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The Stock Exchange? Why?

 
 
Reply Fri 15 Oct, 2021 11:48 pm
Is it really necessary?

Isn't the stock exchange just a bunch of speculation that inflates prices of goods and allows the wealthy to skim revenue from commodities?

It seems like a scam where people with money garner more money out of what seems like thin air.

In reality it is the consumer that pays in the end. It is a scheme to shift wealth around and profit in the process. Consolidate power and obliterate a fair playing field. Is this not an unamerican institution?

A novel idea might be companies who manage and maintain their own equity.

Can't the stock exchange also be equated with "socialism"? The rich inflating the value of things so they can all get more wealthy off of being in the middle between the buyers and the sellers?

Please enlighten me on why the stock exchange is a necessary thing?

It seems to me that if there were no stock exchange there would be more stability in the corporate world and less flagrant "corruption".

The stock exchange enables winners to lose and losers to win.

Correct me if I am wrong...

It seems our world is dictated by currency gamblers and wealth junkie addicts.
 
izzythepush
 
  1  
Reply Sat 16 Oct, 2021 03:05 am
@TheCobbler,
The Dutch stock exchange enabled William of Orange to finance a war with Louis XIV.

The Dutch were successful despite being much smaller than the French because money invested in the stockmarket was relatively secure.

Louis XIV was an absolute monarch who had a tendency to forgive his debts and write them off with no consequences.

If you were a Venetian banker where would you invest your money, France or Holland?
0 Replies
 
engineer
 
  3  
Reply Sat 16 Oct, 2021 09:37 am
@TheCobbler,
TheCobbler wrote:

Isn't the stock exchange just a bunch of speculation that inflates prices of goods and allows the wealthy to skim revenue from commodities?

No. The stock market is a place for companies to raise capital which they can pour back into their businesses to drive growth. Basically if a business wants to expand, they need money and they can get money from borrowing or from issuing stock. Most businesses can no more build a new manufacturing plant by spending some savings than the typical American can buy a new house by dipping into savings. They have the idea, they have the business case, but they need the capital and turning to the stock market is one way of doing that. This allows them to bring new products to market or start mass producing existing ones which typically improves efficiency, lowers prices and benefits society. Does it typically benefit the wealthy? Sure, but we want the wealthy to put their money to use instead of sitting on it. Having a heap of gold and cash in a vault Scrooge McDuck style is not helpful to anyone. Allowing the rich to take some ownership in growing companies in return for use of their cash is tremendously helpful.
TheCobbler
 
  0  
Reply Sat 16 Oct, 2021 11:32 am
@engineer,
I gave your post a like because it seems to exemplify the best case scenario of the stock market.

But what about the most common and worst case scenario?

Speculation where a stock is passed around inflated merely for the purpose of the stock holders gaining revenue from it. Example: oil speculation.

There is no R&D, there is no expansion, there is only wealth speculation.

Your rosy picture of the stock market seems like the exception and not the norm or rule.

And why have banks if their type of lending is not effective for corporations to grow?

And if there is merely speculation in many cases then this revenue is not trickling down to the poor it is merely accumulating for the rich? The rich simply get richer. Money is not passed down.

Not only do the rich get richer but they also gain control of these companies assets and the revenue they earn.

It seems like a win situation and once again it is the consumers who pay in the end. Ethics are required for these companies to pass the savings on down to the consumer and that is not always the case.

The revenues are more likely to be passed to the CEOs and cronies of the rich. (another form of socialism/communism)

(just playing the devil's advocate)
Linkat
 
  2  
Reply Sat 16 Oct, 2021 11:49 am
@TheCobbler,
Actually the stock market can be quite helpful for the average Joe ... One way an average Joe is via mutual funds ...this allows someone in many cases to invest as low as $50 a month in a diverse portfolio.

Many workers are invested at least a portion in the stock market this way for their retirement via 401k or IRAs....many pensions are also invested in part this way, insurance, 529 plans to pay for college and simply just to increase your wealth.

With a mutual fund you will have your money pooled with many other shareholders enabling you to lower your risk ..you don't need much I started years ago with just $50 a month.


TheCobbler
 
  0  
Reply Sat 16 Oct, 2021 12:02 pm
@Linkat,
I also gave your post a like Linkat. I am here to understand and it is nice to have other views than my own...

