The value of a stock is based on the value of the company, but why that correlation?
Only thing I can see linking them is dividend, but that is just 3-4% Annually. What is preventing it from becoming a game of share market, like happens in crypto?
In: 0
Stocks don’t really correlate directly to company value. That’s a “perfect world” idea. Stock is based on the traders perception of the company’s value and what they believe it will be when their ready to sell. Essentially it is a bet that it will be x valuable tomorrow. If the company closed right now, the stock will be gone.
Crypto isn’t based on anything real so the “bet” is more difficult to predict. The currency could collapse without warning because it isn’t based on a company that has an interest in existing. Someone somewhere can literally just decide to close it out of boredom. They also have a slight interest in just taking the money and running because laws haven’t really caught up and there are massive loopholes.
Latest Answers