in quality American companies then, lol.
I always felt this is true. Finally someone proves it.
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!
Hi, love this video. I’m new to finance and I’m wondering, how do the listed companies make money if the money invested by investors just simply go to other investors
I was wondering if the stock market is a pyramid scheme, and I found this. Well explained.
That’s the definition of confirmation bias
What a song! I didn’t learn a thing about the stock market because I was too focused on the music
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
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.
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.
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
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.
This is an eye opener. Damn.
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🤷♂️
That's exactly what my thought was since i came to know ab't Stock Market ..
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.
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
Please suggest book on this topic. My humble request
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?
The best book on stocks I ever read
On second falacy, there are foreign investors also investing so comparing USD in circulation in US and Market cap may not be right.
Owning a house isn't exactly an investment either since you will never see the money. Unless you sell the house but then you have nowhere to live. There are drawbacks to everything.
God... House has intrinsic value of craftsmanship and materials to build one. Second thing is you can't build more houses in the same exact spot, so if it location is good, there is also a value to it. You can rent the house and that creates cashflow. You can't gain cashflow from not-dividend stock.
Like when Robinhood had to put a stop to individual investors making money
So what’s the safest investment to make on your money ?
there is no safe investment you just need to be smart enough to balance your risk levels which means you need to have a deep knowledge in the financial markets
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 😆
This year started with my first 25000 and less than half year my value is almost gone, I should buy a car instead to investing, thank you for the video for open my mind.
This is a meeeeeeh video. When you buy stocks you own the company. The finance people know where the money come from. Its from the company selling products. Companies holding back money uses it to develop the firm. Making the future value go up, makes the stock price go up
This video appeals to the type of people who believes the government expands the money supply by actually and literally printing more paper currency.
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.
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
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.
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!
“Everyone can’t be rich, a lot of people have to lose”
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!
No, the house has intrinsic value because of labor and materials used to build it. That's why it can't be worth zero, because it would mean you're giving away X hours of labor and X materials put into it under the current market value of labor and materials to build a new one. That's why real estate is anti-inflationary. You can't build one for zero, create from nothing. Yet you can emit shares even if your company profits haven't grown up. And on the case of stock, the past value of earnings has no meaning today, so the only way for a stock to keep value is that company backing it up to earn money. Once company stops doing so, stock is worthless. You can't say that for a house or flat because even after 10 years of being empty, it can still be used to live in. It has a value based on human work and limited resources.
This is really good video and amazing editing...
Just poor information
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."
th-cam.com/video/rv5xl1AEeQs/w-d-xo.html
Fiat Money
th-cam.com/video/hx16a72j__8/w-d-xo.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?
Pay attention to stocks PE ratios
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
Bro its 2 30 am where i live and this has just blown my mind
Here's the book if you want to know more.
FREE PDF Book: bit.ly/ThePonziFactor2020
“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.
I think this voice is AI
But I must say this is the best AI narrator I’ve heard so far.
Great video content and production
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...
Who said that companies don’t pay dividends to shareholders anymore? This is simply untrue 😅
What a beautiful video! Thank you so much! ❤
It isn't a ponzi scheme because the value is backed by something.
The stock owners *are* the company owners and can have a vote on the fate of the company and also whether there's a dividend or not.
In case of one company buying up another, or a going private the shareholders will get paid that amount.
There are still companies paying dividends but all studies about paying dividends doesn't affect profitability.
Questioning the stock market because there isn't the equivalent in cash is also nonsense because that way any asset can be questioned.
The reason why stock prices go up and down quickly is that it's price reflects the assumptions about the future and those outlooks can change quickly with certain news happening. Additionally to that, any market that allows for transparent, real time price movements will end up having a price that isn't stable.
And because of the future looking aspect currently negative earning companies can be valuable because it's expected that they'll end up making big money in the future.
No. Stocks are not ownership and it's not backed by anything. If you think they're backed, tell us how much GOOG is backed by and exactly when shareholders will see that money (without hypothetical assumptions about the future).