This is where people lose their pensions due to corrupt people at the top skimming and falsifying the value of companies and selling their risk through insider info and then bailouts are needed and once again the consumer pays for that too. Does the average Joe really win in the end or is it an elusive dangling carrot?

The rich pay off republican senators to look the other way while they set up the consumer with risky debt to over and over again take the fall so the rich can avoid this risk. The rich lend only to capitalize on this risk.

Much like the fake worthless insurance sold by republicans. Trump university and fake pensions built upon a house of cards while the ace and other face cards are residing tax free in some foreign tax haven.
Linkat
 
  2  
Reply Sat 16 Oct, 2021 06:50 pm
@TheCobbler,
What has corrupt people skimming off a pension have to do with the stock market? That is on whoever you entrusted to head up your pension it has nothing to do with the stock market. That is akin to you having an accountant running your books and they skim off your earnings.

Also the stock market, mutual funds and other financial services companies are now the most highly regulated agencies. Yes lots if people do get tempted and cheat it steal but most get caught and the big company end up paying huge penalties for this.

I work in the industry and went from being able to entertain clients and so firth to having anything over a small amount of money to be approved. We could not even take out a client with his kid to a red Sox game ... You won't believe the level of checks and balances in the industry.

At one time yes I could agree but the way things are regulated now.

I have over a million saved for retirement directly related to investing in my 401k and its growth thanks to the stock market. My measly social security if it is there when I retire would not be able to support me.

I honestly think you just have little knowledge about the stock market and how it actually helps people of all income levels. What you are spouting about politics has nothing to do with it and quite honestly makes no sense in regards to IRA, 491ks and the like.

Sorry but what you are saying makes little sense to the benefits of the stock market which is highly regulated and more to do with loopholes in taxes which the stock market is not involved in. Again I don't .even understand how risky debt has to do with the stock market since stock is about equity not debt....that would be the bond market.

And a big part of risky debt came from opening up mortgages and convincing people they could afford this when they could not. Again as a result much regulation has side been put in place to avoid this risky debt.

What us this insurance you are talking about? Honestly it sounds like you are sour on certain things...understand my so...but without really knowing any facts.
TheCobbler
 
  0  
Reply Sun 17 Oct, 2021 02:38 pm
@Linkat,
The Stock Market Is an Engine of Civic Destruction
The chief mechanism of wealth accumulation relentlessly and unfailingly pits the American people against their elected representatives.

A weird thing happened over the last few months: The economy imploded, with 40 million Americans unemployed (and as many as 27 million lost their health insurance). Food bank lines stretch for miles. Yet the stock market rebounded after its March dip. Even as recent protests and the violent response by police roil the nation, as businesses get their windows smashed and their supplies looted, the market is up, up, up. This is happening in large part because the Federal Reserve has acted to prop up industries that should have gone bankrupt, and because money is fake. All of this is fake. Have you ever really looked at your hands, too?

At the same time as all of this was happening, another scandal emerged to illuminate the widening gulf between ordinary Americans and the elites. Various members of Congress were revealed to have sold off stock right after attending closed-door briefings on the coronavirus pandemic, months before any action was taken to protect the public. Senator Kelly Loeffler, one of the richest members of Congress, sold millions of dollars’ worth of stock and purchased stock in a teleconferencing company. Senator Richard Burr sold off between $628,000 and $1.72 million, including stocks in hotels that would soon be empty. The Campaign Legal Center identified hundreds more transactions, from 12 senators and 37 representatives, between February 2 and April 8. At the end of last month, Representative Phil Roe of Tennessee was revealed to have bought stocks in Zoom and sold stocks in cruise lines.

The fake buoyancy of the stock market and the lucrative trades made by these members of Congress are connected. The fact that we have a Congress full of rich people—over half are millionaires—is a big enough problem, even when they aren’t using that wealth to profit from information that the public doesn’t have. Even if members of Congress were forced to stash all of their assets in blind trusts, a glaring problem would remain: Their personal wealth would still be tied to this rotten institution, the stock market.

Last month, The American Prospect’s David Dayen detailed how the Fed’s corporate bailout in March inflated the stock market—even if only temporarily—before it had spent any of the money Congress appropriated. The Cares Act appropriated $454 billion to use as an “equity stake” for the Federal Reserve’s loans, but since that money could be leveraged at a 10-to-1 ratio, that meant a $4.5 trillion “money cannon”—aimed mostly at the large corporations that had the expertise to tap it.

