Do we need a "Stock Market"?

reply to post by rtcctr


It's a win for the guy you bought it from, just the same as it would be a win for you if you sold the stock for more than you paid it for. The greatest fool is the one who sells at a loss.

Originally posted by randolrs1
reply to post by IgnoranceIsntBlisss

 

All investment (read: non-consumption purchases) are speculative in nature, some just carry higher degrees of risk than others. The ones that are typically classified as speculative in MSM are assets with very high risk. However, even "purchasing" a checking account is speculative in nature; it is an asset, not money, and you're assuming that you'll be able to trade claims to that asset for something of value in the future.

I'm talking about this idea of 'betting' that a stock etc will go up or down. You know, "put options" and all that. The idea of playing the stock market without actually buying stocks.

reply to post by IgnoranceIsntBlisss


I understand that you want to understand how the fundamentals of options differ from those of their corresponding stock. In truth, they're no different. An asset is an asset is an asset. In this case they're both imaginary. For example, a put option is essentially a contract between two people, which is also an investment. An investor buys the put option under the assumption that the contract (right to sell share at a certain price) will be of value at a certain point in time.

The option, like a stock, is real value exchanged for an imaginary asset that's future value is uncertain. Like a previous poster said, speculation is outright betting. As an addendum, I would add that all investing is speculation at varying degrees of risk. Some assets carry high risk of devaluation (fiat currencies, options) while others are less risky (gold and silver), but still carry some risk solely because all value is in the mind of men.

Originally posted by randolrs1
reply to post by IgnoranceIsntBlisss

 

I understand that you want to understand how the fundamentals of options differ from those of their corresponding stock. In truth, they're no different. An asset is an asset is an asset. In this case they're both imaginary. For example, a put option is essentially a contract between two people, which is also an investment. An investor buys the put option under the assumption that the contract (right to sell share at a certain price) will be of value at a certain point in time.

The option, like a stock, is real value exchanged for an imaginary asset that's future value is uncertain. Like a previous poster said, speculation is outright betting. As an addendum, I would add that all investing is speculation at varying degrees of risk. Some assets carry high risk of devaluation (fiat currencies, options) while others are less risky (gold and silver), but still carry some risk solely because all value is in the mind of men.

Shares of stock are not imaginary. If you and your brother each own 50% of a business with assets such as equipment, inventory, land, building, client list, etc. is your share of the business imaginary? Of course not. It is a real share which represents ownership of a certian % of a companies assets. It works the same with publicly owned companies.

As far as the value of assets being imaginary I also beg to differ. A desirable house built on land is more valuable than the same land with no house built on it. How much more valuable? At least more valuable then the sum of costs and work it takes to build the house. Value may be uncertian but it is certianly not imaginary.

reply to post by randolrs1


How is it different than calling a bookie and placing a bet on the Superbowl?

The thing about stocks is they represent an actual fraction of ownership of a business. A business that (ideally) has infrastructure, property and other assets. No?

If not then its only getting harder to assume we need such a system.

The idea that we need a system where tycoons can collude and all continuously bet that oilprices will continue to skyrocket over the course of a year and then they do simply because these aholes made it happen... the idea that we need such a system is total insanity.

Furthermore, the oil speculation is just an out and obvious example. If they can go that far with it and not get busted then imagine how often this is done in a more subtle manner.

Originally posted by sligtlyskeptical
My point is that time is an equalizer. If a stock will be worth X based on their earnings, cash flows and future prospects, eventually the stock will find that price, regardless of what happens in between. The market manipulation is just noise and over long periods of time doesn't result in a much different return for a long term investor than they would have had without any manipulation.

I hate to be so blunt, but try telling that to the surviving masses who lived thru the Great Depression. And I'm sure there are plenty of similar "tell that to's" we could come up with.

Ok, so today, or rather 5 years ago, most wouldn't feel the effects of yesteryears Great Depression? Think of the countless trillions of dollars that have been squandered out of everyone via stock market system (alone). Just because work starts again and people can again afford to pay a mortgage doesn't mean there's a net gain. When they were screwed out of their assets and then didn't have work for years there is no net gain outside of Wall Street. I'm not even sure how you'd show the trend you're talking about. The line representing what; WHO is it that benefits above the "fuzz"?

I'm talking system as a whole here, not a handful of graphs that might illustrate your point.

From there the damage that the siphoned money causes when these same crooks use it to secure their interests politically. The dangers of offset money from the society go way beyond measurable long term profits across the stock system.

I wouldn't know where to begin to try and tabulate it, but if the world knew how much wealth has been plundered of the decades via the stock market alone, the world would be burning in a few days time. Especially when you add in the theft via fiat currency inflation and their ilk.

[edit on 1-6-2010 by IgnoranceIsntBlisss]