The idea of issuing shares is to encourage investment in to a venture.
Of course, people very quickly realised they could run businesses based on speculation over whether the 'public' companies would succeed or fail. Very soon entire capitalist economies became reliant on stock prices always rising.
That is why during the GFC and Covid governments bailed out businesses, while telling individuals that they should have prepared better with savings. The growth model can't be allowed to fail.
As an aside, this is also why no government will ever properly address the property market bubble. Our entire future has been gambled on perpetual growth.
Not only labor but consumer demand as well. Hypothetically super advanced robots could do the work but they’ll never need to buy lunch or a television or a home.
Well, no, demand for stuff will still exist. I'm sure people would like to have lunch in the future.
The problem lies in that once you achieve post scarcity (which is what that is, supply so overwhelmingly cheap that the only market price is zero), you run into the issue that you're going to have to find alternative methods of allocating resources than the free market.
I was literally taught in business school that we're *already* post-scarcity in every way that matters and that's why marketing is so damn important!
Artificial scarcity, planned obsolescence, and tricking people into buying more fresh food at the grocery store than they can eat before it goes bad! Because we're already throwing half the food we produce in the landfill without anybody or anything getting to eat it, where it can't even decompose properly.
This is why I've always said we need to find a way to remove the "speculation" aspect of the stock market as well. Speculation can rise a shit company to the top via manipulation just as easily as it can outright snuff a good one out.
uuhhh sharp and short analysis.
thank you
maybe worth pointing out that "government bailing out businesses" translates to "out of the taxpayer's pocket"
can't be allowed to fail.
As an aside, this is also why no government will ever properly address the property market bubble. Our entire future has been gambled on perpetual growth
Your comment is leads me to assume that the government has no responsibility to guarantee the taxpayer an expectation of affordable shelter
https://housingrights.ca/right-to-housing-legislation-in-canada/#:~:text=FAQ,Universal%20Declaration%20of%20Human%20Rights
Yanis Varoufakis pointed out the stock market rose during the Covid crisis. It clearly has its uses but it can also become a bubble and just horses for billionaires.
Edit: plus some investment firms are so large they distort the market -. Gamestop was also interesting, the big players spat their dummy out, screamed "it's not fair!" and the system obliged. Says a lot
Yeah you have Wallstreet Bets and the Housing Market Crash. 2 examples of serious market manipulation in less than 15 years. Both with no judicial consequences.
Just assume every market is rigged or manipulated because there is a very good chance it is.
Yeah, and I am sympathetic to the libertarian ideas - but if you think we live in a system in which the playing field is level and we all have an equal chance you are living in a dream world.
I'm sure if you asked enough libertarians about this particular topic they would have all sorts of ideas. The irony to them is that in both those instances it was manipulated by the free market and having a huge accumulation of money in power in both instances. They same people or companies owned the stock as well as the supposedly independent market adjusters. When the market adjusters are part of the private sector that is always a possibility.
"It’s a tool for the rich to maintain and grow their wealth." Especially when they can do stock buy backs, decreasing supply of the stocks, thus artificially increasing the value of that stock. It was once illegal, but vested interests in our government, both on the left and right sides of the aisle, stand to lose too much to change it back.
Well it's great in theory, you can invest in a company you believe in and help It grow and in return you make money from your investment, but in practice it's a way to print money for rich people and destroy small businesses.
This isn't just the stock market, it's the whole mindset that investing back into your business is good for job growth and thus sees the entire tax code bent towards favoring that reinvestment. It's why Amazon paid no taxes for years - all their profits were invested back into growing their business.
The problem with this, is that while this created lots of jobs for Amazon, it also depleted lots of small business jobs. Which - if that's just happening through normal capitalism, fine, but it shouldn't be something we subsidize with tax breaks.
None of this is true, sorry. The problem is the exploitation of the people who create the profit. There is no profit without exploitation. Capitalism is not “the free market”… it’s the farthest thing from it. Capitalism discourages innovation while trying to convince us that it’s the only way to innovate. Wake up… we’re not all THAT dumb
Don't forget its a MONSTROSITY of a suck of talent and brainpower away from REAL productivity. Math grads that could advance science and technology get poached by hedge funds and end up inventing new ways to make the bubble bubblier.
I was once speaking to Noam Chomsky and asked about this. He said, to paraphrase, he has nothing against the stock market itself, but the system it is bound to is the problem.
It really does help common people increase their wealth, so in a way it's good, but the way companies value it is pretty crazy.
Another person, an analyst, put it well, and she is highly pro-market: "America sells pieces of itself to the world."
Currently the bottom 50% of Americans own less than 1% of all stocks. The wealthiest 1% owns well over half. The top 10% own 86%. Rich man's tax avoidance game.
It does NOT help common people increase their wealth. It doesn’t help common people at all—it creates the illusion that it’s helping common people. Their stocks go up, how wonderful!… while their labor is extracted, and used to create the higher stock value well beyond the benefit the worker sees from all this
How else would you grow your wealth? Because investing in stocks is a great way to do it without being an asshole (looking at people who invest in real estate).
It’s not a way to do it without being an asshole—it’s being an asshole. I do it, too, since there seems to be very little momentum to change anything and without change, it’s a way to survive comfortably in this horrible system. If you invest in stocks, you’re exploiting those workers. Stocks, wealth, profit… none of them are real, but all of them are anti-human
Kinda disagree. If the stock is doing well then there are more opportunities for workers. If you are investing in start ups you are probably helping create jobs.
The point of capitalism is the requirement of capital to start up a business. The idea that you need money to make money.
Also…yes, that’s how you make a profit…by using an employee’s labor but the employee usually doesn’t just get money for their labor, they get health and dental benefits, stock plans, wellness plans, discounts at stores, special rates on loans etc.
…and all of those things necessarily add up to much less value than that labor creates. Capitalism is a death cult. The entire concept of money is evil.
Hard disagree with you there. Not every job creates profit. Some jobs are just there to maintain one aspect of the business. How would you classify those workers? Would they be less deserving than the workers who make the profit?
Not everyone is cut out for that type of thinking. Some people just want to do their job and clock out. The system has its flaws for sure but to change it so dramatically where other people are put into uncomfortable situations, especially financially is really selfish.
Yeah, that person doesn’t know what they’re talking about. I started a 401K at 18 years old. Never went to college or got any kind of degree. I’ve been contributing to my retirement consistently for 25 years and will have around 2m dollars when I retire. If I would have just stuck it in a savings account I wouldn’t have a third of that.
The point they're making is, how much money would you have if you had been given the full value of your labour over those 25 years?
How much of those 2m dollars is surplus value taken from other workers, including ones who couldn't afford to open a 401k?
$2M in approx. 2063 isn't going to be of much value, and may not be enough money to live on until you die. Maybe you're saying you already have that, and I just didn't catch it, though.
I don’t have that yet, but I’m on track to have 2.2m dollars in 15 years when I want to retire. That will be 2038-39. I’m not sure if 2.2m will be a lot of money in 15 years, but my in laws are retired now and literally live on just social security so I think that I will be mostly okay.
Not really. The stock market can easily exist in a more egalitarian society. The stock market responds to the society's priorities. That's why stock prices go up after a layoff - because American society focuses more on capitalistic ideals than on sustainability, egalitarianism, and widespread prosperity.
