4 ms·

This is also flawed. A stock typically has no utility because the share percentage is so small the only thing you can do with it is sell it to the next fool who

This is also flawed. A stock typically has no utility because the share percentage is so small the only thing you can do with it is sell it to the next fool who wants to start the cycle over again. Do not make the mistake of thinking that a thing has utility because we "think" or "believe" it has utility. The usefulness of a product is more tied to the physical world then it is to our opinions. The act of trading stocks offers no utility to the world and therefore a huge portion of the stock market also offers zero utility to the world.

skookumchuck 8y ago
You may believe it has no utility, but the stock market was a great invention in finance, and no country has been able to economically prosper without one ever since.
- crimsonalucard 8y ago
  I shouldn't say absolutely no utility. I mean to say after an IPO every transaction or trade of a stock share generates ZERO utility. Here's a picture of a country that has no stock market that prospers: https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/Vista_de_M%C3%B3naco%2C_2016-06-23%2C_DD_13.jpg/1920px-Vista_de_M%C3%B3naco%2C_2016-06-23%2C_DD_13.jpg?1534579849677 https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/Vi...
  - skookumchuck 8y ago
    Do you believe the companies operating in Monaco are not traded on a stock exchange?
    - crimsonalucard 8y ago
      The country itself has no stock exchange.
antidesitter 8y ago
> The act of trading stocks offers no utility to the world Try to think a little about what you’re saying. Suppose you were to shut down all stock markets worldwide. What do you think would happen? Do you not realize you’ve made the world a poorer place by forbidding people from trading equity?
- crimsonalucard 8y ago
  Lets take a look at what a stock market is. Shares can be represented by a paper certificate that offers people no utility. I cannot use my 0.0000001% share to do anything other than sell it to another person. For the majority of players in the stock market it is the sole reason for buying shares and the sole reason for selling. I may have voting rights but it doesn't mean much in the larger context, ultimately the reasoning remains the same. So the entire stock market consists of people trading paper. It is a game of people trying to buy paper at a low price and sell it at a higher price. HFT is people taking computers into this game. Now lets look at a market that produces true utility. I am a farmer and I grow apples. You are a farmer who grows oranges. I want oranges you want apples, so we exchange products with genuine utility as we both can eat the products and both enjoy and sustain ourselves. The only time where utility is created in a stock market is during an IPO when stocks are issued. All other transactions after that are typically a waste of energy and resources. If I could redirect all that compute capacity used for HFT towards protein folding we'd actually be creating utility rather than tossing it into the void.
  - skookumchuck 8y ago
    > I cannot use my 0.0000001% share to do anything other than sell it to another person. You can borrow against it (it's called "margin"). People do it all the time. The utility of a stock market is providing a nearly frictionless method of moving capital to its most efficient use. It's as great an invention as money is - suppose you want a toaster, but the toaster company doesn't want apples. Good luck setting up an n-way barter with the orange farmer and several other people to try and get a toaster. A simpler answer is if the stock market had no utility nobody would trade stocks. But they do, millions do. Are they all fools, or have you made a mistake?
airstrike 8y ago
> A stock typically has no utility because the share percentage is so small the only thing you can do with it is sell it to the next fool who wants to start the cycle over again. It's quite clear you don't understand finance from that comment alone. Buying and selling stocks allows you to allocate your capital as you see fit. Capital markets provide companies with liquidity and allow investors to partake in the upside. They reward well-run companies and punished mismanagement. They are a net positive for society.
- crimsonalucard 8y ago
  >Buying and selling stocks allows you to allocate your capital as you see fit. There is an intrinsic difference between the normal flow of money in a basic economy vs. the stock market. Namely it is the: allocation of capital for the sole purpose of selling it at a higher cost and buying at a lower cost. This is entirely different from allocating capital to create a factory, or buy food, etc.. etc.. The net effect of a market that trades stocks like this is negative due to the infrastructure required to maintain it. It's similar to how a casino can be viewed as a net negative to society. HFT is the perfect example of this. Trades made in nanoseconds with no physical meaning other than trying to outplay another automated gambler. > They reward well-run companies and punished mismanagement. Wouldn't it be better for the workers who produce the actual GDP to participate in the upside rather than some rich dude who contributes none of the work? This is the primary driver behind wealth inequality. You would know that if you understood economics. >hey reward well-run companies and punished mismanagement. Any business owner will be rewarded regardless of whether it was owned by a billion shareholders or by a few. Incentive, punishment and rewards are not the result of "capital markets" it exists regardless of whether or not a company IPO'd.
  - airstrike 8y ago
    I'm sorry but you're simply factually incorrect.
    - crimsonalucard 8y ago
      I am sorry but your comment is a "shallow dismissal." Please see this guideline when posting in HN: "Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something." -https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html You will need to explain which part of my comment is factually incorrect and why to keep within the guidelines. Thank you.

