What is the purpous of the stock market?
Currently, when you invest you are placing a bet on the success of a company. If the company you bet on does well you win, if the company you bet on
doesn't do well you lose.
On one hand you have a companies stock market value. This is the value based around how many people have placed a bet on how well the company will do.
On the other hand you have the actual value of the company. It is the fluctuations of a companies actual value that make the betting system work. If a
company initally projected to be good suddenly has an unforseen issue, say like a production line breaking down, it drastically changes the actual
value of the company. It is because of the bet placed on the now unsuccessful company that causes the investor to loose their bet. This is how the
system should work.
The problem is the stock market is creating an illusion of what a company is worth based on opinion. A companies actual value could sometimes be far
greater. An issue can arise if the mindset of the investors is that the company would not be successful, and the simple act of selling off their
shares can sometimes be all it takes to drive a potentially successful company under.
"But that's the way the system was built, how is that an issue?" You might ask.
It is an issue because it is this very structure our entire world economy is built upon. We've seen the effects of people loosing their faith in the
system recently with the last market crash.
A market crash occurs when the majority of investors feel the market is too volitile to continue investing, so they pull their money out. As more and
more investors pull out their money, the further down the drain the market goes until, as we saw in the last few years, the system completely crashes.
It then takes years for investors to regain faith in the system, which is the state of depression we find the world in today.
The idea of the stockmarket is so deeply rooted in modern society, that few even contemplate an existance with out. Some who support the system will
say it is a neccessary entity for investors to feel comfortable to invest in certain companies because it forces the publicly traded companies to have
transparency on company profits and new endevors. This allegidly makes it easier for investors to predict how the company might do in the current
market. This however is a farce. If an investor invests in a privately traded company, the investor still has every right to ask that the same
tranparency be given, to be then negotiated in a written contract before providing any form of funding.
The only other reason we are given for its purpose is that "it is the most important source for companies to raise money" because is allows
publically traded companies to raise capital very quickly by selling it's stock shares. This is the very root of the problem. Put simply, the stock
market is important because it allows investors and companies to make more profit quicker.
In other words, its all about the money! This is why the stockmarket is an illusion. It is creating wealth for the investors and companies based
purely off speculation. Very seldom is it actually based off business success. How many small businesses have closed in the last few years? How many
shopping plazas lay vacant as a brand new wallie world or mcbuger-in-a-box is being built across the street? Its a rigged system, and as soon as too
much competition starts showing against big business we will more than likely see it crash all over again. It doesn't hurt the big businesses any,
who do you think is pulling out the money to cause the crash to begin with. After the small businesses go under, they swoop in and buy up the
competition at pennies on the dollar. We just watched it happened it with most of the banks. Ask anyone in the business how many banks there were
before the crash compaired to now. Go even further and look up how many of them were bought up by the very banks that were bailed out! This proves its
all an illusion, and nothing but a rigged system.
Is it a neccessary system? Not in the least! Of course we will be told it is because the largest investors controlling the biggest cash flow stem to
loose the most if its done away with.
As was stated before however, its all an illusion. All it would take to bring the system back into the average joe's favor is one of two things.
1. Don't publically trade your company. Sure it will be a little more difficult to start, but private investors are still out there. The more
businesses to go this route, the easier it will get.
2. At the very least, buy stocks only in the companies you truely support. Sure there may be more profit initially by investing in the latest media
craze, but that only furthers our dependency on the illusion. Plus, would you not sleep better knowing your money is with a business you support,
rather than some unknown fly by night that just happened to have cheap shares?
In the end, it is us that continue to support the illusion. It is by our own choice that we allow such a rigged system to continue to exist. We have
very realistic means of breaking our dependency on this system, so when the next market crash occurs we will have only ourselves to blame.