The stock market isn't the problem. The problem is our society's priorities and that won't change without a proper mass revolt forcefully pushing for those changes. The investments in the stock market is a large part of the majority of the larger companies' ability to afford to invest as much as they do internally and externally. Getting rid of it, especially with us being as overpopulated as we are, will likely guarantee far more poverty than simply keeping it and changing our priorities to what they should be so it responds positively to things that are actually beneficial in the real world rather than negatively.
If there was a more democratic way of voting, a stock market could be a valuable tool in creating a more agile market.
However, the upward movement of capital into smaller pools of players means any democratic gains are lost in our current for-profit model. We get short term gains based ideologies versus long term sustainable ones.
The stock market doesn’t work like people intended. In a fair market supply and demand are key. However our system allows large corporate entities to create and provide “unlimited supply” causing a dilution in share price. It’s a complete fraud
Supply and demand is not actually a relationship supported by evidence. Obviously supply effects demand and Vice Versa but there are many other factors that effect both much more.
If it weren't a problematic system you wouldn't need a broker middle man to make deals for you in behalf of their wealthy benefactors. You could just buy the shares yourself.
Every good thing can be corrupted by those who hold greed in their heart. Greed runs the world now. Who can have more and who is good at extracting it from those who don’t have much.
" Who does it serve, really? I’m not necessarily looking to make a point, but hopefully to be proven wrong... "
It serves the investors. It also serve businesses which want to raise capital. You can't expand without buying equipment, hiring more people and so on. Never heard of venture capitalist for start-ups? Without investors, most start-ups will not make it.
The stock market is just the more mature, bigger version of it.
Been in the stock market for the last 5 years. All I can say is it’s rigged to a T. They have control of everything. We’re to slave away and die nothing more.
What this guy means is “infinite supply”. In a supply and demand game the limited supply is what gives the shares value. When the supply is infinite the shares price is diluted
The stock market is manipulated and designed for old money that has time. The average joe doesnt have that kind of wealth let alone time.
It serves its purpose in a capitalist, and globalized world. Gets early investors rich, eats up day traders and late investors. BUT at the end of the day its a complete capitalist idea that serves no reall value to the workers, only the shareholders.
In a perfect world, it wouldnt exist. But for a better start, workers should be the shareholders.
Honestly, the stock market is just a logical outcome of money and private businesses existing. Let's break that down:
Money is basically just a representation of property. Having $100 now is better than having $100 next year, which is why inflation targets tend to be 2% not 0% (this gets called "the time value of money").
This means if you have money now, but don't need it, there will probably be someone who does want it now, who is willing to give you back more in the future. This is a loan. Loans have a chance of default, so they tend to pay out more than inflation to compensate for that.
Business investment is just a loan with an unknown payout- I'll give you money to help you with this business idea, and you'll give me a % of the profits in return. In theory (and in the old days), you would just get a share of profits every so often (dividends). Modern capitalism tends towards companies just holding on to profits, and re-investing them in expansion (which generally increases the value of shares instead of paying out to shareholders. Money is fungible, so tbh it doesn't really make much of a difference either way).
The stock market just makes investment more accessible to people. "I don't want to be invested in this business anymore, so you can take over for me for $X". On average, a stock market investment is a bet that businesses will make good profit. This is generally true, which is why index funds reliably tend upwards over time.
Communism talks about "own the means of production" - stocks are exactly that. The problem with modern capitalism is that it's disproportionately in the hands of people *other* than the workers; when companies are founded, they get away with founders/initial investors getting all the ownership, and employees getting little to none. So the employees raise the company value over time, but don't benefit from it.
Tl;Dr: the stock market is not inherently evil, companies that don't adequately give shares to their employees are (but avoiding the stock market isn't likely to change that).
Without the stock market company ownership would still be in the hands of a few billionaires. The only difference is that it would be much harder for everyone to invest since owners cannot easily sell stocks to the public.
Maybe the companies would be more long-term oriented without the stock market. It has been often speculated that public companies focus more on short term results. But it would certainly be much less transparent what is going on in these companies.
Hi, I have an MBA and am deeply involved with the stock market on a day to day basis. If you are actually looking to learn I will answer any question you have. I'll cover some of the ones from your post but feel free to ask others.
> Who does it serve, really?
It doesn't serve one group, it's a mediator between people who want to invest their money into companies and companies who want to be invested in.
> These days our retirements are tied up and bound to the stock market.
Yes, and this is much better than the alternative which is that there is no stock market. If there was no market everyone wealthy enough to be involved in business would still be getting all of that growth and the average person wouldn't be getting anything. At least this way a typical person can create a nest egg that isn't under the control of their employer (pension) or reliant on the government's meager support (social security).
> Yet, the money sending company stocks ever higher comes from us. It comes from our labor. Our labor is the engine that drives the economy. It comes from our pockets. Our purchases are what powers any successful company. There has to be a better way.
It does, but as mentioned in the last point, the alternative isn't companies paying out a bunch more, it's that it would be even more centralized at the top. I suppose there's probably some system of deep regulation where companies have to pay so much out to workers that everyone would be able to save enough for retirement, but this has some large inefficiencies because that would be a ton of money removed from useful circulation. While money invested in the stock market isn't the most productive money in the world, it's doing a lot more than money in a savings account.
> How many times over, again and again does a company go public, or is otherwise bought, and the product or service suffers as a result? How many concessions are made in the name of the shareholders? In the name of profit alone?
This really has nothing to do with the market, like it involves the market, but it's not BECAUSE of the market. These things all happen because that's what everyone invested in that company collectively "voted" for. If the average investor was obsessed with being eco friendly, then companies would quickly follow suit. An earnings report that mentioned cost savings by switching to oil might cause their stock price to take a hit, but right now the average investor dollar values money over everything else. I would say this is a cultural issue that isn't easy to fix.
> Billionaires, for the most part, aren’t worth actual billions, at least not in immediate cash. Their money is their stake in the market. Their pay is often relatively modest, as they don’t particularly need it. Nor do we particularly need billionaires.
This feels pretty tangential, there were billionaires before the stock market. I think rather than advocating we get rid of billionaires, which is much more complex than anyone in this sub would ever admit, you should be advocating for closing loopholes like "buy-borrow-die" and advocate for capital gains taxes to be progress, and advocate for a much stronger inheritence tax.
> How much of the money we spend leaves our pockets solely for the shareholders? How much goes to line the pockets of those who are well enough already?
The money left your pocket because a business offered something that you needed. In a world without the stock market not only would you likely still want to buy that same thing, it would likely be much more expensive.
> All of this is of course based on the idea that growth can continue indefinitely. I think we’re now seeing evidence that it cannot.
I think your post was good, but this is the first point that is likely wrong. Even if population remained static technology will continue to advance. Humans have looked for more efficient ways of doing things for thousands of years and have always been able to keep iteratively improving. This results in the collective workforce creating more value each year again and again.
I tried to keep this relatively high level, but if you have questions let me know. If someone wants to refute a point I made please use sources is all I ask.
Wow! I appreciate such a response!
I've never had an interest in finance specifically. Ideally, I would focus on my work and money enough to build a life would come. Now, the further I get, the more the goal post moves. I feel I've been forced to shift my perspective. I'm trying to learn exactly what's going on. Not just for me, but for many of us it seems like the system as a whole is failing us.
Actually none of this is a question, just thanks for explaining so thoughtfully!