skookumchuck 8y ago

You may believe it has no utility, but the stock market was a great invention in finance, and no country has been able to economically prosper without one ever since.

crimsonalucard 8y ago
I shouldn't say absolutely no utility. I mean to say after an IPO every transaction or trade of a stock share generates ZERO utility. Here's a picture of a country that has no stock market that prospers: https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/Vista_de_M%C3%B3naco%2C_2016-06-23%2C_DD_13.jpg/1920px-Vista_de_M%C3%B3naco%2C_2016-06-23%2C_DD_13.jpg?1534579849677 https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/Vi...
- skookumchuck 8y ago
  Do you believe the companies operating in Monaco are not traded on a stock exchange?
  - crimsonalucard 8y ago
    The country itself has no stock exchange.

antidesitter 8y ago

> The act of trading stocks offers no utility to the world Try to think a little about what you’re saying. Suppose you were to shut down all stock markets worldwide. What do you think would happen? Do you not realize you’ve made the world a poorer place by forbidding people from trading equity?

crimsonalucard 8y ago
Lets take a look at what a stock market is. Shares can be represented by a paper certificate that offers people no utility. I cannot use my 0.0000001% share to do anything other than sell it to another person. For the majority of players in the stock market it is the sole reason for buying shares and the sole reason for selling. I may have voting rights but it doesn't mean much in the larger context, ultimately the reasoning remains the same. So the entire stock market consists of people trading paper. It is a game of people trying to buy paper at a low price and sell it at a higher price. HFT is people taking computers into this game. Now lets look at a market that produces true utility. I am a farmer and I grow apples. You are a farmer who grows oranges. I want oranges you want apples, so we exchange products with genuine utility as we both can eat the products and both enjoy and sustain ourselves. The only time where utility is created in a stock market is during an IPO when stocks are issued. All other transactions after that are typically a waste of energy and resources. If I could redirect all that compute capacity used for HFT towards protein folding we'd actually be creating utility rather than tossing it into the void.
- skookumchuck 8y ago
  > I cannot use my 0.0000001% share to do anything other than sell it to another person. You can borrow against it (it's called "margin"). People do it all the time. The utility of a stock market is providing a nearly frictionless method of moving capital to its most efficient use. It's as great an invention as money is - suppose you want a toaster, but the toaster company doesn't want apples. Good luck setting up an n-way barter with the orange farmer and several other people to try and get a toaster. A simpler answer is if the stock market had no utility nobody would trade stocks. But they do, millions do. Are they all fools, or have you made a mistake?

airstrike 8y ago

> A stock typically has no utility because the share percentage is so small the only thing you can do with it is sell it to the next fool who wants to start the cycle over again. It's quite clear you don't understand finance from that comment alone. Buying and selling stocks allows you to allocate your capital as you see fit. Capital markets provide companies with liquidity and allow investors to partake in the upside. They reward well-run companies and punished mismanagement. They are a net positive for society.

crimsonalucard 8y ago
>Buying and selling stocks allows you to allocate your capital as you see fit. There is an intrinsic difference between the normal flow of money in a basic economy vs. the stock market. Namely it is the: allocation of capital for the sole purpose of selling it at a higher cost and buying at a lower cost. This is entirely different from allocating capital to create a factory, or buy food, etc.. etc.. The net effect of a market that trades stocks like this is negative due to the infrastructure required to maintain it. It's similar to how a casino can be viewed as a net negative to society. HFT is the perfect example of this. Trades made in nanoseconds with no physical meaning other than trying to outplay another automated gambler. > They reward well-run companies and punished mismanagement. Wouldn't it be better for the workers who produce the actual GDP to participate in the upside rather than some rich dude who contributes none of the work? This is the primary driver behind wealth inequality. You would know that if you understood economics. >hey reward well-run companies and punished mismanagement. Any business owner will be rewarded regardless of whether it was owned by a billion shareholders or by a few. Incentive, punishment and rewards are not the result of "capital markets" it exists regardless of whether or not a company IPO'd.
- airstrike 8y ago
  I'm sorry but you're simply factually incorrect.
  - crimsonalucard 8y ago
    I am sorry but your comment is a "shallow dismissal." Please see this guideline when posting in HN: "Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something." -https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html You will need to explain which part of my comment is factually incorrect and why to keep within the guidelines. Thank you.