Let me help because I already know what you're going to say:
1) You can't tell us how much $$ GOOG is backed by (because it's not backed).
2) You're going to try and allude to some values on their balance sheet and say that's what it's backed by.
3) You're going to realize that point #2 about the valued on the balance sheet is your personal assumption and hope, but not what Google agreed to at all. You will not find anything in writing from Google to support your assumption in #2.
You're not sharing anything new. You haven't thought about how stocks work at a deeper level.
You shill your project, I assume a book, on biz yet you can't refute a simple statement further than denial.
LEGALLY, the share holders are owners of the company and if they make such decision, the assets of a company can be sold and divided among shareholders. Class A shares with voting rights still exist in most publically traded companies and their owners can vote on decisions regarding the company. Many companies still opt to pay a dividend, and those that don't do so because the owners believe that growth of the underlaying assets of the company will provide the profit from owning it
@@jankapuscinski8456 No. LEGALLY/IN PRACTICE, investors don't own anything and will never see any of those assets, ever. If you really believe what you said, then go look at Google's SEC-10k and tell us "exactly how much" their stocks are backed by and WHEN people can see that money ;-)
You're not sharing anything new. You haven't thought about those fallacies at deeper levels. Please read the research before assuming you know something that wasn't covered. From the book:
"The value of a stock is a cerebral idea. It is a figment of our imagination, which is why the price can rise and fall sharply at any given moment. The value is not backed by an-yone, which is why investors don’t know how much their stocks are backed by or when they will see that money. But what we do know is that if someone buys a share of Google for $1,100 and it drops to $900, Google will not make up that $200 difference and Google has no obligations to pay that person anything close to $900 either."
@fox 200% wrong my friend. It is a total SCAM. If you believe otherwise, good luck to you and ur family. 👍
This video is so funny.😂
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.
Great video
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...
Incredible! This video has been out for over 2 years and only has 57,000 views and 545 comments.🤔 It's a video everyone needs to see.
The book is even better;)
FREE PDF Book: bit.ly/ThePonziFactor2020
it does not add eny value it even make sense why it have few views the kid is just trying to sell the book.
I want to invest, but I dont want to make all my earning from other people losing money on stock market. Would dividend stocks and reit be a better bet?
Are bonds a good option or are there any other good options
Dividends are non-Ponzi and no one ever goes broke from holding dividend stocks. But with that said, this Ponzi scheme is currently backed by the US government and the unrealized returns from Ponzi assets like TSLA SHOP UBER have exceeded that of dividend stocks from VZ IBM LMT, etc. Ultimately, I don't care what people do with their money. I just want them to know the truth about how the stock market works.
@@ThePonziFactor no one ever goes broke from holding dividend stocks. This is incorrect - sometimes the dividend yield are what lead you to a false sense of security that a company is doing well I.e Dividends are not well covered.
@@babbseley4351 Right. Ponzi assets from unprofitable companies with "value value value" are much safer
@@ThePonziFactor thats not my point. my point was that "no one ever goes broke from holding dividend stocks" is false and a terrible statement when you are giving financial advise to people, all stocks have a risk.
If it weren't for all those stock buybacks, the market would be in the toilet.
I only invested once, I understood to ponzy scheme. Took out all money
So if you purchase 51% of all stock u no longer have controlling interest?
If you purchase 51% of class A common stock, the joke is on you when you find out about all the other types of preferred stock the company has and the fact the company can dilute your ownership on a whim.
@@daniellymanmoore7517 ah I see
Excellent video! I've been trading for 24 years and was taught by old school traders. What you say here is what they told me I need to know first before trading. Of course there is more to it, but this is the gist of it. I was in shock to learn how things work behind the curtain. But knowing that and knowing I cannot do anything about it, helped me to invest for me and my family. I trade options on the ES and that's all I do. Thanks for this video. This video should be a prerequisite for anyone learning to trade.
Few years of this and google has finally paying dividend. what a rime to be alive