The Fallacy of Market Capitalization; Market Caps are a Scam – No Safe Bets

People -and Corporations- waive the notion of Market Cap Size to see whose bigger as if it’s not some sort of speculatory charade for gambling degenerates in a dick measuring contest. Many people and futures gamble base on this speculatory number that range from honest Millions to Billions or even Trillions dollars pinned to that of some Corporate shell as a husk of an investment vehicle.

Meanwhile everyone is taking notes at other numbers from their quarterly report, as if there’s any meaningful change found in the numerology of that Quant you’ve locked in a basement feeding mushrooms.

People genuinely hold interest in the Market Cap of a company to invest in, simply because it’s some sort of quasi-gambling chip that has a ‘token of a value’ -in sentiment for investors –or the idiot down the block that just discovered options and got upset at also learning Pattern-Day-Trader Rules. Yes, people read into things, numbers, and even think they mean something. Ahh, yes, welcome to the markets; an ode to Market Capitalization.

So, Market Cap is the Market Capitalization of a company, it is calculated by the shares outstanding multiplied by the spot price of the underlying equity. The Total shares issued in existence multiplied by whatever the value of each share is based on what it’s trading at. Meaning,

Total Shares x Price = Market Cap.

If there are shares of some made-up company with a ticker $DUMB valued at $55,
Then you can calculate the Market Cap as $55 a share x 100 shares = $5,500

Here’s some real-world examples of Market Caps taken via screen grab;

A Nice 2 Trilly
An honest 51 billy

As a thing to note, you’ll understand that there are different Spot prices for these tickers that make up the Market Cap.

So when people look at two companies, they see different valuations based on the Market cap. What I mean is;

Company A that trades for $5 a share with a market cap of $5 million would weigh differently compared to Company B that trades at $5 a share with a market cap of $50 million.

The money pool, think about Market Cap as water in the pool. In this case, it’s the shares outstanding and the ability of liquidity providers to, well, provide liquidity. That’s the water. The price can correlate to volume and volume correlates to liquidity which correlates to shares outstanding.

So the more people buy a share for a higher value, the more money gets sent into the money pool.

Essentially many degenerate traders tries to Viktor Frankl themselves in a search for meaning behind the numbers that they read, the charts that they plot random fucking lines and wedges, and the tea leaves or cosmology from that Star-sign-Thot on Tic Tok. Whatever. People gamble and speculate off of Market Cap.

Here’s how companies use Market Cap;

Not only do degenerative gamblers speculate based on this number, but also Companies can get a series of funding and investments (loans) from institutional Degenerative Gamblers. You know, banks, Hedge funds, ‘venture capital’ and investment firms. The usual ilk.

Thus having a bigger Market Cap, means you can use that as a sort of collateral to ask for a bigger loan or investment. Or you can get more money for less shares and percent equity given. Essentially companies want bigger Market Caps when securing funding because a Big Market Cap implies that there is big money.

Think of it like upselling your used piece of shit, you just got to make it sound like it’s worth more. Same same here but with the company. I mean, “if you ain’t using your product, do you really believe in your company?” -Said literally everyone ever.

So a sizeable market cap helps to waive big dick energy during a corporate merger. That’s a real technical business jargon, so write that down somewhere before yah lose it.

When Company A goes to merge with Company B, in the acquisition and negotiations, they can base their discussion based on ‘value’. Which value is subjective but whatever. Obviously the companies should both do their ‘Due diligence’ and look into the books for detailed auditing and accounting, but no one likes real numbers. So instead, people waive Market Cap as something that seems threatening and use that as power or clout to negotiate in their favor.

If Company A has a Market Cap of $40 Million, and Company B has a market Cap of $30 million,
Then obviously -by-the-numbers- Company A (seems) bigger and more valuable than Company B.

If that Gap was shortened or downsized, like if Company B was instead worth 30 Billion, then there’s a lot of negotiation power and all sorts of jazz going down. When they see eye to eye, all the sudden it’s like equal forces, you’re looking at a pyrrhic victory in these negotiations if both sides are even and squared away.

“All victory is fleeting”
So don’t lose your dick in the merger

It comes down to Valuation, -And Market Capitalization is one of the measures of the ‘supposed’ “value”.

Now to relate that above with a detour down-unda.

Here’s a story of being a male stripper,

This is relevant for your education so pay attention.
You might have to shake your ass for some ones in these trying times.

