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I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do

by _wldu 5y ago

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that appreciate over time).

everdrive 5y ago
>Don't fall for it. It's just rich people and politicians taking money from less rich people. How do rich people make money in the stock market if it's a "scam?" And how do politicians use the stock market to take money from anyone? (usually they use taxes to do this) What about index funds, which usually have proven returns and require no special knowledge?
- deleted 5y ago
  [deleted]
- boppo1 5y ago
  > And how do politicians use the stock market to take money from anyone? Well not politicians quite, but IMHO western bond buying is driving up asset values and fundamentally increasing economic stratification. PCE is a trash measure. It's like our monetary policy says "make sure workers keep working, make sure their feedstuffs stay cheap, and don't worry whether they have a meaningful opportunity to acquire ownership of the economy."
- j-pb 5y ago
  > How do rich people make money in the stock market if it's a "scam?" Definitions: scam (verb): to obtain (something, such as money) by a scam scam (noun): a fraudulent or deceptive act or operation together: to obtain (something, such as money) by a fraudulent or deceptive act or operation Rich/powerful people obtain money and influence by fraudulent or deceptive operations, via the stock markets, from less powerful people, by convincing them that they should participate in said market, either as small investors or indirectly by having their banks, insurance, and pension invest into the stock market. The rules, and conditions on the stock market are in such a way that they reward power and wealth with further power and wealth. E.g. being able to invest into better locations, infrastructure and connections for HFT, being able to hire better analysts and more mathematicians, invest into satellite data and machine learning to track cars in parking lots to estimate the results of earnings calls, pay lawyers and lobbyists to change influence politics and change laws.
- johnchristopher 5y ago
  My naive answers: > And how do politicians use the stock market to take money from anyone? Insider knowledge. > How do rich people make money in the stock market if it's a "scam?" They have an army of traders and their job is to buy and sell non stop, taking advantage of smaller players who think the game is fair, until a profit appears. > What about index funds, which usually have proven returns and require no special knowledge? Why don't everyone buy into index funds then (genuine question) ?
  - lotsofpulp 5y ago
    > Why don't everyone buy into index funds then (genuine question) ? They should, unless they have an “edge” over others, such as inside information or analysis that others did not do or did incorrectly, such as checking satellite photos of parking lots (in days prior to delivery). If you do not have an edge, then you are simply gambling. But I would say craps is more fun. Low cost index funds like VOO are just true inflation protected securities over 5+ year timeframe, in my opinion, because you know the US federal government is going to pull out all the stops to prevent its biggest organizations from collapsing.
  - paulclinger 5y ago
    > taking advantage of smaller players who think the game is fair, until a profit appears. I'm still not sure in what form this "taking advantage" happens. I think the stock market provides unique opportunities in how one can start small and grow with additional capital, knowledge or time when it becomes available. > Why don't everyone buy into index funds then (genuine question) ? For a variety of reasons: some find it boring, some think they can beat the index, some get stock grants and stick to what's familiar, some buy stocks that they hear about (because their friends do), etc. Even those who (mostly) buy into index funds may invest a chunk of their portfolio into riskier assets.
  - kamarg 5y ago
    > Why don't everyone buy into index funds then (genuine question) ? There's actually been a bunch of articles over the last year or two talking about how the large number of passive investors in index funds is causing an issue for price discovery of individual stocks. And everyone doesn't do it because some people are ok with taking more risk for more return.
Spivak 5y ago
How does this work with inflation? Like you have to put your money somewhere that’s appreciating at at least the rate of inflation or you’re losing money.
- cudgy 5y ago
  Don’t forget about risk vs return. Stocks generally do well with inflation as well, assuming they have pricing power and some earnings growth. The problem today is that the fed has ignored inflation by using under-weighted statistics and manipulated rates to an artificially low level. This has created an imbalance that might snap (and may be starting to snap now) which creates a shock to currently bubble equities.
- ItsMonkk 5y ago
