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If that were true, then the corporation would cease to care a fig about the stock value after the IPO. But they do, very much. Shall I count the ways? 1. Much

If that were true, then the corporation would cease to care a fig about the stock value after the IPO. But they do, very much. Shall I count the ways? 1. Much employee compensation is in the form of stock, not cash. This essentially puts that cash in the corporation's pocket. 2. Corporations often issue more shares, which brings cash onto the books. 3. Corporations buy other corporations using their stock. The value of the stock sets the price. 4. Corporations own stock in themselves, and this stock can be used as collateral for loans. 5. A rising stock price creates a lot of intangible value, such as the ability to attract top talent. Everyone wants to be associated with a winner, not a loser. 6. Etc.

EliRivers 8y ago
Much employee compensation is in the form of stock That's just transfer of stock from the company again. Corporations often issue more shares, which brings cash onto the books. That's just transfer of stock from the company again. Corporations buy other corporations using their stock. That's just transfer of stock from the company again. Etc. If the company can give someone stock and get money (or by doing so not lose money), that's money going into more productive use. The rest is people swapping it around themselves; not fresh money going into more productive use. It seems from your arguments that companies care about their stock price going up because they have stock. They have stock and they want the initial influx of cash, when they offload it, to be as high as possible. Your arguments seem to support mine.
- skookumchuck 8y ago
  I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. BTW, if you know of an econ book that espouses your theories, I'd like to read it.
  - EliRivers 8y ago
    I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. No, you did not. Your arguments rely on the company selling (or otherwise exchanging) their stock. The rising price doesn't put money in the company's pocket; selling (or otherwise exchanging or collateralising) their stock is what gives the company money. If the stock is worth more, the company gets more at that point, but a simple rise in stock price doesn't give them more money. The company gets more money when they offload their stock. After that, it's just other people swapping the stock around. As for your passive-aggressive appeal to authority... a rising stock price puts cash in the pockets of a corporation Well, you've asserted that when some private individuals trade a company's stock amongst themselves at a higher price than they did yesterday, someone gives that company some cash. That's your assertion; that if I sell some Servicemaster Global Holdings Inc stock today for more than it was traded at yesterday, somebody will give ServiceMaster some cash. Who's that somebody? Why would they give ServiceMaster some money?
crimsonalucard 8y ago
We're talking about the stock market itself. Not the side effects. What is the stock market from a very essential core stand point? It is people buying paper at a lower price and selling it at higher prices. This has side effects both good and bad, but it is clearly fundamentally different from shifting capital to buy a house and more similar to shifting money to gamble it at a casino. That is the key difference. Your list describes the beneficial side effects of a stock market. Opening a casino has beneficial side effects as well. Casinos can revitalize economies and support an entire city. Casinos have benefited Las Vegas and drives the growth of the city. But this is a side effect to what gambling essentially is: a game where money is exchanged and no production of goods takes place. People who study finance study it from a very capitalistic point of view. They worship freedom of choice to sell and buy anything while ignoring the consequences of wealth inequality. Finance is a biased lens. Stop telling me that this isn't finance. Finance doesn't tell you how to examine the stock market with a critical eye, it just tells you how to invest in the stock market, how to manage risk. Almost every guy in finance worships capitalism. I study economics. I don't worship capitalism, nor do I worship the alternatives. I look at it with a critical eye to see what it is from a theoretical perspective. To address your request of whether I "made up" (highly offensive I might add) my theories or got them from a book/class room... I have learned a lot from a man named César A. Hidalgo. He is a Chilean physicist, writer, and entrepreneur. He is an Associate Professor at MIT and the director of the Collective Learning group at The MIT Media Lab. He is mainly responsible for forming my views about the relationship between economics and entropy. He wrote a book on economics.
- EliRivers 8y ago
  Oh, well, if someone writes a book it must be true! (That's not true, I'm sarcastic; lots of books are utter nonsense and this conversation was simple enough that we can point at direct evidence and first principles - passive-aggressive appeals to authority not needed)
  - crimsonalucard 8y ago
    Did you just call me passive aggressive? There is NOTHING of the sort. Your sarcasm if anything is passive aggressive. I met your demand with a more unique source but that doesn't mean I haven't read other books. Now meet your own demands. Point at your "first principles" and lets hope its a book on economics rather then a book on finance. So first principles... do you mean Adam Smith? Keynes? Kuznet? Obviously not Marx or the recent work by Picketty. I'm pretty sure you'll name some book on investing or some other book that teaches you how to get rich while producing zero utility yourself.

