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Hertz, the original meme stock, is turning out to be worthless

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Re: Hertz, the original meme stock, is turning out to be worthless

#291

Post by chii »

ksdale wrote: post #171
jboog wrote: post #141

Earlier quoted context omitted.

Ben Graham said many decades ago that over the short term the market is like a voting machine but over the long term it's a weighing machine. There have always been periods of irrationality in the markets but there's no reason to believe that equities are fundamentally untethered from their inherent value in perpetuity. Eventually most of the overnight WSB stock picking geniuses are all going to lose their shirts and…

I like that Graham quote, and you make good points. I guess when I say "investing," I mean more like - Purchasing an equity entitles you to a share of that business' income and potentially assets, but if you buy the equity on the stock market, you're not actually investing in capacity, the way you would be if you bought an IPO or even just a piece of equipment you could use to make something. And I think people have…

> you're not actually investing in capacity, the way you would be if you bought an IPO or even just a piece of equipment you could use to make something.

while you are not directly investing in capacity like you might in an IPO, purchasing stock does create the same outcome. It's just not _you_ who is doing the capacity investing directly, but someone else who does so, as a result of the chain of investments.

Re: Hertz, the original meme stock, is turning out to be worthless

#292

Post by imtringued »

saalweachter wrote: post #138
jfengel wrote: post #136

Earlier quoted context omitted.

The sum of all monies lost trading S&P500 shares should be negative, since the index as a whole was up. Which isn't to say it'll be up forever, but over a scale of years it has historically always been up. Even if you lost money trading S&P 500 shares, somebody else made more, which is why the index is up. Even so, that figure isn't really relevant to the GP's point. Their point was that in addition to the price of t…

When you factor in stock buybacks -- which are sort of but not quite the same as dividends -- it's "sort of" like 3%. (My vague understanding is that for complicated and silly reasons, many more companies have preferred stock buybacks to dividends in recent decades, but it's still money flowing back from companies to investors.)

There are two factors. The tax code favors one form of compensation and low interest rate money means it is actually possible to execute this strategy. When companies borrow money to skip taxes you know that the central bank isn't doing its job properly.

Re: Hertz, the original meme stock, is turning out to be worthless

#293

Post by chii »

cwhiz wrote: post #263
throwaway5752 wrote: post #249

Earlier quoted context omitted.

That's pretty cynical and optimistic at the same time. Cynical because it doesn't acknowledge the value that a well functioning and regulated financial system can create. Efficient flow of capital only sounds bad if you haven't seen the absence of it, like projects failing for lack of funding while bad ones are burning money. Optimistic for thinking that the masses have anything approaching the same level of access.…

>Cynical because it doesn't acknowledge the value that a well functioning and regulated financial system can create. You don’t need gambling to have a well functioning financial system. The price of goods at Walmart is not based on what uninterested bettors think the price should. It’s just based on supply and demand. We don’t need gambling to have a functioning financial market.

The reason walmart's prices are stable is _because_ of the gambling of the market!

The financial engineering of modern day has managed to separate risk (which is what causes price fluctuations) from their underlying commodity/goods/etc, and sell that risk away to people who want to take it.

This allows those who want to not have risk (and thus stable prices) to have it - albeit yes, they pay a small premium for that. But ask any farmer and they prefer a lower, but stable price for many years, rather than the fluctuating price of produce.

So the gamblers, who by definition, want risk, take on all the risk. Thus, a functioning financial market is how this is all conducted.

Re: Hertz, the original meme stock, is turning out to be worthless

#294

Post by chii »

jboog wrote: post #196
karmelapple wrote: post #156

Earlier quoted context omitted.

Would you say those same people who just learned the phrase “short” or “short squeeze” are likely the same kind of people going to the casino and thinking they can successfully count cards? As mentioned elsewhere in here, it’s ultimately gambling. It’s putting money up, exposing it to risk that could completely wipe you out. If someone doesn’t understand that about stock investing, I think they’re very similar to som…

Yeah, I agree it's totally gambling. There's also the thing where buying equity in a company can seem very simple because you see something like Apple where they made a cool thing and obviously their stock went up. People just have no idea about how complex the markets are. They also don't remember the very smart people who claimed the Iphone would be quickly overtaken by Android and other cheaper alternatives (Clay…

But people should be allowed the freedom to choose to gamble. Even if it's bad for them - as long as they own the responsibility, and not create a burden on soceity for doing so.

Re: Hertz, the original meme stock, is turning out to be worthless

#295

Post by chii »

rsynnott wrote: post #130
Judgmentality wrote: post #91

Earlier quoted context omitted.

> The industry shift towards electric vehicles is because it's finally becoming profitable to make them. This is largely due to a dramatic reduction in battery costs which is driven by R&D for smartphones, not cars. Personally I don't believe Tesla has much to do with it. As much as I agree with the rest of your comment, I have to disagree with this part. Yes, there is a shift towards profitability with electric vehi…

> There are many things I dislike about Tesla. But I genuinely believe they are responsible for bringing EVs to market ~3 years before it would have happened without them. This feels vaguely ahistorical. The best-selling electric car platform in Europe today is the Renault Z-E platform (or at least it was; VW may have overtaken by now). That platform was announced in 2009 or so, with the first cars in 2011, and the f…

And the nokia phones were much more popular, before apple made the iphone.

The disruptive product doesn't have to be the first.

Re: Hertz, the original meme stock, is turning out to be worthless

#296

Post by vkou »

Spooky23 wrote: post #281
vkou wrote: post #189

Earlier quoted context omitted.