  Everyone wants to only have as much money on hand as they need, and yet the money supply is at record numbers. Who is holding cash? How can there be 20T dollars depreciating every day? The Fed with its policies that drop the Velocity of money naturally leads to asset price inflation. Even worse, as there are now more money being put into buybacks than there are into IPO's, the stock market is a deflationary asset class. Just because there is only a few places to risk your money and not devalue it, does not mean that those places aren't scams.
darepublic 5y ago
I think investing long term across a diverse portfolio is a pretty safe bet no?
SkipperCat 5y ago
Not trying to be a hater, but if you follow most investing advice, you can do really well in the stock market. Don't try to pick stocks, just buy low load index funds (SPY, Russel2000) and hold onto them. Doing that, you can get above 6% yields over the course of a few decades. This has worked really well for so many people. Its boring, there's nothing sexy about it but you will retire with a decent chunk of cheddar. You'll never do well trying to trade individual stocks. Even the pros screw that up constantly. There's a huge industry trying to convince you to trade, but that's so they can make commissions and make $$$ on flow. Be a boring investor and find an exciting hobby instead.
- sitzkrieg 5y ago
  a large part of the problem seems to be people who should be investing wanting to trade so that they can say they're a trader and platforms like robinhood make it easier to actively trade
- cudgy 5y ago
  If everyone buys the same index funds, then all the money chases the same stocks within those index funds. The system feeds on itself resulting in overpricing of the index stocks which may not work out well during a sell-off. Index funds have risks too.
  - costcofries 5y ago
    If more people invest in an asset, the price of the asset increases because its value also increases. This isn't overpricing, or the 'system' feeding itself, this is the value of assets increasing..
    - cudgy 5y ago
      You are ignoring all the other stocks in the market that are not part of an index, which should represent better investment value in the scenario. Do you really want to only invest in the peak priced assets in a market?
bo1024 5y ago
It’s a scam but the reason it works is regular people are still better off “falling for it” than not. At least to this point in history.
agumonkey 5y ago
Can HNers gather for a poll ? A lot of people (including me) spent a lot of time reading, operating, spending time on investing. There are a few bits of value here, and some profits to make. But it seems to me that learning, crafting, sharing is way more beneficial long term. Even if you win, you're never shielded from inflation, being conned buying a car, a house... In a way wisdom and relationships appear more important. Does anybody agree ?
- fxtentacle 5y ago
  In my opinion, investing money into yourself in the form of tools and learning will always yield the best ROI. But obviously, that's a lot less sexy than the hope of one day retiring because you have so much "passive income". It's just that most examples for "passive income" aren't that passive, e.g. all those people advocating SaaS and Apps as a lifestyle business.
- mental1896 5y ago
  >you're never shielded from inflation It seems to me that inflation is integral to success of the system. That is to say, without inflation, far fewer people would "win".
  - MerelyMortal 5y ago
    > without inflation, far fewer people would "win". Wouldn't it also be: without inflation, the people not playing wouldn't "lose"?
    - ziml77 5y ago
      Without inflation, people would naturally hoard their money for safekeeping. But money that isn't changing hands effectively doesn't exist. An economy is made up of the movement of money, so inflation is used to ensure that people keep the money moving.
KoftaBob 5y ago
A quick look at the long term average returns of the S&P 500 or other similarly diversified indexes says otherwise. I can understand where you’re coming from if you’re referring to trendy/hot individual stocks that jump all over the place, but for diversified investing in an index, that’s simply not true.
vadavaski 5y ago
> Just like casinos in Las Vegas It has nothing to do with a cassino. It's not a zero sum game. It generates value from profits, it makes the general market more liquid, pricing assets. Not everybody is day/swing trading with futures. > rich people taking money from poor people That's a pretty strong affirmation, do you have sources with backtests? otherwise, well, it's enough to have 01 consistent counter-example. Of course, if you day trade, you'll give your money to whoever knew how to properly price an asset first. But that's just being unwise. The article bases its theses on the fact that there is insider trading - and its variations - which is a failure on the judicial system, not markets in general .
- mental1896 5y ago
