5 ms·

What I see from this is a while bunch of hand waving to say that 'there are a whole bunch of people between you and x business', despite the fact you can direct

What I see from this is a while bunch of hand waving to say that 'there are a whole bunch of people between you and x business', despite the fact you can directly purchase their shares(which they offered to gain temporary income to make purchases before their cash flow allowed). I still don't see a reason why these people between you and the business have any useful reason to exist. Unless for gambling, Wich as far as I can tell is what it is. (And I'm not talking about initial investment, I'm talking about people gambling o weather the value will go up or down). Ontop of all that, what benefit does it provide to the initial company if people are gambling if the value goes up or down by a few percent? That just seems like a different form of book making. Edit: You know upon second read, it seems there is so much hand waving to mitigate investor risk, that completely ignores the idea that you are purchasing a piece of a company, that really seems that the entire system is beibg rebuilt to keep certain people making money. If I want an investor to purchase 20% of my company. For 20% profit, why should any sort of bonds, currency devaluation come into fact. As far as I see it: you are directly purchasing a portion of my company. That is a share right? If the value goes up, assumably your dividend will increase. Otherwise it will decrease. What the value of my countries dollar happens, has no effect on the percentile of my company. All I can see is a lot of hand waving to make things different. Side note: I'd really like to see a logical reason for any of this. Edit to lostboys: I think the thread is too long and I can't directly respond, my apologies. Once the business sells a portion to investors, those portions can be resold. This I get, where all the shorting and everything else comes from, makes me wonder about the entire stock system. At what point is it not about the investment about the business, and gambling about how it will go in the future(eg shorting). That and the whole system akin to it, is the part that is making me wonder how it was ever allowed.

lostboys67 9y ago
I am not sure what you mean by "gambling" in relation to stockmarkets. Third parties offer services like spreads CDO's and binary bets (which actually are gambling). Stock markets act as a market i.e. introducing investors to companies that need capital for example my latest buy was an American Investment trust Tetragon with out a stock market how would I be able to invest in them ?
- lbotos 9y ago
  I think it's the layman's "gambling": If I buy APPL today at X, I hope in 3 days it will be Y so I can sell. That's a gamble. You can use all forms of analysis and assessment to give you more confidence in the gamble, but it's absolutely a gamble.
  - lostboys67 9y ago
    Gambling implies a truly random outcome which is why Poker is a game of skill as is arguably horse racing :-) If you can identify an temporary overhang on a particular share you can make money as the discount narrows as I have done with Witan I also made a lot on Electra private equity as it was targeted by an activist investor and they realised some of their PE investments
consz 9y ago
>At what point is it not about the investment about the business, and gambling about how it will go in the future(eg shorting). What, in your mind, is the difference? I think it's a reasonable viewpoint to say that all investment in a business is a speculative bet (ie. gambling) on its future. In that sense, shorting is no different than going long (you just believe it's going the opposite direction and want to express that viewpoint to the rest of the market).
technofire 9y ago
> despite the fact you can directly purchase their shares Actually, most people could not directly purchase their shares if we didn't have a stock market. Companies in general would be owned only by relatively wealthy people or by other companies. Stock markets allow more ordinary people to share in the profits of companies. They democratize the ownership of the means of production in society. > (which they offered to gain temporary income to make purchases before their cash flow allowed) The income raised by stock offerings is not temporary; it is not a loan to be paid back. That capital becomes part of the company. The company might use that to purchase assets that stay part of the company or to buy inventory which it will then sell resulting in getting that money back plus profit. > Once the business sells a portion to investors, those portions can be resold. Without a stock market, they could not be resold without great difficulty. Investor A, who wanted to sell his share, perhaps after new management had taken over and was now driving the company into the ground, would have to find other another investor, Investor B, to buy it, and if Investor B didn't want to purchase the exact amount Investor A was selling at a mutually agreeable price, Investor A would have to begin a new search to sell the remainder of his share. This is one way liquity is such a big help. > making me wonder how it was ever allowed. The buying and selling of things has never needed to be explicitly allowed; in most modern nations, individuals are free to buy and sell things they own.
lmm 9y ago
> If I want an investor to purchase 20% of my company. For 20% profit, why should any sort of bonds, currency devaluation come into fact. You'd have to find an investor who wanted to purchase 20% of your company, which is quite a big ask in a lot of respects: they'd be very heavily exposed to one single company, their risk requirements would have to align exactly with yours, they would have to be using the same currency as you. Bottom line is, you'd get a pretty poor price - which is why the institutions that end up buying 20% of companies are the big banks who can slice that exposure and find buyers for the different pieces. (Just like if you're trying to source a given component for manufacturing, you may well end up going through a broker and an importer rather than dealing directly with whoever makes that component). If the banks weren't able to give a better price, no-one would sell through them. > What the value of my countries dollar happens, has no effect on the percentile of my company. Sure, but if I'm a Japanese pension fund and the value of my investment drops by 5% because the dollar has weakened against the yen, my investors are going to ask me some awkward questions. > At what point is it not about the investment about the business, and gambling about how it will go in the future(eg shorting). It is investment: no-one's doing this for fun (well, maybe a few people are, but they're only hurting themselves if so), they're doing it to make money, which means figuring out what's actually valuable. At the end of the day the only money going into the system is business profits, so the only way to make money is to do something that makes more money for the economy (or, sure, you can do zero-sum bets - but that's not a profitable business to be in in the long term). > That and the whole system akin to it, is the part that is making me wonder how it was ever allowed. There's no "allow"; it's a free country, you can buy and sell stuff you own. But the reason the markets are active is because they're productive.
KGIII 9y ago
I wouldn't buy shares in your company unless I had the legal right to trade and sell those shares to others. When I invest, I'm not just supporting you, I'm supporting me.
- eru 9y ago
  Or at least you'd ask for a serious discount to give up those rights.