EliRivers 8y ago

Much employee compensation is in the form of stock That's just transfer of stock from the company again. Corporations often issue more shares, which brings cash onto the books. That's just transfer of stock from the company again. Corporations buy other corporations using their stock. That's just transfer of stock from the company again. Etc. If the company can give someone stock and get money (or by doing so not lose money), that's money going into more productive use. The rest is people swapping it around themselves; not fresh money going into more productive use. It seems from your arguments that companies care about their stock price going up because they have stock. They have stock and they want the initial influx of cash, when they offload it, to be as high as possible. Your arguments seem to support mine.

skookumchuck 8y ago
I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. BTW, if you know of an econ book that espouses your theories, I'd like to read it.
- EliRivers 8y ago
  I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. No, you did not. Your arguments rely on the company selling (or otherwise exchanging) their stock. The rising price doesn't put money in the company's pocket; selling (or otherwise exchanging or collateralising) their stock is what gives the company money. If the stock is worth more, the company gets more at that point, but a simple rise in stock price doesn't give them more money. The company gets more money when they offload their stock. After that, it's just other people swapping the stock around. As for your passive-aggressive appeal to authority... a rising stock price puts cash in the pockets of a corporation Well, you've asserted that when some private individuals trade a company's stock amongst themselves at a higher price than they did yesterday, someone gives that company some cash. That's your assertion; that if I sell some Servicemaster Global Holdings Inc stock today for more than it was traded at yesterday, somebody will give ServiceMaster some cash. Who's that somebody? Why would they give ServiceMaster some money?

crimsonalucard 8y ago

We're talking about the stock market itself. Not the side effects. What is the stock market from a very essential core stand point? It is people buying paper at a lower price and selling it at higher prices. This has side effects both good and bad, but it is clearly fundamentally different from shifting capital to buy a house and more similar to shifting money to gamble it at a casino. That is the key difference. Your list describes the beneficial side effects of a stock market. Opening a casino has beneficial side effects as well. Casinos can revitalize economies and support an entire city. Casinos have benefited Las Vegas and drives the growth of the city. But this is a side effect to what gambling essentially is: a game where money is exchanged and no production of goods takes place. People who study finance study it from a very capitalistic point of view. They worship freedom of choice to sell and buy anything while ignoring the consequences of wealth inequality. Finance is a biased lens. Stop telling me that this isn't finance. Finance doesn't tell you how to examine the stock market with a critical eye, it just tells you how to invest in the stock market, how to manage risk. Almost every guy in finance worships capitalism. I study economics. I don't worship capitalism, nor do I worship the alternatives. I look at it with a critical eye to see what it is from a theoretical perspective. To address your request of whether I "made up" (highly offensive I might add) my theories or got them from a book/class room... I have learned a lot from a man named César A. Hidalgo. He is a Chilean physicist, writer, and entrepreneur. He is an Associate Professor at MIT and the director of the Collective Learning group at The MIT Media Lab. He is mainly responsible for forming my views about the relationship between economics and entropy. He wrote a book on economics.

EliRivers 8y ago
Oh, well, if someone writes a book it must be true! (That's not true, I'm sarcastic; lots of books are utter nonsense and this conversation was simple enough that we can point at direct evidence and first principles - passive-aggressive appeals to authority not needed)
- crimsonalucard 8y ago
  Did you just call me passive aggressive? There is NOTHING of the sort. Your sarcasm if anything is passive aggressive. I met your demand with a more unique source but that doesn't mean I haven't read other books. Now meet your own demands. Point at your "first principles" and lets hope its a book on economics rather then a book on finance. So first principles... do you mean Adam Smith? Keynes? Kuznet? Obviously not Marx or the recent work by Picketty. I'm pretty sure you'll name some book on investing or some other book that teaches you how to get rich while producing zero utility yourself.