  You could argue that if the system naturally permits this kind of behavior (insider trading), that there is something fundamentally wrong with the system itself. Judicial band-aids are effective in their own way but they don't get to the heart of the issue.
fennecfoxen 5y ago
How is it a scam? You buy stock. You own a share in a company, or in a company that owns more companies. The company makes money. It pays that out by dividends or share buybacks. You sell it decades later, hopefully for a profit. That's the deal. That's what's for sale. You want to blame HFTs or whatever? Bah. Worst case you're losing a fraction of a percent of your initial purchase. You've got absolutely nothing on the old-school commissions you'd pay twenty years ago. Oh, wait. I know how it's a "scam". "Double your money", you say. It's a "scam" because people went in thinking "buy sell buy sell momentum trade profit profit profit DOUBLE MY MONEY THEN AGAIN AND AGAIN FREE MONEY FREE MONEY" and it turns out there wasn't free money, that the money was in fact very expensive, that you had to assume Risk, that people who make money on it do a ton of Research to mitigate the risk, that you were competing with billion-dollar systems for doing research and managing risk and getting that money. Maybe you even went in thinking "TO THE MOON" and were surprised when your GME stopped trading because your broker was impaired by pre-existing contracts and couldn't make it happen and elected to use the options which they put in the fine-print they asked you to read and you didn't. Well, boo hoo. Don't play games with your money, don't play games with your food, buy the product that's for sale like a normal responsible investor, and you'll be fine. Or play games, treat it like a casino, but then don't be surprised when you get the casino experience.
- rapsey 5y ago
  >How is it a scam? You buy stock. You own a share in a company, or in a company that owns more companies. Because the stock you buy may not have been actually bought by your broker. Which is the entire point of the GME saga which you completely misunderstand. A stock has no business being shorted over 100% in a market that is not a scam. Major firms can get away with crimes like naked shorting and no one can do anything about it except the regulators and they turn a blind eye or impose hilariously low fines.
  - ericmay 5y ago
    It's more complicated than that. The GameStop saga notably didn't occur with other brokers, such as Vanguard, where shares were "in-stock" if you'll pardon the pun and available for purchase or sale. The volatility of $GME caused issues with the settlement system. That doesn't make "the stock market" a scam. > A stock has no business being shorted over 100% in a market that is not a scam. I'm not sure this is a strong argument for a scam, but is a strong intuitive argument for correcting a problem with how the stock market functions.
strken 5y ago
It's the inverse of a casino, because economies grow instead of shrink. If you bought shares at random, you'd make money on average, like a casino where the house loses more often than it wins. Rich people and politicians are absolutely skimming off the top in various legal and illegal ways, but they skim off less than economic growth adds.
- j-pb 5y ago
  At some point the pyramid has to reach a bottom. There is no infinite grown in this universe. Especially not exponential growth. Even if you assume that we'll reach space at some point and infinitely expand into the universe. Resources available to that civilisation will grow at most cubically (based on the fact that our universe has 3 dimensions). That growth is not caused by magic, the reason why you'd still get a return of investment is because that growth has been fuelled in an unsustainable way with externalised costs. So for the "small long term investor" the pyramid ends at enslaved children in Bangladesh sewing shirts and shoes, overfished oceans, pollution, and climate-change. Pensioners and small investors get scammed by the rich and powerful above them, the kid in Bangladesh, the Somalian fisherman, the person dying during a hurricane, flood, or heatwave, got scammed by everybody else above them. Somebody gets scammed when there is a continuous indefinite return from a single investment.
  - strken 5y ago
    Whether it's possible to grow forever isn't relevant to whether we can grow for another 10, 100, or 1000 years. At some point the sun is going to burn out, and even further than that the universe is going to reach heat death, but they belong to an entirely different class of problem than where to invest your money to prepare for retirement. The growth of economies doesn't rest solely on forcing enslaved Bangladeshi youth to make t-shirts, or causing environmental disasters. It's also powered by the Haber process, cheap power from renewables, efficient labour markets that don't rely on wildly inefficient slavery to assign workers to jobs, assembly lines, spreadsheets, and the other boring but efficient advancements we've made. If I'm reading it right, this is a claim that we're hitting fundamental limits of how large an economy can be, so all future growth will come at the cost of the "bottom of the pyramid". You're claiming that there is no possible future growth, that technology has hit a hard limit, and that any growing company will intrinsically be exploitative because there's no possible way for it to grow otherwise. This is a very extraordinary claim.