lostboys67 9y ago

I am not sure what you mean by "gambling" in relation to stockmarkets. Third parties offer services like spreads CDO's and binary bets (which actually are gambling). Stock markets act as a market i.e. introducing investors to companies that need capital for example my latest buy was an American Investment trust Tetragon with out a stock market how would I be able to invest in them ?

lbotos 9y ago
I think it's the layman's "gambling": If I buy APPL today at X, I hope in 3 days it will be Y so I can sell. That's a gamble. You can use all forms of analysis and assessment to give you more confidence in the gamble, but it's absolutely a gamble.
- lostboys67 9y ago
  Gambling implies a truly random outcome which is why Poker is a game of skill as is arguably horse racing :-) If you can identify an temporary overhang on a particular share you can make money as the discount narrows as I have done with Witan I also made a lot on Electra private equity as it was targeted by an activist investor and they realised some of their PE investments

consz 9y ago

>At what point is it not about the investment about the business, and gambling about how it will go in the future(eg shorting). What, in your mind, is the difference? I think it's a reasonable viewpoint to say that all investment in a business is a speculative bet (ie. gambling) on its future. In that sense, shorting is no different than going long (you just believe it's going the opposite direction and want to express that viewpoint to the rest of the market).

technofire 9y ago

> despite the fact you can directly purchase their shares Actually, most people could not directly purchase their shares if we didn't have a stock market. Companies in general would be owned only by relatively wealthy people or by other companies. Stock markets allow more ordinary people to share in the profits of companies. They democratize the ownership of the means of production in society. > (which they offered to gain temporary income to make purchases before their cash flow allowed) The income raised by stock offerings is not temporary; it is not a loan to be paid back. That capital becomes part of the company. The company might use that to purchase assets that stay part of the company or to buy inventory which it will then sell resulting in getting that money back plus profit. > Once the business sells a portion to investors, those portions can be resold. Without a stock market, they could not be resold without great difficulty. Investor A, who wanted to sell his share, perhaps after new management had taken over and was now driving the company into the ground, would have to find other another investor, Investor B, to buy it, and if Investor B didn't want to purchase the exact amount Investor A was selling at a mutually agreeable price, Investor A would have to begin a new search to sell the remainder of his share. This is one way liquity is such a big help. > making me wonder how it was ever allowed. The buying and selling of things has never needed to be explicitly allowed; in most modern nations, individuals are free to buy and sell things they own.

lmm 9y ago

> If I want an investor to purchase 20% of my company. For 20% profit, why should any sort of bonds, currency devaluation come into fact. You'd have to find an investor who wanted to purchase 20% of your company, which is quite a big ask in a lot of respects: they'd be very heavily exposed to one single company, their risk requirements would have to align exactly with yours, they would have to be using the same currency as you. Bottom line is, you'd get a pretty poor price - which is why the institutions that end up buying 20% of companies are the big banks who can slice that exposure and find buyers for the different pieces. (Just like if you're trying to source a given component for manufacturing, you may well end up going through a broker and an importer rather than dealing directly with whoever makes that component). If the banks weren't able to give a better price, no-one would sell through them. > What the value of my countries dollar happens, has no effect on the percentile of my company. Sure, but if I'm a Japanese pension fund and the value of my investment drops by 5% because the dollar has weakened against the yen, my investors are going to ask me some awkward questions. > At what point is it not about the investment about the business, and gambling about how it will go in the future(eg shorting). It is investment: no-one's doing this for fun (well, maybe a few people are, but they're only hurting themselves if so), they're doing it to make money, which means figuring out what's actually valuable. At the end of the day the only money going into the system is business profits, so the only way to make money is to do something that makes more money for the economy (or, sure, you can do zero-sum bets - but that's not a profitable business to be in in the long term). > That and the whole system akin to it, is the part that is making me wonder how it was ever allowed. There's no "allow"; it's a free country, you can buy and sell stuff you own. But the reason the markets are active is because they're productive.

KGIII 9y ago

I wouldn't buy shares in your company unless I had the legal right to trade and sell those shares to others. When I invest, I'm not just supporting you, I'm supporting me.

eru 9y ago
Or at least you'd ask for a serious discount to give up those rights.