Before going on stage, It doesn’t take rocket science to know that you’d obviously stuff your junk, use schlong pumps, and slap some baby oil all over your muscles. In fact, it’s not rocket science but it is thinking about your rocket. Maybe get a little pregame pump gym work out, before you pump your shlong. Then you wear some outfit, Ya know, dress and put makeup on the pig and fill out some weird bizarre kink of “Blue Ice Barbarian Big Foot Tarzan”, and step on the stage with a name like Diesel or Python or some other Weird Tribalesque Sexualized fantasy with hints of utility as if a Man was meant to actually work besides shake their ass on stage for J-Pows fabled Money Printer Gun.

Don’t smoke the Schlong pumps

Point is, Penis Pumps are a thing. So you make your dick look bigger to win the audience and get more cash.

Same thing in Corporate finance, there are ways to pump up their market capitalization to reel in big fish and attract big money whales to invest, buy out, or something-something-money for your business.

Like why wouldn’t you up your negotiating power by manipulating the market and having backroom deals? What, it’s illegal? So is stealing, does that mean people don’t steal? Let’s not be anti-cynical here. Sheesh.

Here’s why Market Caps are an illusion and a fallacy;

Lets say that there is a Company that sells used Dildos under the ticker $COCK with a shares outstanding of 100 shares.

Lets say that each share is worth $100.

Now the Market Cap for 100 shares at $100 would be (100x$100=) $10,000.

But here’s the thing, that doesn’t mean everyone wants a load of $COCK at $100. Your mom might take two shares, but there’s limited demand.

So lets say the next highest bid looking to buy some $COCK is at $90, and because someone is late on 2nd Alimony, they have to sell their shares of $COCK at the hard bargain of $90.

Now the Spot price went down to $90, so the Market cap went down to (100x$90=) $9,000.

So one transaction lowered the market cap by 10%, a difference of a ‘real’ $10 change in a few transactions generated an unrealized difference for all market participant shareholders (that held at $100 down to $90) of a cumulative $1000. Meaning that everyone has gained some unrealized loss added to their books. Even though only a few bucks were exchanged. Market Cap shrunk from 10k to 9k.

So what if No one wants to buy $COCK because selling Used Dildos is a really shitty business idea? What if the company goes under and bankrupts themselves? People doing a bank run trying to get the closest bid to their ask selling shares of $COCK at ‘getting the fuck out’ price. If the value of $COCK plummets to 1 cent, then the market cap is now a whopping $10.

Inversely, what if Egomaniac Culture-tards with their vision of saving the planet and combat Climate Change happened to be rich (unlikely) and also invest a fuck ton in re-used and upcycled dildos (likely). What if the Price jumped up from $100 to $10,000? What if it was a short squeeze or a gamma ramp? Now the Market Cap for $COCK jumped from $10,000 to $1,000,000. A change of 100%, resulting in a ‘unrealized’ Market Cap expansion of $990,000.

It’s ‘unrealized’ in my scenario, because none of it is real -in more ways than one.

What if either scenario above happened in one transaction? (I get that there are limits and other shit to suppress volatility and circuit breakers and yada-yada. The focus is on single transactions, not on market mechanics.)

See, so the whole swing of the market cap is really just based off of the last transaction. The Spot Price.

Just because the Market Cap may be X value, doesn’t mean shit in realized gains if you can’t sell all your shares at the spot price. Just because Market Cap is $10,000 for shares of $COCK at $100, doesn’t mean you are guaranteed a seller or a buyer at $100, meaning that the Market Cap is a flux number of unrealized valuation for the combined and cumulative efforts of the degenerate gamblers that are invested in the underlying equity or company or however you want to say it.

The Market Cap is what you would call, an estimate at best.

That’s the illusion, and people trade off this shitass (Market Cap) like it’s not super volatile or subject to market manipulation from liquidity (and subsequently volume) Suppliers.

People think Market Cap means something, and it only means something because people think it means something. Lmao. (that’s basically how words work, but that’s a metaphysical discussion I don’t care to entertain while I trash talk in these markets).

Market Cap is just a metric for measuring abstract valuation of a company. It’s one of many different abstract numbers anyone can make up, like EPS or ESG or Credit Ratings or whatever.

Market Cap, It’s basically made up.

Here’s how it’s worse than that;

So Market Cap doesn’t really mean what it means, and people wrongly use that.

Well, let’s assume that Market cap does matter for whatever the fuck reason.

Shares Outstanding aren’t accurately accounted for. So the math into getting the valuation of the Market Cap is Wrong As Fuck.

