Stocks and Trading Thread - Channeling your inner Mono

[Tamas]

I think the danger with the Krugman side of the argument is missing a conditional or two.  It may be that printing money does not increase inflation given that some other factor holds true.  As long as that factor doesn't change, you don't have to identify it, or even be aware of it.  However, if that factor changes, and suddenly printing money does in fact cause inflation, everything can explode in your face.

In finances things exploding in your face and collapsing? Unheard of!

[crazy canuck]

I think the danger with the Krugman side of the argument is missing a conditional or two.  It may be that printing money does not increase inflation given that some other factor holds true.  As long as that factor doesn't change, you don't have to identify it, or even be aware of it.  However, if that factor changes, and suddenly printing money does in fact cause inflation, everything can explode in your face.

Krugman identifies the factors he says needs to hold true.  You should probably read the article I linked.

[Admiral Yi]

Tesla just passed Toyota to become the #1 car maker by market cap.

[Tamas]

Tesla just passed Toyota to become the #1 car maker by market cap.

I don't think there's much reason to compare a speculative stock bubble to bloody Toyota.

[Barrister]

Tesla just passed Toyota to become the #1 car maker by market cap.

I don't think there's much reason to compare a speculative stock bubble to bloody Toyota.

Tesla is more than a "speculative stock bubble".  It is a real company that ships real cars and has for years.

Stock price went up because it produced 90,000 vehicles last quarter.  That was a decline of 5% from last year, but miles better than the industry's 30% decline.

I have no idea is the stock is worth it at that price, but it's no 90s dot-com bubble company.

[Grey Fox]

Another way of seeing things is that the other cars manufacturers, especially the American ones, are undervalued because they carry so much retirement fund obligation.

[DGuller]

Sometimes I have to keep reminding myself that the market cap represents the ability of the company to extract economic surplus from its activity.  What it doesn't represent is the total economic surplus it's generating for the society. 

If we had a conglomerate that had a 100% market share in providing food, shelter, and entertainment to everyone in the world, but they did it at cost, the market cap of that conglomerate would be less than the market cap of one toaster manufacturer, even though society benefited more from that conglomerate than it did from having one more toaster manufacturer.  Toyota obviously brings more utility to the world than Tesla, probably by a couple of orders of magnitude, but ironically they were so successful at making cars an affordable commodity that they can't sufficiently profit from it compared to Tesla.

[Admiral Yi]

Sometimes I have to keep reminding myself that the market cap represents the ability of the company to extract economic surplus from its activity.  What it doesn't represent is the total economic surplus it's generating for the society. 

If we had a conglomerate that had a 100% market share in providing food, shelter, and entertainment to everyone in the world, but they did it at cost, the market cap of that conglomerate would be less than the market cap of one toaster manufacturer, even though society benefited more from that conglomerate than it did from having one more toaster manufacturer.  Toyota obviously brings more utility to the world than Tesla, probably by a couple of orders of magnitude, but ironically they were so successful at making cars an affordable commodity that they can't sufficiently profit from it compared to Tesla.

Tesla still has not made a full year profit.

And of course the market cap of your zero profit company would be zero.

[DGuller]

Another way of seeing things is that the other cars manufacturers, especially the American ones, are undervalued because they carry so much retirement fund obligation.

That's like saying that other car manufacturers are worth less because they paid out a lot of money in salaries 30 years ago, whereas Tesla is worth more because it paid nothing in salaries 30 years ago.  Retirement fund obligations are incurred during employment, not during retirement.  It may seem like they're incurred after someone's retirement only because these pension fund obligations were not properly funded at the time they were incurred, and the company got away with it at the time.

[DGuller]

Tesla still has not made a full year profit.

And of course the market cap of your zero profit company would be zero.

Okay, what I meant was expected ability to extract profit, not currently realized ability to extract profit.

[Grey Fox]

Another way of seeing things is that the other cars manufacturers, especially the American ones, are undervalued because they carry so much retirement fund obligation.

That's like saying that other car manufacturers are worth less because they paid out a lot of money in salaries 30 years ago, whereas Tesla is worth more because it paid nothing in salaries 30 years ago.  Retirement fund obligations are incurred during employment, not during retirement.  It may seem like they're incurred after someone's retirement only because these pension fund obligations were not properly funded at the time they were incurred, and the company got away with it at the time.

Yes.

[garbon]

https://www.theguardian.com/business/2020/jul/07/boohoo-shares-concern-factory-conditions

Boohoo shares plunge amid concern over factory conditions

The value of the online fashion retailer Boohoo has plunged by more than £1.5bn in two days, after revelations about conditions endured by the workers that supply its garments.

Boohoo's sales have been booming during the coronavirus lockdown as consumers shifted to buying clothes online, but its shares fell by 14% in early trading on Tuesday, extending the previous day's falls.

The company is now worth more than a third less than it was on Friday afternoon, before allegations about its supply chain wiped £1.5bn off its stock market value.

Boohoo said on Monday it was investigating claims that staff at one of its Leicester factories were paid as little as £3.50 an hour and were working without proper equipment to guard against Covid-19.

The firm, which owns the Nasty Gal and Pretty Little Thing brands, said it would not hesitate to terminate its relationship with any suppliers that were found in breach of its code of conduct.

But the case has ignited broader concerns about working conditions in hundreds of small warehouse factories in Leicester's garment industry, which supplies high street fashion brands.

Jaswal Fashions was the supplier initially named in a Sunday Times report that alleged staff were working in hot and cramped conditions, without sufficient protective equipment and were paid rates below the minimum wage.

The company has strenuously denied its involvement, saying it no longer works from the factory on Leicester's Gas Street, no longer supplies Boohoo, and has leased the premises to another firm.

A director of the company that leased the premises from Jaswal Fashions has not responded to requests for comment from the Guardian.

Concerns about Boohoo's supply chain emerged less than a month after the company announced a bonus plan worth up to £150m for its bosses.

[Tonitrus]

I dunno...holding on to my TSLA has paid off pretty well so far.

Maybe it is time to cash out?

[Admiral Yi]

I'm holding mine.

I gave half a thought to cashing out a slice when it hit $1,000, then buying back in at $800 or $600.  Didn't pull the trigger, and how stupid would I have looked now.

[Admiral Yi]

Elon has moved past Warren on the billionaire's list.