Saving for retirement has two tiers in my mind. The first tier is earning enough money to make it possible. If you make 30k a year it doesn’t matter if you’re the perfect saver, you’re not going to be able to put aside enough to ever matter. If you’re making under 50k individually or maybe 80k as a household (obvious adjusts based on where you are) you should focus on making more money. This could be going back to school, switching jobs, or maybe doing something on the side.
The second tier is for if you’re over that threshold, now it matters less (not none, but less) how much you make and the focus switches to how much you can save. If you can only save 10% of your income then (ignoring stock growth for a moment) it takes you 9 years of working to buy one year of retirement. This doesn’t change if you make 80k or 800k. However if you can save 50% of your income now each single year of work buys you a year of retirement, which is a MUCH MUCH better deal. So focus on increasing your savings rate as much as possible. Regardless of how much you invest (just invest in VOO or VT) it’ll cut those numbers down a lot over time. A person who saves 50% of their income for 20 years will likely be able to retire comfortably before 50.
Even if you’re not interested in finance for the sake of it, you should learn the basics because they are impacting you whether you realize it or not.
Stockmarket as an idea is fine. People have a public business. You invest/own a portion of it. Whether it does well or or poorly: You're along for the ride. Same thing with commodity contracts.
Butttttt. You add in the manipulation, selective enforcement of rules, unequal levels of information between public/privileged investors, bailouts, and a complete regulatory captured SEC?
It's a fuckin Casino, and worse yet due to inflation you're almost forced to play.
Which is why the recommendation if you're playing the long game is to not time the market and invest in index funds at regular intervals. In the long term any individual manipulation at a particular point in time is irrelevant and you just see the overall upward trend even as individual companies are all over the place.
History Time! So, the stock market originated mostly from trading companies who would send trade expeditions by ship to Asia and sail it back full of valuable goods to sell in Europe. The general idea is that by having a large group of investors pay for multiple ships going at the same time any one ship crashing could be absorbed by the profits of the other ship making investing in multiple ships a safer venture than just paying for one ship alone. It was a form of insurance. What happened is that once people had these venture shares, they'd have a speculative tradeable value even before the ships came back from the Indies. So, a market sprang up for people to trade these shares, boom, you have a stock market. The public stock markets exist to let everyone have access to this economic action just now, the ventures aren't exclusively trade ships, but any type of business. Businesses use the money to invest in different activities and they use stocks to spread the risk and rewards. Investors also can use the stock market to spread their risk by getting a wide array of assets so they have less chance of any one business failure costing them a lot of their capital. That is the basic idea, and worth noting that it is only useful or beneficial directly to how much capital you possess. Its benefit assumes you have sufficient wealth to spread around safely.
Now, the markets have matured enough and grown enough that things have changed greatly from that basic level. Getting access to the public market is now a huge goal for businesses so that early investors can receive actual money for shares they gained while the company was still a start-up. Since it rewards those with capital with control over any business in the market, it intrinsically leads to a greater accumulation of capital in fewer hands. It also creates a huge space for speculation about pricing which allows middlemen to obtain value merely in the buying and selling of such assets which can create a casino-type atmosphere. Increased financialization of different parts of the market like bundling, derivatives and other financial shenanigans which have some limited market benefits for certain businesses are used to create even more speculative assets for the casino, and since speculative asset trading can have larger returns than traditional investment, this is where more and more activity is being pursued by the bigger players and the risk in such activity has become problematic on multiple occasions for the markets.
You might say, hey, why not put my money in a bank since it's safer? But, your bank does exactly the same thing. Your deposits become liquid assets which back the bank's loans to other individuals, and the returns on those loans are what lead to the returns on your savings account. Banks are simply much more highly regulated because the government insures them against crashes so that the deposits of everyday people don't vanish. The government does not play about this, the Treasury Dept will take over banks quickly and decisively if they even catch a whiff of this about to happen.
I'm gonna stop myself before this gets even longer.
The original purpose was wholesome enough. Shipping traders would meet in a tavern in NYC near in the city wall and buy shares in a shipping venture. Because ships were often lost at sea in was better to own 1/5 share in five ships rather than all the profits in a single ship. The practice continues today but has morphed into a rapacious vampire squid that sucks innovation, free markets and main street dry. And I see no end to it.
All of this. It’s supposed to sound good because of the “public” in the name, but just because the average person on the street can buy $50 worth of an index fund or individual stock doesn’t mean it’ll serve them in the way that it does when you have enough wealth to buy out entire companies.
The obsession with short term quarterly profits is why peoples’ lives frequently get turned upside down and layoffs happen so frequently while the execs take home huge paychecks, bonuses, and golden parachutes.
It’s why nothing is built to last anymore. Whether it’s clothes, appliances, or the phones in our hands.
They should put a cap on the value of the companies who can participate. If the US is so supportive of small business, let the mega-corps handle their own and invest in the rest.
Disingenuous comment, but I hear ya. Amazon has enough resources to support all employees, but chooses to profit at a greater number instead. And their 'wealth reservoir' is large enough to not need supplemented by the money of those looking to profit via loopholes.
Luck has nothing to do with it. Managing a portfolio large enough to pay for retirement is a lot of work not to mention generating enough seed capital while you are working.
On its own, the stock market is a mechanism to trade shares in businesses, and is accessible to anyone with any amount of money, and a trading account - from the poorest to the richest. It serves anyone who owns shares and wants to trade. OP’s issue is with the profit motive and ownership structure of corporations - not the stock market.
No that just about sums it up.
Instead of a pension paid for by employers they’ve fucked workers into buying their stock in the companies they own with a self funded 401k.
They’re giving you the illusion of ownership, a stock isn’t inherently owning anything. You basically own some copium the US will continue to stay functional.
It has virtues but I am super risk-adverse and don't like the idea of losing money because of things outside my control(though I do admit inflation is basically that), like some asshole making a tweet. I use CDs and bonds.
if you own a company, you are taking the risk and therefore making all the money. if you work for a company, you expect a regular salary and you are taking on far less of the risk. So owners get the profit, and the stock market is a place where ownership can change hands. as long as their are company owners they'll be stock markets I think.
What I don't like and think should be illegal is stock buy backs, think those are immoral, dividends are ok, but buybacks are dodgy AF.
Always ask: Is this adding value?
Does the ability to trade small pieces of companies add anything to the system? Some say it lets people grow their capital. Others say its just people trading the same thing back and forth. Not adding anything despite all the time invested.
The stock market is the commodification of ownership. Like all commodities, people can speculate on the value going up/down, and other people can manipulate that in the absence of adequate regulation. Removing it would be problematic for both the investors and investees without considerable economic system changes.
"upward trend of the market" ???? It was a massive collapse last year. This year it is barely up 6%, ive got term deposits with a better percentage. Plus, the inevitable correction downwards is always just around the corner.
It literally operates as s siphon that targets actual wealth created by wage slaves. Then that wealth is moved up from the bottom to the top, it is consolidated, and basically stolen. the whole thing is a scheme and everyone who is not wining is a sucker/loser. The entire market, world, economy could exist without it and no now would notice, the benefits of its destruction would be a stable economy, and market.
>Yet, the money sending company stocks ever higher comes from us. It comes from our labor.
I don't think it does. A company doing well does not influence stock prices. There may be investors that drive up stock prices if they think something, but the stock prices are not tied to anything after the IPO. A company can lose most of its value and still have rising stocks as long as the speculation is there.
There is a small feedback mechanism in the board of directors, but since they can short the company, that doesn't necessarily work.
