There's a little more nuance to it, but I essentially agree.
Full disclosure: I've been investing in the stock market for about a year now outside of my company managed 401k.
Investing in the stock market feels ridiculous at best and almost criminal at worst. I've never screwed around with trying to short stocks (bullet point number 1 in your post) because it is gambling, and it's terribly risky, but lots of people do it. I've also never tried to day trade because it's also risky, but also because if you have less than an arbitrary amount of money in your brokerage account ($25,000 in the US anyway), you can only trade a stock you bought on the same day 3 times within a month. Try it any more than that and they'll lock your account out from trades.
The whole thing feels ridiculous for the reasons you listed though. Companies give out quarterly earnings reports, and if they don't beat their estimates the stock usually goes down. If it matches or only slightly exceeds the estimate, the stock goes down. If it obliterates estimates, the stock sometimes goes up. Rarely you get stocks like Tesla's that seem to go up without any basis in the current reality, but I stay away from them because that also feels like gambling since you never know if or when it will implode.
I won't touch high speed trading, because you pretty much covered it. This was a research topic in my department when I was in grad school, where people designed FPGA designs so they could perform the trades as fast as possible, and it got to the point that the speed of light was becoming the limiting factor. Fascinating stuff, but insane in its own manipulative ways.
Now, what feels criminal to me about it all, outside of the fact that it's kind of legalized gambling, also makes it feel like something of an entirely artificial construct and a sham. You get money out of it for having money, basically. I only invest in diversified index funds because I want to be able to accrue the increase in value over a few decades and hopefully retire early, and long term, it's a safe investment. You can pretty much count on the money you have increasing in real value by roughly 7% per year over the long term. You get money for doing nothing, but only if you have money in the first place. And the increase in value feels entirely artificial, since it's driven by market forces and oftentimes over stocks that have no direct value. A stock only has direct value if it pays a dividend, since you can extract money from it that way. If it doesn't pay a dividend, then it only has value because you can have some confidence that someone, one day, will want to buy it from you, maybe because it will pay a dividend one day if the company grows enough.
And, of course, taxation favors investors who have that kind of money. If you own a stock for over a year before you sell it, you only pay 15% taxes on the increase in value (unless you have a huge income already, at which point it's merely 25% instead). Most people who work are going to be paying close to double that on income. This feels incredibly wrong to me.
Raising money for companies through shared ownership seems like a sound idea in and of itself, and I'm sure even today it still serves a useful purpose to companies who take advantage of it. But the whole thing has mutated into a machine for making wealthy people more wealthy while encouraging dangerous business practices in an effort to sustain it. Profit margin is the only thing that matters when a company's leadership can be replaced by share holders who don't think the company is making enough money and paying it out in dividends.
Author
Topic: AmeriPol thread (Read 4452625 times)