Doug_S. comments on Markets are Anti-Inductive - Less Wrong

30 Post author: Eliezer_Yudkowsky 26 February 2009 12:55AM

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Comment author: Doug_S. 26 February 2009 04:41:57AM 0 points [-]

But clearly that person does not likewise think that the price of OB is going to go way up, because if she did, why would she sell it to you now, at the current price?

Maybe she needs to increase liquidity for some reason? For example, the IRS wants payment in cash, not stock. Additionally, she might want to use the resources for immediate consumption rather than for investments; she might want to use the cash to take a vacation, or pay medical bills. There are all sorts of reasons why someone might want to sell a stock, even if they think it will go up.

(Myself, I sort of suspect that, if a stock doesn't pay dividends, it's mostly worthless. To quote some guy with a blog:

If you put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk.)