f0e4c2f7 5y ago
> buy real things that appreciate over time Companies are real things that appreciate over time. Stock is ownership of that. I wouldn't characterize it as a scam exactly. I do think people underestimate how clever markets are and would advise against trying to outsmart them. There is a different kind of bet you can make which is to buy a small part of the entire US economy on the assumption that it will continue to grow during your lifetime. Thats what an index fund is. It's a boring bet with modest returns. A lot has been written about index funds. This video is probably the most clear resource I can think of that has all the information in one place. https://www.youtube.com/watch?v=T71ibcZAX3I https://www.youtube.com/watch?v=T71ibcZAX3I
pif 5y ago
Casinos are not a scam: they are in the entertainment industry. Casinos are just the only place where gullible people go to entertain themselves and expect to get paid for that.
- dragonwriter 5y ago
  > Casinos are not a scam: they are in the entertainment industry. The suggestion that scams and the entertainment industry are nonoverlapping sets is...interesting, but untrue. But casinos are very optimized to develop and milk addicts; they are very much in the addiction industry, like tobacco and heroine dealers.
me_me_me 5y ago
Its not a scam but a platform on which a lot of scams are taking place. If you are on the right side of the line your scam will be swept under the rug, otherwise you go to prison for running a scam. The actual buying of shares is hardly a scam but the more complicated and removed from reality investment tools are used the scamyness comes out. Buying an index fund over long term will not scam you.
FredPret 5y ago
Huge companies that pump out billions in profits and form the basis of modern life aren’t “real things”?!
nova22033 5y ago
'You need to diversify' What? You can take a $100 investment and invest in a single stock or you could put $10 in a diversified portfolio....or put $100 in an index fund... None of these options require investing more money..
amelius 5y ago
Of course it is a scam. Otherwise, why wouldn't we have government-run banks which invest our savings in the background for us?
- bern4444 5y ago
  Why would you want the government controlling even more of your money? They already take large chunks. I'd rather control the remaining bits. It's not their job to invest your money (at least the money that you have left after they take a nice chunk for taxes). The tax money you give them is invested in the country (defense, roads, teachers etc)
closeparen 5y ago
Do you think it makes you less of a sucker to pay someone’s 10x profit on real estate in a neighborhood they campaigned to downzone?
achenatx 5y ago
because you are wrong.. when you own shares in a company you are entitled to the cash flow of the company. Over time the price trends towards the future cash flow of the company. In the short term the price can be anything, but if a company continues to grow and generate cash/profits, then the value will go up. There is too much money chasing too few companies so multiples are high, but that is a temporary situation (that could last a decade). Anything that happens in the short run is irrelevant to long term investors. In fact retail investors have a huge advantage over professionals in that they dont have to show returns every quarter.
caeril 5y ago
It's a scam, but only in the sense that it's become completely controlled by central banks. Since 2008, any 10% drawdown, regardless of how stretched actual valuations are, is met by panic at the Eccles Building, followed by anything from dovish jawboning to unprecedented asset purchases. This results in valuation expansion regardless of underlying GAAP profits, particularly for stonks in the "growth" category. Equity (and bond) markets now only ever go up. But the great thing is that you can participate in the scam just as easily as the next guy. Just buy the index and wait. Jay Powell's got your back. I used to be a "hard money" guy who raged against the "injustice" of the "rigged" system. but think practically - you can either be mad, or you can join in and benefit. One is better for your mental health than the other.
- wilkommen 5y ago
  You figured it out! I see it the same way as you.
chollida1 5y ago
> The house wins more often than we do What house? There is no house. its a market of competing parties, with multiple exchange venues so you can't even say the exchanges are the house. Hedge funds compete against market makers given that they compete head on, which one would you consider to be the house, they both can't be:)

