Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[scriver]

I've said it here before and I'm saying it again. If "God" hated gay marriage that much, Canada would've been ashes long ago, snow and all.

Believe it or not, the most common response I get to this argument is literally that God is simply biding his time, and will retaliate any day now. Annnnnyyyyyyy day now.....

What are you talking about? Their ice bears are breeding with their grizzlies, man! God is creating the strongest, most foul-smelling supersoldier carnivore the world has ever seen! And it will go forth and maul all thine ungodful teenager!

...And when Canada is gone, they'll wander down into... Washinton...

[shadenight123]

could someone explain to me, in a really really easy way, why wallstreet is needed? aka, why do we need to sell/buy "actions/bot/ccp/whatever they are called" ? wouldn't it be better to go without? why are they actually used? why can't we just go without the international "virtual" market?

[Bauglir]

My understanding is that it is about as necessary to the economy as the Internet, in that it facilitates certain types of commerce tremendously by providing a (theoretically) efficient way to invest money and creates entirely new commodities that tie right back into that. It also has going for it being a natural outgrowth of a capitalistic system and occupies a niche that is pretty much inevitably going to be filled in such a system.

I could be wrong on that analogy, because I don't understand stocks that well. Or, to be perfectly honest, the Internet. So, you may want to take that with a big heaping bowl of salt. But what I'm getting at is that it's an effective system that isn't inherently problematic, but which has absurdly high potential for abuse. I think.

[Truean]

Investment:

Corporations are all about spending other people's money (to try and make more money). Say you want to do something like start a business, do you have the money needed to start it up? Can you afford to buy or rent an office/warehouse, pay utility bills, purchase supplies from suppliers, pay employees and all the tons of legit costs of running a business? Probably not, or at least not all by yourself.

You need an investor(s). There are two ways to invest in something, credit (a loan) and equity (stocks). You know basically what a loan is. Stocks are an alternative that instead of an interest rate give a stake in the business for good or bad. Stocks are by definition a gamble on how well someone else can run a business and how things that aren't that person's fault will turn out for the company (part of it is luck and anyone who denies that is living in the proof right now: this economy). The thing about a loan is you get paid if the business fails, because you can sue, foreclosure, etc and you get paid before stockholders if there's anything left in bankruptcy. Stockholders are the last vulture at the corpse in bankruptcy at the bottom of the pecking order. They often lose it all if the company goes bust.

So, investing in a business through stocks is risky as hell. Having a stock market helps people manage those risks in concrete ways, a.) limiting exposure to only what you want, b.) having a bunch of other people to sell out to if you wanna bail on the investment.

a.) You can buy a single share of stock, a thousand or any amount. Maybe someone doesn't have the ability to or isn't willing to invest $10,000, but they might do $5,000, or $1000, or $100. "No one has a dollar, everyone has a quarter," means you can have a wider variety of smaller investors and bring them together to fund your business. Without a stock market, how're you gonna ask for lots of individual investors of $100 a pop? What if there are 1000 of these people out there and that could raise your business $100,000? See how that's an advantage.

b.) investors being able to sell out is pretty self explanatory. If you can sell the stock, then you can get your money back, or at least the money the stock is worth when you sell. If you couldn't sell the stock easily, then you'd be stuck with some stupid piece of paper giving you a very small ownership stake in a company you don't want that your money is tied up in. <---- This makes people less willing to invest in the first place (not being able to sell out).

As for the automation bots who buy/sell automatically when the shares reach a certain point, I disagree with that. They are supposed to be a way to limit risk. If the computer automatically sells out shares in X company when they go below Y amount, that means you theoretically won't loose Y amount and will at least keep that no matter what. The counterargument against me is, "wouldn't human traders do the same thing, "sell off their stocks at a certain point?" The answer is yes, but I maintain a human being can see things a machine can't. At least some of them.

[Virex]

However, machines can see things a human can't, because human stock traders have a tendency to chicken out in situations that don't warrant that kind of behavior.


Anyway, the reason the stock market is so problematic right now is because we've become reliant on it. For example, dropping stocks markets don't actually cost anyone anything The stocks are value, but not money. People already spent money on them, so a change of value has no further effect. However, a dropping stock market makes it harder for companies to attract money by giving out stocks, making it harder for companies in trouble to build sufficient capital to get through the hard times and it also makes it harder to start up new companies. However, in a world without a stock market, that wouldn't be possible in the first place so one could argue that a dropping stock market is still better than no stock market.

[shadenight123]

so removing completely the stock market from the private and public economy of a nation would actually reduce the risks of crashes of the economy, and keeping things stabler? while at a lower "economic" level, it would still keep them stabler.
for example, with stock markets, you can raise easily a 1000 milions dollars to fund a company. so you can have bigger returns if it works, but also bigger failures if it doesn't.
on the other hand, without stock markets you do not raise easily much money, and have minor returns if it works, but you also have minor failures if it doesn't.
Failures which might just be smaller enough not to risk the crysis of an entire nation.

[Virex]

We don't actually know if an economic level such at what we're used to could be sustained without a stock market. It has been an integral part of the world for over 300 years now. There's also a question how much stability is worth. Is it worth to slip down to the level of the Ukraine to lessen economic crashes? How about the economic power of Yemen?