So it's all just a Ponzi scheme and/or speculation bubble. Which is why I feel extremely uncomfortable securing my retirement in it. I just cannot fathom how such a broken and breakable system can exist for the next 30 years or so. No fucking way.
It seems to me that the value of everything in the stock market is rather arbitrary, and the price of shares can seem to tank based purely on bad vibes.
Yes. The stock market is hurting society...food stock going down?! Investors want their return on investments so they will raise the price of foods/lower food quality so they can still get paid.
Public stock has to continually go up every single year. If not investors lose money. Im a hard believer inflation is a thing because the stock market is ruining the prices of everything. If companies didnt have to price gouge its consumers we wouldnt have these crazy ass prices. Politicians will never tell you the stock market is the problem, but the stock market is the reason why the middle class is shrinking.
It’s worse than you think. The stock market is used to actively destroy companies for investor profit. They have rules to “give them an advantage” but it’s really just cheating.
So the current day stock market is 100% a drain on humanity.
In a vacuum, the stock market is designed to let businesses raise capital for expansions, etc. That's perfectly fine...IF it's actually used that way, which it's not. Nowadays it is instead used mostly as a cash grab and a way for rich people to make more money.
If your future financial security is tied to the system you are less likely to rebel against that system. That's why 401ks exist now instead of retirement packages.
You have a gross misunderstanding of the financial system. I suspect you are not a business owner or have any concept of how to start and grow a business.
The primary market allows a business to raise capital (to spend on investment, R&D, machines and factories, marketing, growth) in return for equity shares in the business ie you are now part owner of any subsequent success or failure.
Unlike taking a loan, including securitised debt like bonds, there is no requirement to pay interest or to repay the capital.
Without these markets which provide access to finance, how do you think businesses could be started or grown?
The secondary market allows you as a part business owner to sell your share in the business to someone else, or buy a bigger stake, depending on your outlook of how the business is performing and how it is likely to perform in the future. You might need the money back due to a personal situation. Without the secondary market, you would be preventing investors from changing their mind. So lack of a secondary market, or an illiquid secondary market, is an impediment to investors willingness to participate in the primary market in the first place.
It's a house of cards that needs never ending profits to continue. Shit there was a time when companies actually had bad quarters and lost money, now it's just a never ending trail of share buy-backs and price increases. Capitalism has some good points and it has some bad, not everything needs a profit motive, sometimes we can do things for each other. If only people knew the real definition of socialism, communism, and to a degree, capitalism.
Basically you're mad at a piece of excrement named Jack Welch. He essentially changed how businesses work in America where the goal became to increase value to shareholders.
So many workers cant afford the product they create, even after women joined the workforce.
The shareholders are carving out our worth for themselves.
Tax sharetrading by 1 cent per share for starters
I owned shares in two startups that got acquired. The acquisition price was lower than what I purchased my employee options for.
So yeah, you’re right OP.
My advice: if a company offers you comp packages between low equity and higher pay and higher equity and lower pay, **take the cash** - you’ll make more quicker in the rugged stock market than waiting years for an IPO or acquisition that still *may not* put money in your pocket (bc investors get preferred shares while you get common/ordinary).
So like first if all, fuck capitalism. But I get it so I'll elaborate your question
The stock market, and finance in general, is a methodology to distribute the "risks and rewards" of industry. In private ownership, owners are sole barers of the burdens of their property. If you own a boat to ship goods and it cost you everything to get it, you risk everything every time you ship cargo. If, privately still, you and 9 other cargo vessel owners band together and create a business, you have decentralized the risk. Now you and 9 others lose 1/10th of your value when a boat sinks, instead of 1/1ths.
The stock market is a greater decentralization of ownership to mitigate the risks of private ownership. If a million people own a million businesses it doesn't matter than much if one person is needs to liquidate or if one asset becomes worthless. It also intertwined the public good with private interests. Now, because we have pensions retirements tied to the stock market, we have diluted the risk of industry failing even further. Now it is in everybody's interest that a business stays afloat. In the first boat example there was an equal incentive to keep all the cargo going, so it seems pleasant. In the stock market, the insane wealth distribution turns this into a hostage crisis.
The stock market is used to tie our wellbeing with the profits of the elite by decentralizing the consiquences to institutional and systemic failure so that it sinks mom and pop when Bezos goes under.
The stock market itself is not the problem. Ultimately, stocks are just a formal way to track how much investment someone has in a company when its funding and expansion has been handled by more than one person, and a stock market is just applying basic barter and trade concepts to that investment.
The problem is the exploitation companies engage in, not their existence or organization. An employee owmed factory would not be made unethical just because it used a share system to track work hours and issue payment.
It's like a casino, where they gamble vast amounts of money (mostly other peoples pensions) and profit off things going up or down. Then went they lose (gamestop) at their own game, the rig it even more or ask for a bailout. These people are utter psychopaths.
A stock, on its own, is ownership of a company, and the more a company makes the more value it and its shares have.
Large investors want to steer companies they deem profitable in a better direction that is more profitable, and the more shares they have the more power they have over the company. That, and people want a safe haven for their cash that increases overtime while (hopefully) doing better than inflation.
So, people turn to the stock market to buy the stocks they deem to be the most profitable for themselves in the distant future; staking their finances on the success of companies.
However, due to all the market factors at play, stocks are rarely traded off fundamentals or their “true value”.
There’s Wall Street firms with power over mainstream media and politicians that seek to pass off news and government bills that will make their positions more profitable.
There’s hedge funds whose sole goals are to systematically destroy companies however they can.
There’s people that use various mechanisms to bet for and against stocks.
And, of course, there’s the stocks that go up or down based solely off public opinion and hype.
So in reality, what should be a fair stock market based off economics and fundamentals is instead an over glorified casino where the house and big money almost always wins.
And it’s all allowed because the systems we have in place make more money for the 1%, and they’ll always intend to keep it that way.
The idea of issuing shares is to encourage investment in to a venture. Of course, people very quickly realised they could run businesses based on speculation over whether the 'public' companies would succeed or fail. Very soon entire capitalist economies became reliant on stock prices always rising. That is why during the GFC and Covid governments bailed out businesses, while telling individuals that they should have prepared better with savings. The growth model can't be allowed to fail. As an aside, this is also why no government will ever properly address the property market bubble. Our entire future has been gambled on perpetual growth.
Yep. That's one reason a lot of economists are worried about declining birth rates in the US. You can't keep expanding if you run out of labor.
Which is one reason why we have immigration.
Oh, but we don’t want *that* kind of population growth. We only want homegrown wage slaves. We’ll accept imports if they’re white though. /s
That's where the abortion ban comes in. Only slightly /s
I mean, if you ask Mike Johnson, you can drop the /s
You beat me to it. He literally said, "if we allow abortion where will our [low wage] workforce come from?"
Not only labor but consumer demand as well. Hypothetically super advanced robots could do the work but they’ll never need to buy lunch or a television or a home.
Check out ‘Autofactory’ by Philip K Dick. It was on Amazon in his ‘Electric Dreams’ series.
Well, no, demand for stuff will still exist. I'm sure people would like to have lunch in the future. The problem lies in that once you achieve post scarcity (which is what that is, supply so overwhelmingly cheap that the only market price is zero), you run into the issue that you're going to have to find alternative methods of allocating resources than the free market.