Due to lending practices, there can be a plethora of unaccounted phantom or counterfeit shares in the market for a given equity. Literally any short interest from someone who still has their loaned out share in the books implies the generation of more shares than the shares outstanding. (This happens because of Continuous Net Settlement, CNS, allows markets to be lazy)

So the Real Market Cap could be 110% of the displayed Market Cap. So if the spot price is $10, and the Shares outstanding is 50 shares, the Market Cap would display $500. Yet if there are 10% more shares in existence than there should be, then that would mean there’s 5 more shares, meaning the ‘true’ market cap would by $550.

This happens because Shares are being lent while still being counted, from short selling, and Rehypothecated selling of shares. For instance, a single share can be lent out, short sold, borrowed to be lent out, short sold, borrowed to be lent out and short sold again and again ad nauseum. So one share could be resold several times, five, seven, ninety-nine luft balloons. Point is, one share is counterfeited to make it look like (say) 90 or so shares.

So the Shares Outstanding isn’t going to reflect
the true number of actual shares outstanding.

And in theory people could use these lending practices as a method of price control. This method of price control through shares being borrowed and lent out can be used for both bullish and bearish behavior. Bet your sweet ass that people are going to game the system to mess with the fluctuation of Shares Outstanding and invariably control volume and liquidity to Pump up their Market Cap or deflate other’s Market Caps. This is just business.

If you don’t have an accurate account of Shares Outstanding, you can’t have an accurate Market Cap.

here’s how it gets worser-er-er than that;

Besides subjecting you to new American Ver-na-cu-lah

It turns out, that shares outstanding doesn’t accurately portray the real size of the money pool that is Market Capitalization.

Alright, so look at a Stock’s Market Cap like a giant pool of money (as described earlier);

You put money in by buying shares. So now the market cap gets your money, and the person with the share gets to redeem that money. You get issued a ticket, a share, to redeem that money at whatever value, that you mutually agree with someone else, that it’s worth.

As more people buy into the stock at a higher price, more money goes in the money pool, and it starts to expand. Price goes up, Market Cap goes up. If people buy at lower prices, and sell at lower prices, more money leaves the money pool, and it starts to contract. Price goes down, Market Cap goes down.

This is all dependent on having a ticket into and out of the money pool, an I.O.U. That’s what a stock certificate is, or a ‘share’ as they say.

However, not all of that money actually settles into that money pool. Some of it gets lost in settlement and clearing, some of it gets PFOF sniped and poached in OTC markets.

Due to Dark Pools and OTC exchanges, that money doesn’t even hit the market at the value or price it should. And per the SEC Chairman Gensler, NBBO isn’t reflected on Dark Pools. So the price you get could be made up.

So, uh, the Price is fake.

If the Price is fake, then the calculation to get Market Cap is also Fake.

In Closing

I simply broke down the equation and attacked everything that makes Market Cap, well, Market Cap.

This equation;

Spot Price x Shares Outstanding = Market Cap

-So Market Cap is wrong and an illusion because it doesn’t mean what it’s supposed to mean,
Market Cap is also not priced in correctly because;
-the Spot price is fake and
-the Shares outstanding isn’t accurate.

That’s three independent reasons on why Market Cap is a scam,
So it’s literally a made up number that’s (as the retard Fake Legacy media say);

‘Detached from FuNdAMenTaLs’

I would say Market Cap is useless, but people are still gambling based off of it and are using it. So that’s not quite true. Whatever;

Market cap is cap,

Straight Cap.

No Cap.

Wait, what.

Like Straight cap as in Market Caps are sus af, but like I’m speaking the truff, so I’m not cappin when I say Market Cap is Cappin’.

Point is, It’s an illusion, a fugazzi, another number to make it seem like glorified computer bean counters with their digitally-faked excel spread-shits can feel like they’re doing something besides gambling Underpaid Teacher’s Pension Funds and then subsequently blaming it on some poor retail trader with no-money in the bank account to buy Taco Bell. You know, society or something.

I’m not lying. I may be vulgar, but there is truth to power or something, so heed my cautionary tail or something. In fact, Call me Vulgarian, because I’m about to start my own Nation of Vulgaria so that I can rechant in front of congress “When I was a young boy in Vulgaria”. lmayo.

So, uh, Market Cap is a scam, and it doesn’t really matter. That’s just the run down buck-o.

*Not Valid Financial, Legal, Life, or Any Advice

Author: Elsie Hughes