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How is that any different from any other business? You spend money to make more money later, which enables you to spend more money to make even more money. For
by shawnz 6y ago
How is that any different from any other business? You spend money to make more money later, which enables you to spend more money to make even more money. For example if you run a loan business you're making a bet that your customers will repay you on time so you can loan even more to future customers. Buying stock is just like giving loans to corporations.
- _qulr 6y agoA loan has a fixed time period, and usually a fixed interest rate too. The monetary value is straightforward. Of course there's a risk you won't get paid back by the debtor, as there's risk in all business. But the monetary value of the payback can't vary wildly based on pure future speculation. A variable interest rate alters the situation, but if interests rates vary wildly during the fixed loan period, you've got an entire economy out of control. In recent years, interest rates have been relatively steady.
- shawnz 6y agoI am not saying all asset classes ought to be as volatile as stocks are. Investors should have choices about the safety of the investments they make.