The stock market has, of course, never been wrong about the prospect of endless returns.
Even before it lit the fuse on that cannon, equity markets “ballooned,” anticipating the huge cushion of Fed cash. Boeing, for example, said it was “rejecting” a corporate bailout—but it issued $25 billion in bonds, which Dayen said was “entirely made possible by the Fed’s implicit guarantee of corporate bond markets.” Carnival Cruises, a company that by all measures of human happiness and worth should not exist, took an understandably huge hit from the coronavirus pandemic. Thanks to the Fed’s actions, Dayen wrote, Carnival was able to secure $5.75 billion in loans in March, at a far lower rate than the hedge fund loan sharks it had been considering earlier that month. The Fed saved it hundreds of millions of dollars, and its market cap grew by $3.5 billion; a nice cushion for the likely future waves of coronavirus. All this was thanks to, according to an account in The Wall Street Journal, investors’ “fear of missing out” on the good deal. The FOMO economy thrives. As one Wall Street analyst told CNBC this week: “We have a giant Fed cycle that looks like it’s never going to stop.” The stock market has, of course, never been wrong about the prospect of endless returns.

As Dayen noted, Congress did not have to cede all its power in structuring this rescue to the Fed, but “rescuing investors—rich people like members of Congress and the donors they listen to—makes it easier for Congress to keep ignoring the needs of everyone else.” It is clearly a problem that members of Congress who hold hundreds of thousands or millions of dollars in stocks—who themselves would find their portfolios kept afloat by their own actions—are the ones tasked with deciding what to do with the stock market. In this way, the handful of Republicans who took their confidential briefings on the coronavirus situation and spun that knowledge into gold are mostly a different type of corrupt from the rest.

This does not detract from the sordid disgrace of this particular scandal. If these members did indeed profit from the knowledge of a coming pandemic that has so far killed at least 100,000 Americans, they should be in prison; this is the sort of thing that makes one wistful for angry mobs with pitchforks or perhaps putting them in the medieval stocks, for a more fitting punishment. But the more intractable problem is that members of Congress are so rich in the first place, and that this very wealth warps their incentives when it comes to regulating Wall Street—no matter how it’s invested, or how detached they are from that process.

As The Intercept’s Jon Schwarz pointed out in March, the stock market pushes us “psychologically to the right … shredding our instincts for social solidarity.” It gives even regular, middle-class Americans a financial incentive—a literal investment—in things that are otherwise totally opposed to their interests, encouraging fossil fuel companies to continue our death march towards climate change, and health insurance companies to exert an iron grip on Americans’ throats. If your retirement income is tied up in United Health stock, you would stand to lose financially if the government took over providing health insurance to everyone or even if it instituted a public option that eroded some of the company’s market share. This is bad enough if you are simply some Boomer growing more conservative as your wealth grows; it is far worse if that same dynamic applies to members of Congress, who are tasked with making decisions to benefit all of us, not just those with big portfolios.

In 2014, MapLight reported that around half of Congress owned individual stocks, but many more have money in investment funds, meaning their wealth is still tied to the overall health of the stock market. Outlets frequently report on conflicts of interest between members’ individual stocks and their duties: investments in pharmaceutical and biotech companies, for example, or fossil fuels. There is no obvious reason why this sort of individual trading should be allowed at all, as many pointed out in the wake of the recent scandals. But it’s not great, either, if members of Congress stand to profit from episodes like the market’s recent fart-huffing explosion, enabled by the bailout they approved. In contrast to members of Congress, about half of Americans don’t own any stock at all. Only 14 percent of households own stock directly; the rest have their money in investment vehicles like 401(k)s. And the top one percent of Americans own over 40 percent of the stock, while the bottom 60 percent own just 1.8 percent.


The evidence shows that for most people, picking individual stocks is a mug’s game, and that you’re much better off just sticking your money in an index fund and letting it grow with the market. Yet there’s also research showing that members of Congress have been able to beat the market, implying they really did trade on insider information (though the study also found that the implementation of the STOCK Act eradicated this advantage). The members of Congress implicated in the Great Coronavirus Sell-Off Scandal have largely defended themselves by saying they don’t personally manage their stocks. The office of Representative Phil Roe told The Hill that he “does not manage his personal stock investments and uses a third-party investment manager to handle personal stock purchases and sales.”

