MIcrosoft is now a 2 trillion dollar company happened june 22(I'm late)

[Verter]

JRPGfan said:

Thats my point.... "perceived value" is mostly just like a magic trick.
Its not real. However because enough people believe in a lie or illusion, it just keeps going.

Its like how theres more people that own gold, than there is gold in the world.
If everyone that has a claim on gold, took it back, there would be people left with their claim, on it, that couldnt get it.
And somehow the stock in gold is fine.

Its a deck of cards, build on lies (imo).
It has nothing to do with real value, or real numbers.
The fact that something can go up in price, simply because enough people by into it, is crazy.

edit:

2015  MS Annual Revenue $93,580 million USD.
2020  MS Annual Revenue $143,015 million USD.

now this is revenue and not profit.
Also inflation between 2015 and 2021 is like ~14%.


So growth is like 33% in revenue (no idea on profits).
While the company became 6 times as much worth in stocks?

Its crazy to me.
Stuff like this is what leads to bubbles in stockmarkets.
Sooner or later, enough people realise there is a issue, and things crash.
We gotta be close to a crash point, cuz that seems insane to me.

Bold: you hit the nail there: that's exactly how economy works. Do you know that there's more money owned by people that there is actual money in the world? If, for instance, all the customers of a given bank would want to withdraw all their money at the same time, they couldn't do it, because the bank wouldn't have as much money and would eventually run out of it before satisfying the needs of all its customers. That situation, however, is pretty much unlikely to happen, and that's why our economic system works: because we are confident that, when we go to the bank to withdraw money, we will be able to do it. But the only reason why banks have always enough money available is because, apart from those who withdraw it, there are also lots of people who deposit it - money is constantly moving.

And that's the case with money, but the exact same principles apply to literally anything that can be bought or sold (or just exchanged for other stuff, in general).

Also, you have to take into account that market capitalization is not actually the value of the stock; it's the value of the stock multiplied by the amount of stock in the wild. And the current value of Microsoft stock at this point in time is "just" around 270$. For comparison's sake, Sony stock is around 98$ (with a recent maximum of almost 120$ a few months ago, and an all-time high of almost 160$ a couple of decades ago), so it's not that much of a difference, if you put it that way.

Besides, another think that you have to take into account is that the fluctuations in prices are caused only by supply and demand (which are closely related to the perceived value): the price of Microsoft stock is rising right now because there are more people buying than there are people selling, but a time will come (when the circumstances dictate it) when people who bought Microsoft stock at a lower price will want to sell it to reap the benefits and, as a result, the price of the stock will fall. That, however, is not a bubble bursting - it's just the market functioning normally. In fact, I'm seeing in the graph that Microsoft stock rose from 5 to 60$ back then between the years 1995 and 1999, and then it fell down to 20$ in merely a year. That's called a market correction and it's not bad; on the contrary: it's necessary in order to maintain a healthy growth. And as of now, as I'm seeing, Microsoft stock has been rising for years, so you can hold no doubt that sooner or later it will see another big fall; more than probably not now (maybe in months or even years), but it will happen eventually.

But as I said, that's just normal market behavior: you can call that a bubble if you wish, but it's just how things work. In fact, it happened to Sony too in the early 2000s: its stock fell to almost 30$, yet look at it now: almost 100. Is that a bubble? Well, it may or may not be; the only certain thing is that that's the perceived value of its stock at this moment in time, and while that perceived value doesn't decrease, the price will not fall either.

And the same applies to the Coca-Cola stuff: if it's cheaper in your country than it is in others (in relative terms), it's probably because The Coca-Cola Company didn't see as much demand for it as they would've expected, and set a lower price in order to increase its perceived value and therefore incentivize the demand. So a can of Coca-Cola going cheaper or more expensive is not relevant; what is relevant is the fact that its price is determined by the market: it rises when there's more perceived value (and therefore demand) and falls when there's less, just as happens with stock. And that's because perceived value is all that matters in this world when it comes to economy. Is that a lie? Is that an illusion? Well, it quite probably is; but it's the same illusion upon which our whole economic system is build, which... admittedly, can be a bit scary if you think about it too thoroughly. But at the same time, it's been working for us more or less well for a very long time, so as long as enough people keep trusting this system, it will work just as fine.