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> They are not, or they would be priced the same. If this was market based, you'd be right. But if it is legislative based, then this is the definition of circ
by 4ntonius8lock 7y ago
> They are not, or they would be priced the same.
If this was market based, you'd be right. But if it is legislative based, then this is the definition of circular logic. Given that the structure of preferential stock is legislative based, it is circular reasoning.
I count risk based on what percentage of a person's net worth and potential earnings are tied up in the securities.
That renders a different perspective of risk than just raw numbers which is what you seem to be going off of.
Your argument can be boiled down to 'caveat emptor'. Which is an argument that lacks intellectual cohesiveness when you are simultaneously supporting the legal structure that removed such a situation from the average investor.
- WalterBright 7y ago> Which is an argument that lacks intellectual cohesiveness when you are simultaneously supporting the legal structure that removed such a situation from the average investor. Not exactly. The courts are there to enforce the contracts, and protect against fraud. They are not there to protect people from making ignorant decisions and failing to do things like read the contracts they sign. They are not there to remove risk. Some people say that free markets don't work unless there is perfect information on both sides. This is incorrect. Imperfect information is called risk and is always priced in. The overhang in stocks comes about because investing in the company is perceived as extremely risky.
- 4ntonius8lock 7y ago> Honesty has nothing to do with meritocratic (in markets) Again, I can't really talk about economics and capitalism with someone who believes what you wrote. Either we agree that honest markets are more meritocratic (in which case you are admitting to being wrong) or we can't really go any further.