[Nadaka]

The huge problem with robotic traders right now is that they can detect when someone else tries to make a trade, but before that trade can go through, the robot makes and rescinds a thousand trade offers to find the lowest possible purchase and highest possible sales price,and then it jumps into the middle of that normal trade and siphons off the difference. This means that the buyer and seller both get the worst possible deal that they were willing to accept and the guys running the robot get free money that would have otherwise been productively invested.

[shadenight123]

isn't slipping down, more like, attuning everyone?
if everyone reasons in milions then yes, one who reasons in thousands is weaker.
if everyone reasons in thousands, isn't that equilibrium?
if some reasons in hundreds and some in thousands, isn't it better than risking damage for milions or bilions?
furthermore, the market is a beast who has alway been able to adapt.
if you reduce the earnings it will have no choice but to choke down and collapse back down if it wishes to live.

[Truean]

However, machines can see things a human can't, because human stock traders have a tendency to chicken out in situations that don't warrant that kind of behavior.


Anyway, the reason the stock market is so problematic right now is because we've become reliant on it. For example, dropping stocks markets don't actually cost anyone anything The stocks are value, but not money. People already spent money on them, so a change of value has no further effect. However, a dropping stock market makes it harder for companies to attract money by giving out stocks, making it harder for companies in trouble to build sufficient capital to get through the hard times and it also makes it harder to start up new companies. However, in a world without a stock market, that wouldn't be possible in the first place so one could argue that a dropping stock market is still better than no stock market.

?

Uh, what? It isn't a sunk cost because you can get it back by selling the stock. The price of stock going down does matter. Granted, a portion of fluctuation is bullshit and based upon perception, but if the stock price goes down and you've invested, then it really does matter.... There absolutely is a "further effect."

Margin call

Even then, there's further effect beyond that, because other investors won't invest in the future if they see the stock market going down....

isn't slipping down, more like, attuning everyone?
if everyone reasons in milions then yes, one who reasons in thousands is weaker.
if everyone reasons in thousands, isn't that equilibrium?
if some reasons in hundreds and some in thousands, isn't it better than risking damage for milions or bilions?
furthermore, the market is a beast who has alway been able to adapt.
if you reduce the earnings it will have no choice but to choke down and collapse back down if it wishes to live.

It's complex, there are risks and damages. This is where regulation comes in. Unfortunately, the more conservative people have been demonizing regulation and destroying it. Regulation of financial institutions is not inherently good or evil, it's a tool. Properly applied, it protects us from crashes. Improperly applied, it causes them like Regulation Q did.

If you obliterate the stock market, you will have scarcity. People will not have enough food to eat, because all those companies that sell you food through the grocery store are publicly traded stocks. Fact of the matter is, it takes a lot of money to buy and maintain the machines, factories, food processing plants, transportation, etc that makes modern life possible.

That said, we don't need to destroy the stock market, we need to regulate it so it works again. It needs to provide goods and services for customers and profits for investors. It does not need to be predatory reaping profits at all costs, even to its own destruction.

We need regulation to force companies to hire an army of accountants to make sure Enron doesn't happen again. We need regulation to force companies to hire attorneys and public notaries so we don't have robosigners breaking laws systematically.

Bottom line, the stock market is needed to support modern life, but that needed thing has been corrupted to its core and needs massive reform. Killing the stock market entirely means having people who will not be able to eat and live. That is unfortunately the "choking down" you're talking about. That's how things would work out if we cut back.

[Andir]

Without a stock market, one could argue that the disparity between the rich and poor would be even greater.  (Only the ultra-rich could afford to run a company, and they'd be the only benefactor of the return.)  The stock market allows the poor to benefit from the success of the rich.

[Virex]

True, I should have said 'No immediate effect'. The value of the stocks goes down, so if you were to sell them at that exact moment you would have made a loss. But that loss is purely theoretical. You don't actually lose anything until you sell your stocks. Losses and gains due to any goods, no matter the liquidity, are quantized, they happen only at the moments of buying and selling.
This also has another profound implication, for anyone who loses due to selling their stock below the price they bought it for, there must be someone who gained money from selling the stock. This is because stocks start at 0, the company does not have to pay anything to give out stocks. So the company giving them out always gains from them (though they do have to pay dividend et cetera, but that's a delayed cost).
You are however right that in the case of a margin call, the loss is no longer purely theoretical and I didn't take that into account.

[Nadaka]

Without a stock market, one could argue that the disparity between the rich and poor would be even greater.  (Only the ultra-rich could afford to run a company, and they'd be the only benefactor of the return.)  The stock market allows the poor to benefit from the success of the rich.

I think it would be more accurate to say that the stock market allows the not quite rich to benefit from the success of the rich. I don't know any poor people that invest in the stock market.

[ChairmanPoo]

*shrug*

I think it's primary function is to facilitate capital for enterprises to screw around with. Arguably it works quite well in that regard.

I also think any pedestrian citizen who wants to "try his luck at the stock market" is pretty much just gambling, and more likely than not to end up on the losing side. The house always wins

[Virex]

There's no house on the stock market. For everyone that loses money there, someone else gains it (there are trading fees though, but those are supposed to be only a small part of the trading. Else you're trading too little at once)