OohPooPahDoo
Gold Member
Otherwise, no P/E ratios do not normally exceed long term averages.
A given sample point will exceed the median exactly half of the time. The median is close to the average for sample sets that aren't skewed in some ridiculous manner.
And before the bubble burst a lot of folks made a lot of money in spite of high P/E ratios.Currently the S&P average is 16x. The long term average around 18x during 2007. The Forward 12-month P/E ratio was moving as high as 27x during the Dot-Com bubble. After the bursting of the bubble, P/E's returned to their range around 15x.
Again, there are plenty differences you choose to ignore. Ponzi Schemes yields 0% return if no one participates or if less and less people choose to participate. Not the case with stocks. There is a difference between stocks which are 'worthless' and stocks which are 'worth less' than their previous market price. Stocks are worthless when their market price reaches zero. This means that the company has no value whatsoever. As long as the company has earning potential, then the stocks have value whether or not people choose to buy.
They can have all the "value" they want, if no one will actually pay for them they are worthless.
Sentiment has nothing to do with it. The act of paying money for it is all that matters.Just mere sentiment cannot increase prices alone.
There are plenty of micro/small cap companies worth pennies where people are investing into the stock, hoping that the stock will go up. This is not a Ponzi Scheme, but rather what is known as a 'Pump and Dump' scheme.
??? No, that's not "pump and dump" - that's just investing. "Pump and dump" is when an brokerage firm convinces its clients a shit stock is hot so their clients buy it and the stock jumps up in price. That's the "pump". The "dump" comes when the firm then shorts the stock and it then crashes and they make a ton at the expense of their clients. It - like the Ponzi scheme - also requires dishonesty. The brokerage firm is misleading its clients into buying the stock.
The whole point of a con is to gain someone's confidence, hence the word 'con.' How is it any less of a con simply because it's legal or legit? Are schemes only schemes if they operate under false pretenses?
I didn't say it was less of a con because it was legal. I said it was less of a con because there is nothing being hidden, there is no dishonesty involved. That actually makes it NOT a con at all.
If you decide to run a legitimate business or operation, acquire funds from old investors and pay new investors without any method of making profits, that is a ponzi scheme.
Look up the definition of Ponzi scheme:
Ponzi Scheme Definition | Investopedia
Do you see the second word? Its FRAUDULENT. A PONZI SCHEME REQUIRES FRAUD You need to get that through your sophomoric little brain before you continue in this conversation. What you have outlined above in quotes is a Ponzi scheme ONLY if it also involves telling the investors that their money is being invested in something other than paying off older investors.
If your business model operates like this, you can be charged with running a Ponzi Scheme, whether it's fraudulent or not. Just because the Government can do it doesn't mean it's not illegal. The again, the Government really does hate competition.
There's plenty of competition. Ever heard of a life annuity?