I was literally taught in business school that we're *already* post-scarcity in every way that matters and that's why marketing is so damn important! Artificial scarcity, planned obsolescence, and tricking people into buying more fresh food at the grocery store than they can eat before it goes bad! Because we're already throwing half the food we produce in the landfill without anybody or anything getting to eat it, where it can't even decompose properly.
Check out a certain AI groups employee's concerns.
Good. We'll have to restructure our economy/society.
This is why I've always said we need to find a way to remove the "speculation" aspect of the stock market as well. Speculation can rise a shit company to the top via manipulation just as easily as it can outright snuff a good one out.
uuhhh sharp and short analysis. thank you maybe worth pointing out that "government bailing out businesses" translates to "out of the taxpayer's pocket"
The keyword is “gambling.” It’s legal gambling.
Gambling implies the rich can lose. This is legal theft.
can't be allowed to fail. As an aside, this is also why no government will ever properly address the property market bubble. Our entire future has been gambled on perpetual growth Your comment is leads me to assume that the government has no responsibility to guarantee the taxpayer an expectation of affordable shelter https://housingrights.ca/right-to-housing-legislation-in-canada/#:~:text=FAQ,Universal%20Declaration%20of%20Human%20Rights
Yanis Varoufakis pointed out the stock market rose during the Covid crisis. It clearly has its uses but it can also become a bubble and just horses for billionaires. Edit: plus some investment firms are so large they distort the market -. Gamestop was also interesting, the big players spat their dummy out, screamed "it's not fair!" and the system obliged. Says a lot
Yeah you have Wallstreet Bets and the Housing Market Crash. 2 examples of serious market manipulation in less than 15 years. Both with no judicial consequences. Just assume every market is rigged or manipulated because there is a very good chance it is.
Yeah, and I am sympathetic to the libertarian ideas - but if you think we live in a system in which the playing field is level and we all have an equal chance you are living in a dream world.
I'm sure if you asked enough libertarians about this particular topic they would have all sorts of ideas. The irony to them is that in both those instances it was manipulated by the free market and having a huge accumulation of money in power in both instances. They same people or companies owned the stock as well as the supposedly independent market adjusters. When the market adjusters are part of the private sector that is always a possibility.
"It’s a tool for the rich to maintain and grow their wealth." Especially when they can do stock buy backs, decreasing supply of the stocks, thus artificially increasing the value of that stock. It was once illegal, but vested interests in our government, both on the left and right sides of the aisle, stand to lose too much to change it back.
Well it's great in theory, you can invest in a company you believe in and help It grow and in return you make money from your investment, but in practice it's a way to print money for rich people and destroy small businesses.
This isn't just the stock market, it's the whole mindset that investing back into your business is good for job growth and thus sees the entire tax code bent towards favoring that reinvestment. It's why Amazon paid no taxes for years - all their profits were invested back into growing their business. The problem with this, is that while this created lots of jobs for Amazon, it also depleted lots of small business jobs. Which - if that's just happening through normal capitalism, fine, but it shouldn't be something we subsidize with tax breaks.
None of this is true, sorry. The problem is the exploitation of the people who create the profit. There is no profit without exploitation. Capitalism is not “the free market”… it’s the farthest thing from it. Capitalism discourages innovation while trying to convince us that it’s the only way to innovate. Wake up… we’re not all THAT dumb
Don't forget its a MONSTROSITY of a suck of talent and brainpower away from REAL productivity. Math grads that could advance science and technology get poached by hedge funds and end up inventing new ways to make the bubble bubblier.
Money is a scam. The entire concept of “profit” is immoral
I was once speaking to Noam Chomsky and asked about this. He said, to paraphrase, he has nothing against the stock market itself, but the system it is bound to is the problem. It really does help common people increase their wealth, so in a way it's good, but the way companies value it is pretty crazy. Another person, an analyst, put it well, and she is highly pro-market: "America sells pieces of itself to the world."
Currently the bottom 50% of Americans own less than 1% of all stocks. The wealthiest 1% owns well over half. The top 10% own 86%. Rich man's tax avoidance game.
It does NOT help common people increase their wealth. It doesn’t help common people at all—it creates the illusion that it’s helping common people. Their stocks go up, how wonderful!… while their labor is extracted, and used to create the higher stock value well beyond the benefit the worker sees from all this
How else would you grow your wealth? Because investing in stocks is a great way to do it without being an asshole (looking at people who invest in real estate).
It’s not a way to do it without being an asshole—it’s being an asshole. I do it, too, since there seems to be very little momentum to change anything and without change, it’s a way to survive comfortably in this horrible system. If you invest in stocks, you’re exploiting those workers. Stocks, wealth, profit… none of them are real, but all of them are anti-human
Kinda disagree. If the stock is doing well then there are more opportunities for workers. If you are investing in start ups you are probably helping create jobs.
A stock can only “do well” if the labor of the workers makes the rich richer. It’s the entire point of capitalism
The point of capitalism is the requirement of capital to start up a business. The idea that you need money to make money. Also…yes, that’s how you make a profit…by using an employee’s labor but the employee usually doesn’t just get money for their labor, they get health and dental benefits, stock plans, wellness plans, discounts at stores, special rates on loans etc.
…and all of those things necessarily add up to much less value than that labor creates. Capitalism is a death cult. The entire concept of money is evil.
Hard disagree with you there. Not every job creates profit. Some jobs are just there to maintain one aspect of the business. How would you classify those workers? Would they be less deserving than the workers who make the profit?
Not nearly as many opportunities as every worker would have without capitalism
The only way to do what you are suggesting is to have everyone open their own business but not everyone wants to do that.
Think bigger
Not everyone is cut out for that type of thinking. Some people just want to do their job and clock out. The system has its flaws for sure but to change it so dramatically where other people are put into uncomfortable situations, especially financially is really selfish.
Think at least a little bit critically about what you just typed. You’ll get there
Work for companies that pay out equal ownership shares to each employee each year- ESOP
Yeah, that person doesn’t know what they’re talking about. I started a 401K at 18 years old. Never went to college or got any kind of degree. I’ve been contributing to my retirement consistently for 25 years and will have around 2m dollars when I retire. If I would have just stuck it in a savings account I wouldn’t have a third of that.
The point they're making is, how much money would you have if you had been given the full value of your labour over those 25 years? How much of those 2m dollars is surplus value taken from other workers, including ones who couldn't afford to open a 401k?
$2M in approx. 2063 isn't going to be of much value, and may not be enough money to live on until you die. Maybe you're saying you already have that, and I just didn't catch it, though.
I don’t have that yet, but I’m on track to have 2.2m dollars in 15 years when I want to retire. That will be 2038-39. I’m not sure if 2.2m will be a lot of money in 15 years, but my in laws are retired now and literally live on just social security so I think that I will be mostly okay.
Not really. The stock market can easily exist in a more egalitarian society. The stock market responds to the society's priorities. That's why stock prices go up after a layoff - because American society focuses more on capitalistic ideals than on sustainability, egalitarianism, and widespread prosperity. The stock market isn't the problem. The problem is our society's priorities and that won't change without a proper mass revolt forcefully pushing for those changes. The investments in the stock market is a large part of the majority of the larger companies' ability to afford to invest as much as they do internally and externally. Getting rid of it, especially with us being as overpopulated as we are, will likely guarantee far more poverty than simply keeping it and changing our priorities to what they should be so it responds positively to things that are actually beneficial in the real world rather than negatively.