by _wldu 5y ago

everdrive 5y ago

>Don't fall for it. It's just rich people and politicians taking money from less rich people. How do rich people make money in the stock market if it's a "scam?" And how do politicians use the stock market to take money from anyone? (usually they use taxes to do this) What about index funds, which usually have proven returns and require no special knowledge?

deleted 5y ago
[deleted]
boppo1 5y ago
> And how do politicians use the stock market to take money from anyone? Well not politicians quite, but IMHO western bond buying is driving up asset values and fundamentally increasing economic stratification. PCE is a trash measure. It's like our monetary policy says "make sure workers keep working, make sure their feedstuffs stay cheap, and don't worry whether they have a meaningful opportunity to acquire ownership of the economy."
j-pb 5y ago
> How do rich people make money in the stock market if it's a "scam?" Definitions: scam (verb): to obtain (something, such as money) by a scam scam (noun): a fraudulent or deceptive act or operation together: to obtain (something, such as money) by a fraudulent or deceptive act or operation Rich/powerful people obtain money and influence by fraudulent or deceptive operations, via the stock markets, from less powerful people, by convincing them that they should participate in said market, either as small investors or indirectly by having their banks, insurance, and pension invest into the stock market. The rules, and conditions on the stock market are in such a way that they reward power and wealth with further power and wealth. E.g. being able to invest into better locations, infrastructure and connections for HFT, being able to hire better analysts and more mathematicians, invest into satellite data and machine learning to track cars in parking lots to estimate the results of earnings calls, pay lawyers and lobbyists to change influence politics and change laws.
johnchristopher 5y ago
My naive answers: > And how do politicians use the stock market to take money from anyone? Insider knowledge. > How do rich people make money in the stock market if it's a "scam?" They have an army of traders and their job is to buy and sell non stop, taking advantage of smaller players who think the game is fair, until a profit appears. > What about index funds, which usually have proven returns and require no special knowledge? Why don't everyone buy into index funds then (genuine question) ?
- lotsofpulp 5y ago
  > Why don't everyone buy into index funds then (genuine question) ? They should, unless they have an “edge” over others, such as inside information or analysis that others did not do or did incorrectly, such as checking satellite photos of parking lots (in days prior to delivery). If you do not have an edge, then you are simply gambling. But I would say craps is more fun. Low cost index funds like VOO are just true inflation protected securities over 5+ year timeframe, in my opinion, because you know the US federal government is going to pull out all the stops to prevent its biggest organizations from collapsing.
- paulclinger 5y ago
  > taking advantage of smaller players who think the game is fair, until a profit appears. I'm still not sure in what form this "taking advantage" happens. I think the stock market provides unique opportunities in how one can start small and grow with additional capital, knowledge or time when it becomes available. > Why don't everyone buy into index funds then (genuine question) ? For a variety of reasons: some find it boring, some think they can beat the index, some get stock grants and stick to what's familiar, some buy stocks that they hear about (because their friends do), etc. Even those who (mostly) buy into index funds may invest a chunk of their portfolio into riskier assets.
- kamarg 5y ago
  > Why don't everyone buy into index funds then (genuine question) ? There's actually been a bunch of articles over the last year or two talking about how the large number of passive investors in index funds is causing an issue for price discovery of individual stocks. And everyone doesn't do it because some people are ok with taking more risk for more return.

Spivak 5y ago

How does this work with inflation? Like you have to put your money somewhere that’s appreciating at at least the rate of inflation or you’re losing money.

cudgy 5y ago
Don’t forget about risk vs return. Stocks generally do well with inflation as well, assuming they have pricing power and some earnings growth. The problem today is that the fed has ignored inflation by using under-weighted statistics and manipulated rates to an artificially low level. This has created an imbalance that might snap (and may be starting to snap now) which creates a shock to currently bubble equities.
ItsMonkk 5y ago
Everyone wants to only have as much money on hand as they need, and yet the money supply is at record numbers. Who is holding cash? How can there be 20T dollars depreciating every day? The Fed with its policies that drop the Velocity of money naturally leads to asset price inflation. Even worse, as there are now more money being put into buybacks than there are into IPO's, the stock market is a deflationary asset class. Just because there is only a few places to risk your money and not devalue it, does not mean that those places aren't scams.

darepublic 5y ago

I think investing long term across a diverse portfolio is a pretty safe bet no?

SkipperCat 5y ago

Not trying to be a hater, but if you follow most investing advice, you can do really well in the stock market. Don't try to pick stocks, just buy low load index funds (SPY, Russel2000) and hold onto them. Doing that, you can get above 6% yields over the course of a few decades. This has worked really well for so many people. Its boring, there's nothing sexy about it but you will retire with a decent chunk of cheddar. You'll never do well trying to trade individual stocks. Even the pros screw that up constantly. There's a huge industry trying to convince you to trade, but that's so they can make commissions and make $$$ on flow. Be a boring investor and find an exciting hobby instead.

