planb, this is not true in all cases. In fact, once a company goes public it's not really true at all, ever. The basic concept of stock price is that it is the present value of all future earnings, not current hard assets.
A run on a bank is an example of a "soft value" situation in which word of mouth and fear can cause a viable business to fail in a very short time. Even if the fear was initially totally baseless, it quickly becomes very real and well-founded due to the fact that banks don't keep their depositors' money on hand, they lend it out. If enough depositors want their money at the same time, the bank won't be able to give it to them. The fact of the run on the bank could cause all investors who don't get their deposits out to lose them. Thus the FDIC was born to stop runs on banks. There is no FDIC for businesses, just TARPs.
Stock situations can be similar. A significant portion of a company's value is tied up in its stock. A stock can be devalued to the point that the value of all the shares of stock is actually less than the market value of all the holdings, inventory, etc. of the company. If that happens, often a business will not recover, even if it is viable - a predatory company may but it out to sell off the holdings, shutting down the business, because it is worth more in pieces than it costs. If you owned the stock, you may get a fraction of the real value of what you owned.
Look at eBay. Compare the hard value of what the company owns to its market capitalization. How do you put a hard price tag on the fact that when people want to buy or sell something, they type "ebay" into a browser?
I have seen many companies that list "goodwill" or other soft, non-tangible assets on their balance sheets with a dollar value next to them because they are REAL and VALUABLE despite the fact that you can't touch them. Ignoring that is foolish, but many engineers refuse to believe in things that they can't touch. It's an outgrowth of their wonderful and essential abilities in other areas. I am foolish in my own ways.
It's been pointed out before - companies can finance capital purchases or operations on the basis of the lender's perception of their value. TATF could point to income streams or to the value of their assets in order to get a loan if they need it. Marc - if that income stream dries up (new investors) and TATF's trees are not perceived to have value, they will not be able to get a loan. This hypothetical (but probably real) situation is not a Ponzi-esque problem where we need new investors to service old investors. This is a problem where fear or suspicion causes investors to stop coming and then TATF has no way to dig itself out of this hole.
We made our deal with TATF. If TATF is dissolved and goes bankrupt, they no longer have ANY responsibility to our trees. Nobody who buys their assets will have any responsibility to fulfill their obligations (in my non-expert legal opinion). A viable TATF is the only entity that can have its feet held to the fire over this. I want TATF to be viable.
I don't begrudge anyone their right to say what they want to say. I am telling you that it's not helping me or you to bash TATF. If your idea is to make sure the company fails fast so that we are the only ones who go down with the ship, maybe that's for the best. I still am of the opinion that something could be saved - anything. More than $10 per tree even. It will absolutely only happen if there is a TATF.
It's crystal clear that Steve could do a lot more to save this company by talking than you or I could do by shutting up. We all know that. But that doesn't make shutting up meaningless. We still CAN help the situation - or not make it worse - by sticking to facts instead of a constant stream of bashing.