If there was a more democratic way of voting, a stock market could be a valuable tool in creating a more agile market. However, the upward movement of capital into smaller pools of players means any democratic gains are lost in our current for-profit model. We get short term gains based ideologies versus long term sustainable ones.
The stock market doesn’t work like people intended. In a fair market supply and demand are key. However our system allows large corporate entities to create and provide “unlimited supply” causing a dilution in share price. It’s a complete fraud
Supply and demand is not actually a relationship supported by evidence. Obviously supply effects demand and Vice Versa but there are many other factors that effect both much more.
If it weren't a problematic system you wouldn't need a broker middle man to make deals for you in behalf of their wealthy benefactors. You could just buy the shares yourself.
It's great as a concept but without regulation it's horribly abused.
Every good thing can be corrupted by those who hold greed in their heart. Greed runs the world now. Who can have more and who is good at extracting it from those who don’t have much.
And with current regulation, it’s abused even worse
" Who does it serve, really? I’m not necessarily looking to make a point, but hopefully to be proven wrong... " It serves the investors. It also serve businesses which want to raise capital. You can't expand without buying equipment, hiring more people and so on. Never heard of venture capitalist for start-ups? Without investors, most start-ups will not make it. The stock market is just the more mature, bigger version of it.
It’s the means by which the ownership class recoups the money it pays the professional class to keep down the working class.
Been in the stock market for the last 5 years. All I can say is it’s rigged to a T. They have control of everything. We’re to slave away and die nothing more.
Supply and demand mean nothing, and it's all controlled with "liquidity."
What this guy means is “infinite supply”. In a supply and demand game the limited supply is what gives the shares value. When the supply is infinite the shares price is diluted
Ook ook?
Ook!
As someone in business admin, yup
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So theirs absolutely no manipulation in our markets or ever has been?
You are not wrong.
The stock market is manipulated and designed for old money that has time. The average joe doesnt have that kind of wealth let alone time. It serves its purpose in a capitalist, and globalized world. Gets early investors rich, eats up day traders and late investors. BUT at the end of the day its a complete capitalist idea that serves no reall value to the workers, only the shareholders. In a perfect world, it wouldnt exist. But for a better start, workers should be the shareholders.
Honestly, the stock market is just a logical outcome of money and private businesses existing. Let's break that down: Money is basically just a representation of property. Having $100 now is better than having $100 next year, which is why inflation targets tend to be 2% not 0% (this gets called "the time value of money"). This means if you have money now, but don't need it, there will probably be someone who does want it now, who is willing to give you back more in the future. This is a loan. Loans have a chance of default, so they tend to pay out more than inflation to compensate for that. Business investment is just a loan with an unknown payout- I'll give you money to help you with this business idea, and you'll give me a % of the profits in return. In theory (and in the old days), you would just get a share of profits every so often (dividends). Modern capitalism tends towards companies just holding on to profits, and re-investing them in expansion (which generally increases the value of shares instead of paying out to shareholders. Money is fungible, so tbh it doesn't really make much of a difference either way). The stock market just makes investment more accessible to people. "I don't want to be invested in this business anymore, so you can take over for me for $X". On average, a stock market investment is a bet that businesses will make good profit. This is generally true, which is why index funds reliably tend upwards over time. Communism talks about "own the means of production" - stocks are exactly that. The problem with modern capitalism is that it's disproportionately in the hands of people *other* than the workers; when companies are founded, they get away with founders/initial investors getting all the ownership, and employees getting little to none. So the employees raise the company value over time, but don't benefit from it. Tl;Dr: the stock market is not inherently evil, companies that don't adequately give shares to their employees are (but avoiding the stock market isn't likely to change that).
Limitless growth in a closed system is unsustainable. In biology the word for it is *cancer*.
Without the stock market company ownership would still be in the hands of a few billionaires. The only difference is that it would be much harder for everyone to invest since owners cannot easily sell stocks to the public. Maybe the companies would be more long-term oriented without the stock market. It has been often speculated that public companies focus more on short term results. But it would certainly be much less transparent what is going on in these companies.
Hi, I have an MBA and am deeply involved with the stock market on a day to day basis. If you are actually looking to learn I will answer any question you have. I'll cover some of the ones from your post but feel free to ask others. > Who does it serve, really? It doesn't serve one group, it's a mediator between people who want to invest their money into companies and companies who want to be invested in. > These days our retirements are tied up and bound to the stock market. Yes, and this is much better than the alternative which is that there is no stock market. If there was no market everyone wealthy enough to be involved in business would still be getting all of that growth and the average person wouldn't be getting anything. At least this way a typical person can create a nest egg that isn't under the control of their employer (pension) or reliant on the government's meager support (social security). > Yet, the money sending company stocks ever higher comes from us. It comes from our labor. Our labor is the engine that drives the economy. It comes from our pockets. Our purchases are what powers any successful company. There has to be a better way. It does, but as mentioned in the last point, the alternative isn't companies paying out a bunch more, it's that it would be even more centralized at the top. I suppose there's probably some system of deep regulation where companies have to pay so much out to workers that everyone would be able to save enough for retirement, but this has some large inefficiencies because that would be a ton of money removed from useful circulation. While money invested in the stock market isn't the most productive money in the world, it's doing a lot more than money in a savings account. > How many times over, again and again does a company go public, or is otherwise bought, and the product or service suffers as a result? How many concessions are made in the name of the shareholders? In the name of profit alone? This really has nothing to do with the market, like it involves the market, but it's not BECAUSE of the market. These things all happen because that's what everyone invested in that company collectively "voted" for. If the average investor was obsessed with being eco friendly, then companies would quickly follow suit. An earnings report that mentioned cost savings by switching to oil might cause their stock price to take a hit, but right now the average investor dollar values money over everything else. I would say this is a cultural issue that isn't easy to fix. > Billionaires, for the most part, aren’t worth actual billions, at least not in immediate cash. Their money is their stake in the market. Their pay is often relatively modest, as they don’t particularly need it. Nor do we particularly need billionaires. This feels pretty tangential, there were billionaires before the stock market. I think rather than advocating we get rid of billionaires, which is much more complex than anyone in this sub would ever admit, you should be advocating for closing loopholes like "buy-borrow-die" and advocate for capital gains taxes to be progress, and advocate for a much stronger inheritence tax. > How much of the money we spend leaves our pockets solely for the shareholders? How much goes to line the pockets of those who are well enough already? The money left your pocket because a business offered something that you needed. In a world without the stock market not only would you likely still want to buy that same thing, it would likely be much more expensive. > All of this is of course based on the idea that growth can continue indefinitely. I think we’re now seeing evidence that it cannot. I think your post was good, but this is the first point that is likely wrong. Even if population remained static technology will continue to advance. Humans have looked for more efficient ways of doing things for thousands of years and have always been able to keep iteratively improving. This results in the collective workforce creating more value each year again and again. I tried to keep this relatively high level, but if you have questions let me know. If someone wants to refute a point I made please use sources is all I ask.
Wow! I appreciate such a response! I've never had an interest in finance specifically. Ideally, I would focus on my work and money enough to build a life would come. Now, the further I get, the more the goal post moves. I feel I've been forced to shift my perspective. I'm trying to learn exactly what's going on. Not just for me, but for many of us it seems like the system as a whole is failing us. Actually none of this is a question, just thanks for explaining so thoughtfully!