sitzkrieg 5y ago
a large part of the problem seems to be people who should be investing wanting to trade so that they can say they're a trader and platforms like robinhood make it easier to actively trade
cudgy 5y ago
If everyone buys the same index funds, then all the money chases the same stocks within those index funds. The system feeds on itself resulting in overpricing of the index stocks which may not work out well during a sell-off. Index funds have risks too.
- costcofries 5y ago
  If more people invest in an asset, the price of the asset increases because its value also increases. This isn't overpricing, or the 'system' feeding itself, this is the value of assets increasing..
  - cudgy 5y ago
    You are ignoring all the other stocks in the market that are not part of an index, which should represent better investment value in the scenario. Do you really want to only invest in the peak priced assets in a market?

bo1024 5y ago

It’s a scam but the reason it works is regular people are still better off “falling for it” than not. At least to this point in history.

agumonkey 5y ago

Can HNers gather for a poll ? A lot of people (including me) spent a lot of time reading, operating, spending time on investing. There are a few bits of value here, and some profits to make. But it seems to me that learning, crafting, sharing is way more beneficial long term. Even if you win, you're never shielded from inflation, being conned buying a car, a house... In a way wisdom and relationships appear more important. Does anybody agree ?

fxtentacle 5y ago
In my opinion, investing money into yourself in the form of tools and learning will always yield the best ROI. But obviously, that's a lot less sexy than the hope of one day retiring because you have so much "passive income". It's just that most examples for "passive income" aren't that passive, e.g. all those people advocating SaaS and Apps as a lifestyle business.
mental1896 5y ago
>you're never shielded from inflation It seems to me that inflation is integral to success of the system. That is to say, without inflation, far fewer people would "win".
- MerelyMortal 5y ago
  > without inflation, far fewer people would "win". Wouldn't it also be: without inflation, the people not playing wouldn't "lose"?
  - ziml77 5y ago
    Without inflation, people would naturally hoard their money for safekeeping. But money that isn't changing hands effectively doesn't exist. An economy is made up of the movement of money, so inflation is used to ensure that people keep the money moving.

KoftaBob 5y ago

A quick look at the long term average returns of the S&P 500 or other similarly diversified indexes says otherwise. I can understand where you’re coming from if you’re referring to trendy/hot individual stocks that jump all over the place, but for diversified investing in an index, that’s simply not true.

vadavaski 5y ago

> Just like casinos in Las Vegas It has nothing to do with a cassino. It's not a zero sum game. It generates value from profits, it makes the general market more liquid, pricing assets. Not everybody is day/swing trading with futures. > rich people taking money from poor people That's a pretty strong affirmation, do you have sources with backtests? otherwise, well, it's enough to have 01 consistent counter-example. Of course, if you day trade, you'll give your money to whoever knew how to properly price an asset first. But that's just being unwise. The article bases its theses on the fact that there is insider trading - and its variations - which is a failure on the judicial system, not markets in general .

mental1896 5y ago
You could argue that if the system naturally permits this kind of behavior (insider trading), that there is something fundamentally wrong with the system itself. Judicial band-aids are effective in their own way but they don't get to the heart of the issue.

fennecfoxen 5y ago

How is it a scam? You buy stock. You own a share in a company, or in a company that owns more companies. The company makes money. It pays that out by dividends or share buybacks. You sell it decades later, hopefully for a profit. That's the deal. That's what's for sale. You want to blame HFTs or whatever? Bah. Worst case you're losing a fraction of a percent of your initial purchase. You've got absolutely nothing on the old-school commissions you'd pay twenty years ago. Oh, wait. I know how it's a "scam". "Double your money", you say. It's a "scam" because people went in thinking "buy sell buy sell momentum trade profit profit profit DOUBLE MY MONEY THEN AGAIN AND AGAIN FREE MONEY FREE MONEY" and it turns out there wasn't free money, that the money was in fact very expensive, that you had to assume Risk, that people who make money on it do a ton of Research to mitigate the risk, that you were competing with billion-dollar systems for doing research and managing risk and getting that money. Maybe you even went in thinking "TO THE MOON" and were surprised when your GME stopped trading because your broker was impaired by pre-existing contracts and couldn't make it happen and elected to use the options which they put in the fine-print they asked you to read and you didn't. Well, boo hoo. Don't play games with your money, don't play games with your food, buy the product that's for sale like a normal responsible investor, and you'll be fine. Or play games, treat it like a casino, but then don't be surprised when you get the casino experience.

