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One of those two things helps keep the world order from collapsing.

gruez 6y ago
Exactly. It's not a conscious policy decision by government, but a corollary of: * Stock markets should be allowed because they allow for efficient allocation of capital, allowing for economic growth * Access to stock markets should be available for all, for as cheaply as possible so everyone can reap the gains
- Barrin92 6y ago
  the stock market itself is the result of a conscious policy decision because it's a tightly regulated legal fiction, not some random thing that plopped out of thin air. Trading securities is subject to countless of regulations, which is what makes it attractive to investors in the first place. So, the fact that stock market allocates capital efficiently is true in a broad sense but says nothing about how participation or regulation ought to look. The second statement also is too vague. Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model. Distributing the returns of stocks and design of the market are orthogonal issues, or if anything justify more restrictions. If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year
  - gruez 6y ago
    >Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model. I mean, the "optimal" way to invest is to buy a passively managed index fund and don't touch it until you retire, but how much of that should be baked into the regulation? Should we make the stock market off limits to the average joe except the most optimal choice? >If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year So... the SSA? The other problem I can see is that in a country that's distrustful of the government, citizens might be reluctant to hand their retirement plans to the government. After all, the fund can be raided by politicians for short term spending or otherwise mismanaged, causing adjustments to be made to the payout structure (eg. cutting benefits, or forcing people to retire later).
    - smabie 6y ago
      There is no "optimal" way to invest. Every person/instiution has different risk limits, obligations, and time horizons. It's not a one size fits all kind of thing.

Exactly. It's not a conscious policy decision by government, but a corollary of: * Stock markets should be allowed because they allow for efficient allocation of capital, allowing for economic growth * Access to stock markets should be available for all, for as cheaply as possible so everyone can reap the gains

Barrin92 6y ago
the stock market itself is the result of a conscious policy decision because it's a tightly regulated legal fiction, not some random thing that plopped out of thin air. Trading securities is subject to countless of regulations, which is what makes it attractive to investors in the first place. So, the fact that stock market allocates capital efficiently is true in a broad sense but says nothing about how participation or regulation ought to look. The second statement also is too vague. Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model. Distributing the returns of stocks and design of the market are orthogonal issues, or if anything justify more restrictions. If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year
- gruez 6y ago
  >Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model. I mean, the "optimal" way to invest is to buy a passively managed index fund and don't touch it until you retire, but how much of that should be baked into the regulation? Should we make the stock market off limits to the average joe except the most optimal choice? >If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year So... the SSA? The other problem I can see is that in a country that's distrustful of the government, citizens might be reluctant to hand their retirement plans to the government. After all, the fund can be raided by politicians for short term spending or otherwise mismanaged, causing adjustments to be made to the payout structure (eg. cutting benefits, or forcing people to retire later).
  - smabie 6y ago
    There is no "optimal" way to invest. Every person/instiution has different risk limits, obligations, and time horizons. It's not a one size fits all kind of thing.