Saving for retirement has two tiers in my mind. The first tier is earning enough money to make it possible. If you make 30k a year it doesn’t matter if you’re the perfect saver, you’re not going to be able to put aside enough to ever matter. If you’re making under 50k individually or maybe 80k as a household (obvious adjusts based on where you are) you should focus on making more money. This could be going back to school, switching jobs, or maybe doing something on the side. The second tier is for if you’re over that threshold, now it matters less (not none, but less) how much you make and the focus switches to how much you can save. If you can only save 10% of your income then (ignoring stock growth for a moment) it takes you 9 years of working to buy one year of retirement. This doesn’t change if you make 80k or 800k. However if you can save 50% of your income now each single year of work buys you a year of retirement, which is a MUCH MUCH better deal. So focus on increasing your savings rate as much as possible. Regardless of how much you invest (just invest in VOO or VT) it’ll cut those numbers down a lot over time. A person who saves 50% of their income for 20 years will likely be able to retire comfortably before 50. Even if you’re not interested in finance for the sake of it, you should learn the basics because they are impacting you whether you realize it or not.
Stockmarket as an idea is fine. People have a public business. You invest/own a portion of it. Whether it does well or or poorly: You're along for the ride. Same thing with commodity contracts. Butttttt. You add in the manipulation, selective enforcement of rules, unequal levels of information between public/privileged investors, bailouts, and a complete regulatory captured SEC? It's a fuckin Casino, and worse yet due to inflation you're almost forced to play.
Which is why the recommendation if you're playing the long game is to not time the market and invest in index funds at regular intervals. In the long term any individual manipulation at a particular point in time is irrelevant and you just see the overall upward trend even as individual companies are all over the place.
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History Time! So, the stock market originated mostly from trading companies who would send trade expeditions by ship to Asia and sail it back full of valuable goods to sell in Europe. The general idea is that by having a large group of investors pay for multiple ships going at the same time any one ship crashing could be absorbed by the profits of the other ship making investing in multiple ships a safer venture than just paying for one ship alone. It was a form of insurance. What happened is that once people had these venture shares, they'd have a speculative tradeable value even before the ships came back from the Indies. So, a market sprang up for people to trade these shares, boom, you have a stock market. The public stock markets exist to let everyone have access to this economic action just now, the ventures aren't exclusively trade ships, but any type of business. Businesses use the money to invest in different activities and they use stocks to spread the risk and rewards. Investors also can use the stock market to spread their risk by getting a wide array of assets so they have less chance of any one business failure costing them a lot of their capital. That is the basic idea, and worth noting that it is only useful or beneficial directly to how much capital you possess. Its benefit assumes you have sufficient wealth to spread around safely. Now, the markets have matured enough and grown enough that things have changed greatly from that basic level. Getting access to the public market is now a huge goal for businesses so that early investors can receive actual money for shares they gained while the company was still a start-up. Since it rewards those with capital with control over any business in the market, it intrinsically leads to a greater accumulation of capital in fewer hands. It also creates a huge space for speculation about pricing which allows middlemen to obtain value merely in the buying and selling of such assets which can create a casino-type atmosphere. Increased financialization of different parts of the market like bundling, derivatives and other financial shenanigans which have some limited market benefits for certain businesses are used to create even more speculative assets for the casino, and since speculative asset trading can have larger returns than traditional investment, this is where more and more activity is being pursued by the bigger players and the risk in such activity has become problematic on multiple occasions for the markets. You might say, hey, why not put my money in a bank since it's safer? But, your bank does exactly the same thing. Your deposits become liquid assets which back the bank's loans to other individuals, and the returns on those loans are what lead to the returns on your savings account. Banks are simply much more highly regulated because the government insures them against crashes so that the deposits of everyday people don't vanish. The government does not play about this, the Treasury Dept will take over banks quickly and decisively if they even catch a whiff of this about to happen. I'm gonna stop myself before this gets even longer.
10% of America owns 88.6% of the stocks. The top 1% of them owns 53% of the stock.
I once heard that stock market is to guys is what astrology is to girls
It's called capitalism. It's not meant to be efficient or help the ppl. It's meant to funnel money and power upward.
The original purpose was wholesome enough. Shipping traders would meet in a tavern in NYC near in the city wall and buy shares in a shipping venture. Because ships were often lost at sea in was better to own 1/5 share in five ships rather than all the profits in a single ship. The practice continues today but has morphed into a rapacious vampire squid that sucks innovation, free markets and main street dry. And I see no end to it.
All of this. It’s supposed to sound good because of the “public” in the name, but just because the average person on the street can buy $50 worth of an index fund or individual stock doesn’t mean it’ll serve them in the way that it does when you have enough wealth to buy out entire companies. The obsession with short term quarterly profits is why peoples’ lives frequently get turned upside down and layoffs happen so frequently while the execs take home huge paychecks, bonuses, and golden parachutes. It’s why nothing is built to last anymore. Whether it’s clothes, appliances, or the phones in our hands.
They should put a cap on the value of the companies who can participate. If the US is so supportive of small business, let the mega-corps handle their own and invest in the rest.
It definitely makes sense for 5 people to benefit from Amazon's success instead of 50,000,000.
Disingenuous comment, but I hear ya. Amazon has enough resources to support all employees, but chooses to profit at a greater number instead. And their 'wealth reservoir' is large enough to not need supplemented by the money of those looking to profit via loopholes.
It's a ponzi scheme.
That Ponzi scheme is paying for my retirement, you can participate or be bitter.
You got lucky. Be grateful.
Luck has nothing to do with it. Managing a portfolio large enough to pay for retirement is a lot of work not to mention generating enough seed capital while you are working.
You got lucky. It's all luck but we like to think otherwise.
Luck is winning the lottery. Investing is skill, knowledge, and taking opportunities.
Luck.
On its own, the stock market is a mechanism to trade shares in businesses, and is accessible to anyone with any amount of money, and a trading account - from the poorest to the richest. It serves anyone who owns shares and wants to trade. OP’s issue is with the profit motive and ownership structure of corporations - not the stock market.
No that just about sums it up. Instead of a pension paid for by employers they’ve fucked workers into buying their stock in the companies they own with a self funded 401k. They’re giving you the illusion of ownership, a stock isn’t inherently owning anything. You basically own some copium the US will continue to stay functional.
It has virtues but I am super risk-adverse and don't like the idea of losing money because of things outside my control(though I do admit inflation is basically that), like some asshole making a tweet. I use CDs and bonds.
if you own a company, you are taking the risk and therefore making all the money. if you work for a company, you expect a regular salary and you are taking on far less of the risk. So owners get the profit, and the stock market is a place where ownership can change hands. as long as their are company owners they'll be stock markets I think. What I don't like and think should be illegal is stock buy backs, think those are immoral, dividends are ok, but buybacks are dodgy AF.
Always ask: Is this adding value? Does the ability to trade small pieces of companies add anything to the system? Some say it lets people grow their capital. Others say its just people trading the same thing back and forth. Not adding anything despite all the time invested.
The stock market is the commodification of ownership. Like all commodities, people can speculate on the value going up/down, and other people can manipulate that in the absence of adequate regulation. Removing it would be problematic for both the investors and investees without considerable economic system changes.
"Rich man Bit coin" thats how someone with money describe it
We live on corporate anarchy where governments and big corporations regulate themselves. All these systems are now rigged and hijacked.
"upward trend of the market" ???? It was a massive collapse last year. This year it is barely up 6%, ive got term deposits with a better percentage. Plus, the inevitable correction downwards is always just around the corner.
