Re:How This Ends
by noduerme on Monday May 23, 2022 @03:21AM
(#31476177)
Yeah, I get that. And that's natural. But if a huge population swell is accustomed to treating the market as a get-rich-quick casino, the market stops serving its purpose and I guess we're in for a really bad series of shocks.
[ Parent
| on HN ]
We've already reached this point. Hence Tesla $1T and shitcoin et al...
You're watching the unwind.
Re:How This Ends
by SgtBastard on Monday May 23, 2022 @04:48AM
(#31476649)
The scary thing for me is the 2nd order effects of this activity as companies try to act increasingly like meme stocks to boost share price and abandon all pretence of P/E ratios and profitability.
This. Also, in terms of downstream effects: Taking sibling's point, even now at $650B Tesla has market cap equivalent to the next 10 largest automakers combined, while having a P/E ratio ten times higher than Toyota, 32 times higher than BMW. Isn't the effect that other automakers are undercapitalized? The distortion of the market that's inflated Tesla has funneled investment away from productive non-meme competitors. That means layoffs and more supply chain problems. And that capital just gets wiped out when the bubble bursts, leaving a giant supply-side hole.