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/biz/ - Business & Finance

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13784522 No.13784522 [Reply] [Original]

Why do boomers think market cap is a good way to value an asset?

>> No.13784546

>>13784522
Because it is

>> No.13784567

>>13784522
i mean, for equity based securities it is

>> No.13784577

>>13784522
"too big to fail"

>> No.13784603

>>13784546
No it isn't. A good valuation method is to take the market depth of an asset. How much could you sell the entire circulating supply for if you were to wipe out the entire order book.

>> No.13784624
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13784624

>>13784522
Because it tells you where the whales are loading their bags.

>> No.13784732

>>13784603
doesn't take into account tokens/coins that aren't circulating.

>> No.13784768

>>13784603
the order book is a meme

>> No.13784773
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13784773

>>13784522
why do zoomers think market cap should be counted by circulating supply only?

>> No.13784781

>>13784522
Are you talking about assets that generate cash flows? Statistically speaking, market caps are very good estimates of the excepted/average value of assets. Look at how many fund managers underperform the market. Liquid assets tend to be very fairly priced.
>>13784603
Are you saying that value is a function of market depth? There are no studies/statistics that support this claim.

>> No.13784849

>>13784781
If you're talking about assets that don't generate cash flows and aren't factors of production then you can't value the asset. It's a pricing game.

>> No.13784868

Liquidity. With big money you can't get out unless the market cap is big enough.

>> No.13784896

Google it you degenerate