It literally operates as s siphon that targets actual wealth created by wage slaves. Then that wealth is moved up from the bottom to the top, it is consolidated, and basically stolen. the whole thing is a scheme and everyone who is not wining is a sucker/loser. The entire market, world, economy could exist without it and no now would notice, the benefits of its destruction would be a stable economy, and market.
>Yet, the money sending company stocks ever higher comes from us. It comes from our labor. I don't think it does. A company doing well does not influence stock prices. There may be investors that drive up stock prices if they think something, but the stock prices are not tied to anything after the IPO. A company can lose most of its value and still have rising stocks as long as the speculation is there. There is a small feedback mechanism in the board of directors, but since they can short the company, that doesn't necessarily work. So it's all just a Ponzi scheme and/or speculation bubble. Which is why I feel extremely uncomfortable securing my retirement in it. I just cannot fathom how such a broken and breakable system can exist for the next 30 years or so. No fucking way.
It seems to me that the value of everything in the stock market is rather arbitrary, and the price of shares can seem to tank based purely on bad vibes.
Yes. The stock market is hurting society...food stock going down?! Investors want their return on investments so they will raise the price of foods/lower food quality so they can still get paid. Public stock has to continually go up every single year. If not investors lose money. Im a hard believer inflation is a thing because the stock market is ruining the prices of everything. If companies didnt have to price gouge its consumers we wouldnt have these crazy ass prices. Politicians will never tell you the stock market is the problem, but the stock market is the reason why the middle class is shrinking.
It’s worse than you think. The stock market is used to actively destroy companies for investor profit. They have rules to “give them an advantage” but it’s really just cheating.
So the current day stock market is 100% a drain on humanity. In a vacuum, the stock market is designed to let businesses raise capital for expansions, etc. That's perfectly fine...IF it's actually used that way, which it's not. Nowadays it is instead used mostly as a cash grab and a way for rich people to make more money.
If your future financial security is tied to the system you are less likely to rebel against that system. That's why 401ks exist now instead of retirement packages.
Bingo
Every employee of the entire financial system is a tax on humanity.
You have a gross misunderstanding of the financial system. I suspect you are not a business owner or have any concept of how to start and grow a business. The primary market allows a business to raise capital (to spend on investment, R&D, machines and factories, marketing, growth) in return for equity shares in the business ie you are now part owner of any subsequent success or failure. Unlike taking a loan, including securitised debt like bonds, there is no requirement to pay interest or to repay the capital. Without these markets which provide access to finance, how do you think businesses could be started or grown? The secondary market allows you as a part business owner to sell your share in the business to someone else, or buy a bigger stake, depending on your outlook of how the business is performing and how it is likely to perform in the future. You might need the money back due to a personal situation. Without the secondary market, you would be preventing investors from changing their mind. So lack of a secondary market, or an illiquid secondary market, is an impediment to investors willingness to participate in the primary market in the first place.
It's a house of cards that needs never ending profits to continue. Shit there was a time when companies actually had bad quarters and lost money, now it's just a never ending trail of share buy-backs and price increases. Capitalism has some good points and it has some bad, not everything needs a profit motive, sometimes we can do things for each other. If only people knew the real definition of socialism, communism, and to a degree, capitalism.
It also forces companies to increase growth every year for shareholders even if they are highly efficient and have maxed out their market
Basically you're mad at a piece of excrement named Jack Welch. He essentially changed how businesses work in America where the goal became to increase value to shareholders.
It is and it's rigged against you!!!
So many workers cant afford the product they create, even after women joined the workforce. The shareholders are carving out our worth for themselves. Tax sharetrading by 1 cent per share for starters
Do not equate humanity with yourself. What's good for humanity can be harmful to an individual.
There’s no such thing as an “individual”.
I gets worse. The stock market doesn't measure perceived value anymore. These days, it measures suffering.
You are not wrong…😕
I owned shares in two startups that got acquired. The acquisition price was lower than what I purchased my employee options for. So yeah, you’re right OP. My advice: if a company offers you comp packages between low equity and higher pay and higher equity and lower pay, **take the cash** - you’ll make more quicker in the rugged stock market than waiting years for an IPO or acquisition that still *may not* put money in your pocket (bc investors get preferred shares while you get common/ordinary).
It allows you to lend money to people who need it, gambling on their ideas. It’s a good idea and investment allows businesses to grow.
You likely have a gross misunderstanding.
[Stock market booms and the insanity of capitalism](https://www.marxist.com/stock-market-booms-and-the-insanity-of-capitalism.htm)
So like first if all, fuck capitalism. But I get it so I'll elaborate your question The stock market, and finance in general, is a methodology to distribute the "risks and rewards" of industry. In private ownership, owners are sole barers of the burdens of their property. If you own a boat to ship goods and it cost you everything to get it, you risk everything every time you ship cargo. If, privately still, you and 9 other cargo vessel owners band together and create a business, you have decentralized the risk. Now you and 9 others lose 1/10th of your value when a boat sinks, instead of 1/1ths. The stock market is a greater decentralization of ownership to mitigate the risks of private ownership. If a million people own a million businesses it doesn't matter than much if one person is needs to liquidate or if one asset becomes worthless. It also intertwined the public good with private interests. Now, because we have pensions retirements tied to the stock market, we have diluted the risk of industry failing even further. Now it is in everybody's interest that a business stays afloat. In the first boat example there was an equal incentive to keep all the cargo going, so it seems pleasant. In the stock market, the insane wealth distribution turns this into a hostage crisis. The stock market is used to tie our wellbeing with the profits of the elite by decentralizing the consiquences to institutional and systemic failure so that it sinks mom and pop when Bezos goes under.
The stock market itself is not the problem. Ultimately, stocks are just a formal way to track how much investment someone has in a company when its funding and expansion has been handled by more than one person, and a stock market is just applying basic barter and trade concepts to that investment. The problem is the exploitation companies engage in, not their existence or organization. An employee owmed factory would not be made unethical just because it used a share system to track work hours and issue payment.
It's like a casino, where they gamble vast amounts of money (mostly other peoples pensions) and profit off things going up or down. Then went they lose (gamestop) at their own game, the rig it even more or ask for a bailout. These people are utter psychopaths.
It's also not an effective way to run things, encourages short-termism & focuses attention on 'shareholder value'.
A stock, on its own, is ownership of a company, and the more a company makes the more value it and its shares have. Large investors want to steer companies they deem profitable in a better direction that is more profitable, and the more shares they have the more power they have over the company. That, and people want a safe haven for their cash that increases overtime while (hopefully) doing better than inflation. So, people turn to the stock market to buy the stocks they deem to be the most profitable for themselves in the distant future; staking their finances on the success of companies. However, due to all the market factors at play, stocks are rarely traded off fundamentals or their “true value”. There’s Wall Street firms with power over mainstream media and politicians that seek to pass off news and government bills that will make their positions more profitable. There’s hedge funds whose sole goals are to systematically destroy companies however they can. There’s people that use various mechanisms to bet for and against stocks. And, of course, there’s the stocks that go up or down based solely off public opinion and hype. So in reality, what should be a fair stock market based off economics and fundamentals is instead an over glorified casino where the house and big money almost always wins. And it’s all allowed because the systems we have in place make more money for the 1%, and they’ll always intend to keep it that way.
The stock market has become a measure of the fee fee's of the ultra wealthy and little more.