this post was submitted on 21 Sep 2023
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Speculation depends on value a belief that value will rise in the future, which depends on the recognition of other value not speculative.
Land speculators know that land has usefulness, for development, agriculture, or resources. Stock speculators know that stocks have value generated by work. Even if market value has some component that is speculative, always some component is due to intrinsic value.
Your assertion, that "value of publicly traded stocks is based upon the speculation that the value of the stock will rise or decline", is refuted by the contradictions it itself implies.
An asset class whose value is purely speculative necessarily will collapse eventually. Generally in such cases the speculative value is generated through hype created by a nefarious actor who originally created the asset. Such is the nature of Ponzi schemes.
You seem to be confused by my comment if you think it is contradictory.
I think APPL is overvalued so Im selling its stock while someone else believes that the stock will go up during the time they plan to hold onto the stock thus while I think it will decline someone else perceives for their reasons it will increase.
Considering you literally claimed Marx LVT as if it were gospel maybe consider you aren't going to have a good grasp on how stock markets work as that's not something you've studied.
A particular stock cannot be meaningfully considered overvalued if its entire value is speculative.
Such is the contradiction.
Perhaps you are not understanding speculation, confusing it with any investment purchase, any purchase based on expectation of rising value.
I have never said the entire value is speculative. I have said the price is based on perceived value of the company which us not 1:1 with productivity or actual reality in some cases (eg when the value is based on fraudulent information or reports a la Enron)
I observed as follows:
The following was your response:
It only confuses the matter further that you now offer as clarification, "I have never said the entire value is speculative".
I believe the observations I have given, more so than yours, are generally accurate.
The price of stocks is supported principally by the value generated by labor, with speculation necessarily only a secondary effect.
The belief that value will rise is generally an accurate belief, because growth occurs from the value generate by labor. Such growth is not related to speculation.
The bit you are overlooking is the conditional phrase "which is often not related to the productivity of workers".
If I suspect APPL is going to gain value because I know China is going to announce that Chinese government workers can use Apple devices, then the gain in value will be based on the speculation that the stock will rise with these potential new sales. Thus the rise is not related to anything the workers are currently doing only on what they might possibly do in the future. That is speculative.
The above is not the same as the total value being purely speculative. Stocks kind of sort of sometimes represent real valuations but they never reflect the pure value of the labor alone. If that was the case there would be nothing to speculate on. We know exactly how many units Apple manufactures and how many sell. That is factored into evaluations as to if the stock price is accurate or not.
The new sales would be of products whose creation occurs only through the labor of workers. Your are describing ordinary investment, not speculation.
The particular distinction is not relevant. Stocks gain value because of the labor of workers.
The labor of workers is the source of value, the single element without which stocks would never gain value. Speculation only occurs as secondary effect, a response to the intrinsic value generated by labor. If work stopped, if intrinsic value stopped growing, then speculation would also cease to have meaning.
An asset class inevitably crashes if traded speculatively but lacking any intrinsic value, as observed in Ponzi schemes.
The value increased because people suspect sales would be made of products that have yet to he created so the value increased with ZERO input from the workers.
"Stocks kind of sort of sometimes represent real valuations but they never reflect the pure value of the labor alone. The analysis is not relevant. Stocks gain value because of the labor of workers."
Sorry but it is entirely relevant as it demonstrates the inaccuracy if your claim that labor is the only source of value. It is not and you can easily find thousands of examples as to why the labor theory of value is no longer supported in neoclassical economics. Marx was wrong about this.
Speculation creates some of the value of stock and labor factors into it but neither accounts for the total value of the stock.
No prediction is absolute, and neither is any investment.
However, suppose inputs may be purchased at market for prices that are broadly stable, suppose a process is available for workers to create the products from such inputs, suppose the process is not in conflict with natural and legal constraints on the labor market, suppose the total wages required to pay to workers for each product is known, to reasonable precision, and suppose a consumer demand is also known, to reasonable precision.
Then, the prediction for profitability of investment is one related to general investment, not one based on speculation.
More, the prediction may be accurate only because the labor market exists, because workers will be available to provide labor.
If workers were not available, then no one would invest in production, obviously.
You have consistently misconstrued my claim.
I never asserted the value of an asset may never have a component that is speculative, only that an asset class cannot sustain a component of its value that is speculative unless it also has a component relating to intrinsic value.
Except in extreme cases, as noted, the reason assets have speculative value is because they also have intrinsic value.
Again, assets eventually crash if they have no intrinsic value, only speculative value. Such is the claim I have made, which you consistently misrepresent.