> How was selling more stock in that situation legal? Why should it not be? Consider the following situation: 1. Alice owns 5 shares of Hertz. 2. Hertz owns 5 shares of Hertz. 3. Bob is an ape. For some stupid reason, Bob wants to buy 5 shares of Hertz. Is it immoral or illegal for Alice to sell her 5 shares to Bob? If not, why should it be immoral or illegal for Hertz to do so? Especially if they are up front about…

1. Alice owns three cartons of unfiltered cigarettes. They are harsh and kids don’t buy them. 2. RJ Reynolds owns many cartons of Camels. Reynolds creates a cartoon camel called Joe Camel, who is as recognizable to 6 year olds as Mickey Mouse. 3. Bob is a 11 year old. For some stupid reason, Bob wants to smoke Camels and be cool like Joe. Is it immoral for Reynolds to sell to an 11 year old? Is it immoral for Alice t…

It's immoral for Alice to sell cigarettes to a minor, and it is also immoral for Reynolds to do so, so the analogy doesn't work.

Since, uh, nobody has an issue with regular stock holders selling their shares to other stock holders.

If Bob is not 'sophisticated' enough to be allowed to buy shares of Hertz regardless of who is selling them, then sure, prevent him from buying. Delist the stock. Require you to be an accredited investor to buy shares of a company undergoing bankruptcy. These are all reasonable solutions to the problem. Stopping Hertz from selling shares... Is not. Because if Bob is an informed/sophisticated/accredited investor, then Hertz selling him shares isn't actually defrauding him.

Re: Hertz, the original meme stock, is turning out to be worthless

#297

Post by Spooky23 »

vkou wrote: post #296
Spooky23 wrote: post #281

Earlier quoted context omitted.

1. Alice owns three cartons of unfiltered cigarettes. They are harsh and kids don’t buy them. 2. RJ Reynolds owns many cartons of Camels. Reynolds creates a cartoon camel called Joe Camel, who is as recognizable to 6 year olds as Mickey Mouse. 3. Bob is a 11 year old. For some stupid reason, Bob wants to smoke Camels and be cool like Joe. Is it immoral for Reynolds to sell to an 11 year old? Is it immoral for Alice t…

It's immoral for Alice to sell cigarettes to a minor, and it is also immoral for Reynolds to do so, so the analogy doesn't work. Since, uh, nobody has an issue with regular stock holders selling their shares to other stock holders. If Bob is not 'sophisticated' enough to be allowed to buy shares of Hertz regardless of who is selling them , then sure, prevent him from buying. Delist the stock. Require you to be an acc…

Just like RJ Reynolds and Joe Camel, the Hertz management knew that their share offering was targeted at investors ill equipped to make a rational decision.

It is bad faith and fraud.

The prevalence of the “it’s just the market” argument and corresponding ethical gap here is disturbing. Read the Ben Horowitz “why I didn’t go to jail” post that was reposted earlier this week. End of the day, everyone who signed off on the Hertz offering decided to paper over an obvious moral hazard with sophistry and bullshit to enrich themselves (via bonuses) and bondholders by defrauding the public.

Re: Hertz, the original meme stock, is turning out to be worthless

#298

Post by HPsquared »

pessimizer wrote: post #234
dragontamer wrote: post #188

Earlier quoted context omitted.

Do you think the buyers of HTZGQ at $5.50 in June 2020 will be proven correct? Or do you think, that like most other bankrupt companies, HTZGQ will be worthless once these bankruptcy proceedings are done? The stock is almost certainly going to go to $0. That's just what happens as bankruptcies play out. If you disagree, you're welcome to toss your money into buying some HTZGQ yourself. ---------- The issue is that He…

Modern finance is a process of constantly repackaging and reselling risk from people in a better position to evaluate that risk to people in a worse position to evaluate that risk. Finally, after a dozen generations when it arrives at the people least able to evaluate the risk, it crashes to zero, followed by sympathy to the poor suckers (like your local school district) and a bailout. Hertz just cut out the middle m…

I'll pass on the dinars, unless they are somehow collectible.

May I interest you in some Aaa-rated subprime mortgage backed securities? How about some negative -yield bonds?

Institutions can have conflicts of interest, which individual investors can make up their own mind on. (Whether that's a winning strategy is another question, I admit)

Re: Hertz, the original meme stock, is turning out to be worthless

#299

Post by UncleMeat »

Judgmentality wrote: post #42
camjohnson26 wrote: post #35

Earlier quoted context omitted.

All this retail interest in meme stocks is gambling, plain and simple. More people entering the market creates a Ponzi effect where new entrants pay for the gains of holders, but by definition this is unsustainable. You can see this basically everywhere in the economy but the meme stocks are the most obvious. Not financial advice, I thought Tesla was laughably over valued at $40 a share, never bet more than you’re wi…

Investing in any stock is gambling, plain and simple. The only difference is your risk tolerance. Remember when it was impossible for real estate investments to lose money 15 years ago?

If your goal is to own a productive asset, it is investing. If your goal is to ride the price fluctuations of an asset, it is gambling.

Re: Hertz, the original meme stock, is turning out to be worthless

#300

Post by UncleMeat »

Pyramus wrote: post #166
MagnumOpus wrote: post #92

Earlier quoted context omitted.

No one from JPM or even big hedge funds was involved -- this is the one single thing that compliance and legal departments would be all over, so any well-regulated outfit with a compliance department would have staid well away from pump&dump. (The JPMs and Citadels made money from market making on stocks and options - there they made a year's worth of profits in a week.) You are likely right that finance bros were (a…

From what I've heard and read Wall St was heavily involved - I'm not sure why you think this would be a compliance issue?

A bank going on reddit to try to influence public behavior and therefore the price of a stock so they can make money is definitely illegal. A competent legal department would reject an organized attempt to do this. This is why many people believe that it is "finance bros" doing this on their own in their spare time rather than somebody at JPM leading a team to do it.
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