My colleague and I spent a few minutes discussing investing a ta general level and the question came up about the disconnection between stock price and the company operations. He has been investigating various aspects over the last few months with renewed enthusiasm, ever since he bought some Bitcoin, something that I have seen before.
One of the benefits of investing into crypto or even building an interest to potentially invest into crypto is that it brings up the question of what is valuable, something most people seem to have an intuitive understanding of, yet not when it comes to financial considerations that lay outside of the everyday of their lives. For example, the entire global stock market value is around 70 trillion dollars worth - which is pretty enormous - but the derivatives market is at least 10x that size and could be closer to 20x that size - making it around 1.2 quadrillion dollars worth. It is in derivatives where most of the money of the world lays - by a long margin.
However, what my colleague is discovering is how fickle the stock market is and while he was investigating one particular stock on Twitter he started to question the value. The thing is that investing has become far more mainstream over the last decade or two, largely thanks to technology, but this also means that people who aren't necessarily investors are getting involved. This is great - but when many of these people are investing through Twitter the risk of influence through hype is enormous, and that can be driven by nothing at all - you know, FOMO and FUD.
It is all speculative in the markets and when most of the money is sitting in derivatives that track some kind of stock pricing, there is a very strong incentive and potential for market manipulation with nothing more than a tweet. It doesn't have to come from the CEO or an insider, it doesn't have to be real, it just has to trend - and when people are so willing to share, consumption driven and emotionally invested, this can heavily affect perception heavily.
For example, the stock he was "investigating" had some negative press come out that drove the price down heavily, but a couple days later it might be that the press was baseless. Who benefits?
Outside of the stock investment scope of value however, my friend is starting to look at the value of much of his life, including the time he spends and the things he buys. I think that this is a positive part of getting into investing as it starts to affect the lens through which we see the world and influence our own behaviors. Perhaps in some ways, it starts to remove the veils and shines some light onto things that actually affect us.
We all make decisions daily and these are influenced by what we know and believe, as well as factors that might be invisible to us - both external and internal. What this means is that if we had a different understanding in some way, we would make different decisions. Knowledge is power because having knowledge gives us the potential to use it in some way - Knowledge is a manipulator.
And I think that once we start to burrow down into investing, we start to question the core of value and that will inevitably lead to exploring what is valuable to us as individuals - not just as part of the consumptive group. I believe that if everyone did this, we would affect the way we consume heavily and in time, demand would shift and therefore, so what would be considered valuable. I see the future of crypto value being driven largely by people discovering that ownership of resources have value, even if those resources are tracking value - kind of like derivatives.
Considering how much of the worlds wealth is in derivatives, I wonder how many people actually have any direct investments in them. Land is real - the value of all real estate in the world is only 1/5th the size of the derivatives market. By the way, most derivatives are traded over-the-counter (OTC) between private entities in an unregulated manner. Isn't there something insane about the majority of the world's worth being traded in an unregulated environment?
But this is the thing - most of the 7 billion people on earth have no idea where monetary value lays and what is considered "a lot" in terms of money. All of the worlds debt is estimated to be around 200 trillion - 1/6th the size of the derivative market. Shouldn't questions be raised as to how all of this works as obviously, it is affecting us, whether we understand it or not - I do not understand it.
Perhaps once we start picking away at the concepts and realities of what holds value - we start to pull at threads that unwind the fabric of the economy. A fabric full of holes by design.
Taraz
[ Gen1: Hive ]