Let me start by saying I do not invest in the stock market; it doesn't make sense to me. I admit you can make money in the stock market, it's not impossible, but I know the fundamentals behind it, and I can't entirely agree with this kind of gambling. It doesn't sit well with me.
While many may see crypto as gambling and use crypto as gambling and I may sound like a hypocrite depending on your perspective. I feel more comfortable that with crypto BTC pegs a lot of what goes on in the space, which is why BTC is the most significant part of my portfolio.
I've spoken in the past about Zombie companies. In the past and why they are a burden on society but what I don't think people realise is the depth of how valueless many of these companies are in the modern-day and age.
Why we used to invest in companies
In the past, we would invest in a company because of its earnings; a company would earn a profit by servicing the market, having a healthy debt to income ratio. They would serve their debt, and other operational cost obligations and the rest would go onto the balance sheet.
The extra cash would then be used for R&D and payment of dividends to shareholders. Shareholders wouldn't try to trade the asset to another fool, but look to hold it long term as it provides them with a cash flow generating investment.
As companies continued to become efficient in financialisation, it becomes utterly devoid of fundamentals. People don't invest in companies to hold it long term but to scalp a profit or hope the company buys back the stock at a premium.
How deep the financialisation goes
As companies have focused more on financialisation, they've left gotten rid of anything of real value. There was a time when companies held assets like land, material, bonds that are of high quality to protect the balance sheet and cash. This made companies robust and robust, allowing them to pivot, expand and adapt to market changes.
Now, however, more companies have been hollowed out and hold more intangible assets on their balance sheet with a perceived value.
What is an intangible asset?
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets.
According to research 84% of the S&P 500 balance sheet consists of intangible assets.
If you thought the banking worlds rehypothecation is terrible if you believe fiat money is based on nothing then what the hell are these companies based on. How do so many companies hold so much value-based one the underlying assumption that these algorithms, code and patents are worth something?
No piece of IP is worth more over time, it has to deflate, but our current regulations allow these companies to hold IP hostage and kill off competition. I'm not saying IP isn't useful or valuable, but I think this IP has been exploited for gain for very few.
The longer companies can hold on to IP, the longer they keep competition out fo the market, the longer they can remain a monopoly and extract value from their IP. Instead of allowing IP to eventually become public property and allowing the open-source community to iterate on it, improve it, augment it and drive price deflation, we allow a select few companies to dictate the price of that market.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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