27 replies to this topic

[iargue]

Hey, iargue. COMPANIES DO NOT EARN MONEY WHEN YOU PURCHASE AND RESELL THE STOCK. THE ONLY TIME THEY MAKE THE MONEY IS WHEN THEY FIRST OFFER IT FOR SALE. THE COMPANIES GAIN NOTHING FROM HAVING A HIGHER OR LOWER STOCK THEREAFTER, EXCEPT FOR OWNERSHIP INTEREST. Therefore, wealthy individuals buying a stock would not change jack shit. The whole point of (A) was to show that the fact people stopped spending money was what got the gears moving towards a depression. A company does not die because its stock price is 0. It never has, and it never will. A stock price of 0 is a result of a poorly managed company which produces negative profits (cash drains) and files for bankruptcy. Do you think Google would die out if it went to a stock price of 0 tomorrow? No, Google would just buy back all its stock, get 100% ownership, and make more money than ever because it is a valuable company.

The stock market crashed, and the economy went to shit. You still choose to believe that the stock market plays no role in this. Explain to me why the stock market always falls. All the stock is is people selling and buying and trying to make a quick buck. So why is it that the stock market always drops before the economy takes the hit? The stock market only drops whenever people start selling the stock. So if an economy depression hit, and no one sold, then everything would be fine according to the stock market. But the downward trend on the stock market always starts before the economic failure falls. DOW started falling before mass layoffs.

Everyone turns the blind eye to this, yet everyone using the stock market to measure the strength of an economy. So if everyone sees DOW falling. and they stop spending, which causes the economic collapse.... Its all the stock markets fault. Or better yet, its the Economics fault for screaming about a dieing market.

This entire discussion you have this twisted idea that stocks determine a companies fate, when in reality, a stock is a reflection of expected potential of a company. The expected potential undergoes corrections when the stock price adjusts closer to the actual value of the company.

Secondly, yes it can be argued that it is the governments fault. Governments determine what kind of economy operates within their borders (mixed, market, or command) -- market/mixed is what we are discussing. If a government chooses to run a market or mixed economy, it is there responsibility to make sure it succeeds. It can be argued that a market economy should have no government interference, but unfortunately for you, America is a mixed economy. (Are you a commie?)

Also, yes, people have fears, but how can you possibly use consumer sentiment (thats the term you're trying to use, by the way) to justify that stock markets are the reasons economies fail? With that kind of logic I can argue that the reason economies fail is based on a human factor, therefore if there were no human factor, they would succeed.

Laissez-faire.


(And I do apologize if it seems that I have insulted or attacked you. I get overworked sometimes thanks to outside events. I have no hard feelings towards you, and I understand you're point of view)

The stock market originally existed to raise money for capital investment. The East and West India Trading Companies financed massive construction of seaworthy vessels - which isn't cheap. But the return was enormous on trading missions. The same principle applies to IPOs - Initial Public Offerings. Basically the company offers a share of profits or ownership in return for an investment. Keep that in mind before you diss the entire market principle. No company larger than a mom and pop store would exist without the market.

And? The ideal of investing in companies to help them grow, and make money on returns. Thats not what the stock market does anymore....Its gone far worse then that.

Government subsidizing corporations to create non-essential jobs is just stupid. Creating jobs isn't necessary if innovation drives growth.
Do you even know what venture capital is? Not all stock investments are people trying to ride from bottom to top. Most people are content to invest in a strong company with a solid product and revenue flow. Day trading is a market action. Price reflects all the current knowledge about a company's worth. Of course some people don't actually do the research bit, and just follow the market trend. So yeah, there are always late sellers, late buyers - it's how it goes.

This is the entire problem. All of it. People just sell out thousands of stocks, and drop the price, and then buy up thousands. This artificially raises the price, and allows them to make money, and when they pull out the prices take a big hit, people freak out, and sell. The stock price crashes, and everything follows from there. Its a simple cycle and it will continue to happen. How do we judge the strength of our economy? On the stock market. If the stock market goes bad, then people freak out and stop spending money. This kills the economy. Welcome to reality.

No. The market is only a reflection of people's actions, and therefore cannot have caused the Great Depression. It has no intrinsic decision making apparatus - it isn't sentient. But price reflects what thousands upon thousands of sentient beings think about any given company. The problem in 1929 was that price reflected wild expectations of growth.

It did cause it though. Just because its not a person doesn't mean it cant have an effect. When people see the prices go down, they freak out and stop spending, when they stop spending, the economy dies. Pretty simple math there. The stock market is to blame.

You're a fool if you think we can't justify 3 trillion over the next ten years for our domestic wellbeing. Do you know how much we spend on foreign wars? Aide monies to Africa? Or Asia? Or South America? 3 trillion dollars is nothing to the medical companies. You need your priorities straightened out.

That was a counter to the original post, saying that the government has stopped spending. Which is a lie. We are spending more. And if this was for our wellbeing, I would be fine with it. But its not. This is of course, a debate for another time. If you want to go into that. Make a topic

I read The Economist. I think you should too.

Also, loose credit from huge banking firms is also responsible for housing busts. Fucking idiots.

