3 ms·

I think this is the way capital markets were originally supposed to work; matching companies in need of growth capital with investors seeking to earn a risk-adj

by lowkey 16y ago

I think this is the way capital markets were originally supposed to work; matching companies in need of growth capital with investors seeking to earn a risk-adjusted return on their long-term savings. Unfortunately, the financial markets have morphed over time such that now, traders trade for the sake of trading. Instead of our work being our wealth, trading securities somehow became an end unto itself. What's worse is that there really are two markets today: one for the individual retail investor and a second for institutional investors. Retail investors are taught to 'invest for the long-term', and 'not try to time the market' meanwhile hedge-funds and high-frequency traders play a different game with different rules. Their profits come primarily at the expense of retail investors and in many cases investment banks 'front-run' their own clients taking advantage of their customers in a way that would be illegal in any other industry. John Stewart explains it better than I ever could in his face to face indictment of Jim Cramer of CNBC: http://ccinsider.comedycentral.com/2009/03/13/jon-stewart-and-jim-cramer-the-extended-daily-show-interview/ http://ccinsider.comedycentral.com/2009/03/13/jon-stewart-an... (Link for the Canadians: http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/exclusive-interviews/the-daily-show-with-jon-stewart---jim-cramer-interview-uncut/#clip149637 http://watch.thecomedynetwork.ca/the-daily-show-with-jon-ste...)

jeromec 16y ago
For the most part I totally agree. Rampant speculation combined with a fiat currency and too loose regulation is how we got so much money sloshing around, a deformed market, and this economic crisis (and a near collapse of the financial system). We've gotten too far away from fundamentals. We also see this in startups. For example, I totally agree with Mark Cuban who laments that modern founders often look at valuations, and indeed raise lots of capital, for possible IPOs without even discovering how to profit a single dollar.
mistermann 16y ago
>Retail investors are taught to 'invest for the long-term', and 'not try to time the market' meanwhile hedge-funds and high-frequency traders play a different game with different rules. Exactly....that the financial services industry constantly advises the retail investor to "invest for the long term", when they do the exact opposite (while generally using the funds provided by these exact same retail investors), to me is a pretty strong indicator that the markets are something entirely different than how they are sold to people. The markets were created to provide funding for companies in need of capital, and a branch of the financial services industry was legitimately required to facilitate this process between companies and individual investors, but now almost everywhere I look people are focused on finding new ways to skim money out of the system, under the guise of "providing liquidity", as if there was some problem with liquidity 10, 20, 30 years ago.

by lowkey 16y ago

jeromec 16y ago

For the most part I totally agree. Rampant speculation combined with a fiat currency and too loose regulation is how we got so much money sloshing around, a deformed market, and this economic crisis (and a near collapse of the financial system). We've gotten too far away from fundamentals. We also see this in startups. For example, I totally agree with Mark Cuban who laments that modern founders often look at valuations, and indeed raise lots of capital, for possible IPOs without even discovering how to profit a single dollar.

mistermann 16y ago

>Retail investors are taught to 'invest for the long-term', and 'not try to time the market' meanwhile hedge-funds and high-frequency traders play a different game with different rules. Exactly....that the financial services industry constantly advises the retail investor to "invest for the long term", when they do the exact opposite (while generally using the funds provided by these exact same retail investors), to me is a pretty strong indicator that the markets are something entirely different than how they are sold to people. The markets were created to provide funding for companies in need of capital, and a branch of the financial services industry was legitimately required to facilitate this process between companies and individual investors, but now almost everywhere I look people are focused on finding new ways to skim money out of the system, under the guise of "providing liquidity", as if there was some problem with liquidity 10, 20, 30 years ago.