How can members of Congress make so much money from an activity they claim they aren’t involved in at all?
How can members of Congress make so much money from an activity they claim they aren’t involved in at all? Easily, because the stock market is essentially just One Weird Trick for the already wealthy to increase their wealth. If you have $1 million already, you can just stick that sucker in a fund and watch the pot grow and grow, without doing anything. You don’t have to have any skill or labor to do so; you just have to already have cash. You pay a wealth manager, or just a computer, to grow your wealth for you. It is the Rosebud cheat in the Sims, but in real life, with actual money that can buy you real furniture.

This would be one thing if the success of the stock market was at all tied to the success of the American people—if the stock market went up, and members of Congress profited, when good jobs were created, or workers were paid more, or more people had health insurance—but the opposite is true. It goes up when things get worse, as evidenced by its continuous growth during a period of Total **** for most Americans. It goes up when Aetna finds a new way to kick people off their health insurance, or when Eli Lilly prices a new drug at more than the average American earns in a year, or when Exxon finds a big new gloop of oil to turn into atmosphere-choking gas. Members of Congress know this. They know that corporations’ profits are tied to bad, anti-worker, anti-human decisions by their boards. You can’t really expect the Republican Party to care much about that—that’s sort of its whole brand—but many, if not most, Democrats are in the same situation. Virginia senator and Democrat Mark Warner is the richest member of Congress.

There is no easy answer to this problem. Banning members of Congress from having stocks or index funds would mean they’d have to find somewhere for their money. Are they allowed 401(k)s? (Ideally, in this happier world, we would find a less horrendous way to handle retirement funds first.) Perhaps we could institute a wealth cap on members of Congress, which would work to improve their ability to represent the poor, too. We could invent a new kind of government bond, just for members of Congress or other public servants. We could permit this trading activity but nationalize the individual members’ profits and put those funds toward the common good. We could just abolish the stock market. But there has to be a better way than stacking our legislature with rich people who get richer the more they screw over the rest of us.
Libby Watson @libbycwatson

https://newrepublic.com/article/157991/stock-market-congress-coronavirus
Linkat
 
  2  
Reply Sun 17 Oct, 2021 04:53 pm
@TheCobbler,
Do you understand that you can search anywhere on the internet and get whatever you want to support your viewpoint? You are grabbing an article from a non factual source but rather a source that is known as given an opinion not facts.
TheCobbler
 
  0  
Reply Sun 17 Oct, 2021 05:25 pm
@Linkat,
It does not fit your viewpoint.

Perhaps, your viewpoint was paid for by those who are supporting the status quo? I tend to believe that is the case.

Take off the rose colored glasses.

Non factual source? They used many examples of actual events.

It seems you want to believe what you want regardless of the facts.
They also quoted statistics and gave logical reasons why those statistics showed such disparities.

But of course, the rich 1% would never take advantage of the 99%... lol

How about Wikipedia?

Securities fraud
https://en.wikipedia.org/wiki/Securities_fraud

Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.

Securities fraud can also include outright theft from investors (embezzlement by stockbrokers), stock manipulation, misstatements on a public company's financial reports, and lying to corporate auditors. The term encompasses a wide range of other actions, including insider trading, front running and other illegal acts on the trading floor of a stock or commodity exchange.
Linkat
 
  1  
Reply Sun 17 Oct, 2021 10:01 pm
@TheCobbler,
There is fraud in every industry..I never said there was not fraud in the stock market quite the opposite. What I said as a result of this fraud the investment market is one of the most regulated of any industry. It still goes on but there are high penalties and most get caught as a result.

Can you tell me one industry or any part of the world that is free of any fraud?

The article you refer me to is from soapbox. Just the meaning of soapbox is that you get on a soapbox and spout whatever nonsense you want.

You are actually doing what you accuse me but the opposite.

You say I am speaking through rose color glasses yet I actually speak there was and is fraud...just that as a result the market is highly regulated.

But you do the opposite you vilify to an extreme an industry of which you personally acknowledge you have limited knowledge of and base your negatively on one article from a source that is known to be opinionated not factional.