Actually it's harder than rocket science. At least in physics you can write out the equations. Such-and-such thrust applied over another-number time will give you an escape velocity of something-else. Economics is far from an exact science. That's why it's interesting - it's all a bunch of choice theory. You can't dumb it down to a basic if-then statement. It isn't entirely logical

And? This is the problem I have. People get called experts in a field were all they do is guess. People just guess, and guess, and guess. and its all they can do. They actually are part of the cause of the economic problems. When they tell people, the economy is bad. People stop spending. Last year, time and time again I heard people repeat "The economy is so bad" while looking at sales numbers that were higher then last year. Ty for fucking the economy people .

How long are we going to let people get money for making guess's? How long are we going to just give people money to tell us a random guess that they make, or to even bankrupt people?

[redlion]

The stock market crashed, and the economy went to shit. You still choose to believe that the stock market plays no role in this. Explain to me why the stock market always falls. All the stock is is people selling and buying and trying to make a quick buck. So why is it that the stock market always drops before the economy takes the hit? The stock market only drops whenever people start selling the stock. So if an economy depression hit, and no one sold, then everything would be fine according to the stock market. But the downward trend on the stock market always starts before the economic failure falls. DOW started falling before mass layoffs.

Of course the market always falls. Have you done euclidean geometry yet? Without down, you cannot define up. There has to be a negative price movement for positive movement to be possible. The economy drops after the market because the market (or more correctly, price) is the single fastest indicator to react to news. Layoffs take time. Price can rise or fall in seconds. You think because it's early it should be punished? Price is the most efficient indicator we could ever have of the strength of the economy, a stock, a market, or a commodity.

And? The ideal of investing in companies to help them grow, and make money on returns. Thats not what the stock market does anymore....Its gone far worse then that.

Yeah... saying 'And?' is not a rebuttal. You use this twice as though your point is self evident. Kindly don't assume you're right. This isn't a court of law, you aren't innocently right until proven guilty of wrongness.

And there are many reasons to invest in a company. There is also a reason to short sell, if you care to go into it. And the idea of investing is not really about dividends anymore. It used to be (say, in 1929) that people invested in Utilities, because utilities were the only companies that could guarantee revenue, and could thus guarantee a dividend. Nowadays, most companies don't even bother with dividends, unless they're really flush. Most traders now make money on price change alone. Meaning they buy at 60, wait until the price hits a price objective (say, 75) and then sell. Nothing wrong with that, it's just a different style of investing. It takes all types to be a market.

This is the entire problem. All of it. People just sell out thousands of stocks, and drop the price, and then buy up thousands. This artificially raises the price, and allows them to make money, and when they pull out the prices take a big hit, people freak out, and sell. The stock price crashes, and everything follows from there. Its a simple cycle and it will continue to happen. How do we judge the strength of our economy? On the stock market. If the stock market goes bad, then people freak out and stop spending money. This kills the economy. Welcome to reality.

You are laboring under a misapprehension. You overestimate the impact that individual investors have on the market. As with everything human, people group together to buy stocks, because great minds think alike. Plus, the sheer volume of shares that are involved makes it impossible for any one agent to attack the system by selling.

Still, you are correct that people manipulate price. It isn't at the individual level, but rather at the 'trading house' level, what we call investment firms. Fund managers will make a call, and if other fund managers like the reasoning (reasearch, some earnings disclosure, or even a hunch) they'll follow the trend into ad nauseum. But the sheer number of investment houses makes collusion unlikely, difficult, and just plain useless. Say any three firms together decided to dump GE. Just totally destroy the price. Well that would never happen, because there are always buyers for GE. There will always be someone there to buoy the price back up. At some point, the price of the stock, however low, makes it worth it for someone to buy it.

We also don't judge our economy based on the stock market. But you need to understand that an economy is simply output and consumption. Measure it in dollars or doughnuts, someone still has to have the most.

That was a counter to the original post, saying that the government has stopped spending. Which is a lie. We are spending more. And if this was for our wellbeing, I would be fine with it. But its not. This is of course, a debate for another time. If you want to go into that. Make a topic

Don't get cute. If you want to bring up some shit, be prepared to defend it.

And? This is the problem I have. People get called experts in a field were all they do is guess. People just guess, and guess, and guess. and its all they can do. They actually are part of the cause of the economic problems. When they tell people, the economy is bad. People stop spending. Last year, time and time again I heard people repeat "The economy is so bad" while looking at sales numbers that were higher then last year. Ty for fucking the economy people .

How long are we going to let people get money for making guess's? How long are we going to just give people money to tell us a random guess that they make, or to even bankrupt people?

Well, to be fair, they're educated guesses. And don't call it a field. Finance is so complicated, there are a hundred career paths within the financial district, and to say everyone guesses is just ignorant.

Again you use 'and?' as though I didn't prove my point. My point doesn't need any more words to be a complete thought. If you don't get it, ask a real question. The equivalent of 'so what?' is about as intellectually challenging as a two year old babbling.

Anyway, if anyone guesses, it's technical analysts. But we're wizards. Dwarfs and hobbits aren't supposed to understand our magic, they're just supposed to accept it, defend it, and profit from it when required or desired. So there

[pyke]

The topic has been closed at ChemD's request. Shoot a pm if you want it reopened!