I’ve weighed in on the stock market numerous times before. I still believe, and always will believe, that the stock market is Ponzi scheme designed to defraud ‘investors’ (greedy people).
This story exemplifies the gigantic scam behind the stock market: There’s a single New Jersey deli doing $35,000 in sales valued at $100 million in the stock market
With yearly sales of (averaged) $17, 350 for the past two years, the ‘stock value’ of this delicatessen is a whopping $100 million dollars. Clearly, more then a few people are being taken for a ride, but you can’t blame the company alone, ‘investors’ are buying up truly stupid ‘stocks’ (all over the map) right now, hoping to make a big return.
So how in the world could a small brick-and-mortar sandwich shop with paltry sales be valued at $100 million? Even during the pandemic closure, the ‘stock value’ (scam value) tripled in price. With 2.5 million shares, I value these stocks worth just .00007 each. This doesn’t even qualify as a ‘penny stock’.
Hometown reported more than $600,000 in expenses last year, up from about $154,000 in 2019. The company also reported a net cash gain of $2.2 million from financing activities, such as selling stock, in 2020.
How can “selling stocks” increase the value of a company? Nothing is being produced (except greed). No investments are even being made, no improvements in the company. But the scam is clear – claim you’ve got something to ‘sell’ despite having very little to actually show for it, then sell a lot of ‘it’ (greed), and make a ‘profit’ off of the stunning ignorance of your ‘investors’.
There are some very, very stupid people throwing their money around. This is a sign of collapse dead ahead. When stupid money follows stupid ‘marketing’, a reckoning will be due shortly.
If this takes on a domino effect, and I suspect it will, not only will all these people lose their shirts, but so will everybody else.
One thought on “Stupid Money”
Charles Hugh Smith has been focused on the absurd level that share markets have reached -especially S&P, Dow- and the possibility (certainty at some stage) of a crash.
‘The current market melt-up is taken as nearly risk-free because the Fed has our back, i.e. the Federal Reserve will intervene long before any market decline does any damage.
It’s assumed the Fed or its proxies, i.e. the Plunge Protection Team, will be the buyer in any freefall sell-off: no matter how many punters are selling, the PPT will keep buying with its presumably unlimited billions.
If this looks risk-free, ask who else will be “buying the dip” in a freefall? Former Fed Chair Alan Greenspan answered this question in his post-2008 crash essay Never Saw It Coming: Why the Financial Crisis Took Economists By Surprise (Dec. 2013 Foreign Affairs):
“They (financial firms) failed to recognize that market liquidity is largely a function of the degree of investors’ risk aversion, the most dominant animal spirit that drives financial markets. But when fear-induced market retrenchment set in, that liquidity disappeared overnight, as buyers pulled back. In fact, in many markets, at the height of the crisis of 2008, bids virtually disappeared.”……