And its great you can find the definition of securities fraud which any reasonable person understands....it exists but so does malpractice in the medical industry but yet we do not do anyway with doctors, we have cars that are lemons that are sold but yet we still have car salesmen, we have plumbers, electricians and carpenters that do shoddy work but yet we still allow this work to be done.

There are cheats and scammers in any industry but that does not mean you close down an entire useful industry.
0 Replies
 
engineer
 
  2  
Reply Mon 18 Oct, 2021 08:42 am
@TheCobbler,
TheCobbler wrote:

I gave your post a like because it seems to exemplify the best case scenario of the stock market.

Thank you.
TheCobbler wrote:

But what about the most common and worst case scenario?

Speculation where a stock is passed around inflated merely for the purpose of the stock holders gaining revenue from it. Example: oil speculation.

There is no R&D, there is no expansion, there is only wealth speculation.

Your rosy picture of the stock market seems like the exception and not the norm or rule.

Actually my case is the most common situation. The vast majority of the stock market is investment by pensions and long term investors. These investments power our economy by making capital available. That doesn't mean that there isn't a layer of speculative buying and selling on top of that. There are day traders out there trying to exploit inefficiencies in the market, but these people are not preying on the everyday folk or even corporations, they are playing off each other. A company is responsive to its stockholders but not on a day to day basis. Once a company issues stock and gets the proceeds, they are not involved in the day to day fluctuations in the stock price. There is securities fraud, but it is not any more prevalent than fraud in other areas.
TheCobbler wrote:

And why have banks if their type of lending is not effective for corporations to grow?

Banks provide money for low risk activities. Because they are lending out their depositors' money, they insist on collateral and low risk. Companies often don't offer collateral when they go to the stock market, they offer potential, an idea, an opportunity. There is more risk involved than a bank is willing to take on so they appeal to investors who are willing to take on the risk for potential gain. That said, banks are often involved in helping companies access the stock market.
TheCobbler wrote:

And if there is merely speculation in many cases then this revenue is not trickling down to the poor it is merely accumulating for the rich? The rich simply get richer. Money is not passed down.

Speculation doesn't do much but keep the market efficient, but the economic growth driven by the stock market is being passed down. The plant that a company just built is paying salaries, buying raw materials from local businesses, pumping taxes into the local economy. Yes, the rich are reaping the benefit of allowing their money to be used and are in a position to take more risk with their money to capture better returns, but in this case it really is a win-win situation. The company uses the stock money to create new wealth, some of that wealth goes to the people to provided the money but some going to the workers and community and some typically goes back into the company for R&D and new opportunities.
TheCobbler wrote:

Not only do the rich get richer but they also gain control of these companies assets and the revenue they earn.

Actually, this is rarely the case. The companies are much bigger than their individual shareholders. That is often a problem and would be an interesting separate thread but unless rich people own a business (or a majority stake in the company which is like owning a business), they aren't pulling the levers and controlling the wealth.
TheCobbler wrote:

It seems like a win situation and once again it is the consumers who pay in the end. Ethics are required for these companies to pass the savings on down to the consumer and that is not always the case.

But it is often the case. Amazon doesn't succeed by jacking up prices, they succeed by reducing them. I know the presence of Amazon has saved me thousands of dollars by allowing me to compare costs over a wide range of vendors but Amazon lost money at first. Money from the stock market kept it going until it could achieve critical mass. The big telcos have spent huge sums putting in fiber optics backbones and increasing their carrying capacity with the result that long distance phone calls are now close to free and you can access the Internet driving in the middle of nowhere. When I was growing up, calling my grandmother in another state cost more than a dollar a minute. Now that would be included in my plan and I could call internationally for ten cents a minute.
0 Replies
 
TheCobbler
 
  0  
Reply Fri 22 Oct, 2021 10:34 pm
https://scontent-lga3-1.xx.fbcdn.net/v/t39.30808-6/248223686_4418375004945057_3722860630987280484_n.jpg?_nc_cat=108&_nc_rgb565=1&ccb=1-5&_nc_sid=8bfeb9&_nc_ohc=Hjvvyn0zFvgAX_WtiYs&_nc_ht=scontent-lga3-1.xx&oh=a485706c90e04904b366f4344dc634b2&oe=61785A2D
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