rapsey 5y ago
>How is it a scam? You buy stock. You own a share in a company, or in a company that owns more companies. Because the stock you buy may not have been actually bought by your broker. Which is the entire point of the GME saga which you completely misunderstand. A stock has no business being shorted over 100% in a market that is not a scam. Major firms can get away with crimes like naked shorting and no one can do anything about it except the regulators and they turn a blind eye or impose hilariously low fines.
- ericmay 5y ago
  It's more complicated than that. The GameStop saga notably didn't occur with other brokers, such as Vanguard, where shares were "in-stock" if you'll pardon the pun and available for purchase or sale. The volatility of $GME caused issues with the settlement system. That doesn't make "the stock market" a scam. > A stock has no business being shorted over 100% in a market that is not a scam. I'm not sure this is a strong argument for a scam, but is a strong intuitive argument for correcting a problem with how the stock market functions.

strken 5y ago

It's the inverse of a casino, because economies grow instead of shrink. If you bought shares at random, you'd make money on average, like a casino where the house loses more often than it wins. Rich people and politicians are absolutely skimming off the top in various legal and illegal ways, but they skim off less than economic growth adds.

j-pb 5y ago
At some point the pyramid has to reach a bottom. There is no infinite grown in this universe. Especially not exponential growth. Even if you assume that we'll reach space at some point and infinitely expand into the universe. Resources available to that civilisation will grow at most cubically (based on the fact that our universe has 3 dimensions). That growth is not caused by magic, the reason why you'd still get a return of investment is because that growth has been fuelled in an unsustainable way with externalised costs. So for the "small long term investor" the pyramid ends at enslaved children in Bangladesh sewing shirts and shoes, overfished oceans, pollution, and climate-change. Pensioners and small investors get scammed by the rich and powerful above them, the kid in Bangladesh, the Somalian fisherman, the person dying during a hurricane, flood, or heatwave, got scammed by everybody else above them. Somebody gets scammed when there is a continuous indefinite return from a single investment.
- strken 5y ago
  Whether it's possible to grow forever isn't relevant to whether we can grow for another 10, 100, or 1000 years. At some point the sun is going to burn out, and even further than that the universe is going to reach heat death, but they belong to an entirely different class of problem than where to invest your money to prepare for retirement. The growth of economies doesn't rest solely on forcing enslaved Bangladeshi youth to make t-shirts, or causing environmental disasters. It's also powered by the Haber process, cheap power from renewables, efficient labour markets that don't rely on wildly inefficient slavery to assign workers to jobs, assembly lines, spreadsheets, and the other boring but efficient advancements we've made. If I'm reading it right, this is a claim that we're hitting fundamental limits of how large an economy can be, so all future growth will come at the cost of the "bottom of the pyramid". You're claiming that there is no possible future growth, that technology has hit a hard limit, and that any growing company will intrinsically be exploitative because there's no possible way for it to grow otherwise. This is a very extraordinary claim.

f0e4c2f7 5y ago

> buy real things that appreciate over time Companies are real things that appreciate over time. Stock is ownership of that. I wouldn't characterize it as a scam exactly. I do think people underestimate how clever markets are and would advise against trying to outsmart them. There is a different kind of bet you can make which is to buy a small part of the entire US economy on the assumption that it will continue to grow during your lifetime. Thats what an index fund is. It's a boring bet with modest returns. A lot has been written about index funds. This video is probably the most clear resource I can think of that has all the information in one place. https://www.youtube.com/watch?v=T71ibcZAX3I https://www.youtube.com/watch?v=T71ibcZAX3I

pif 5y ago

Casinos are not a scam: they are in the entertainment industry. Casinos are just the only place where gullible people go to entertain themselves and expect to get paid for that.

dragonwriter 5y ago
> Casinos are not a scam: they are in the entertainment industry. The suggestion that scams and the entertainment industry are nonoverlapping sets is...interesting, but untrue. But casinos are very optimized to develop and milk addicts; they are very much in the addiction industry, like tobacco and heroine dealers.

me_me_me 5y ago

Its not a scam but a platform on which a lot of scams are taking place. If you are on the right side of the line your scam will be swept under the rug, otherwise you go to prison for running a scam. The actual buying of shares is hardly a scam but the more complicated and removed from reality investment tools are used the scamyness comes out. Buying an index fund over long term will not scam you.

FredPret 5y ago

Huge companies that pump out billions in profits and form the basis of modern life aren’t “real things”?!

nova22033 5y ago

'You need to diversify' What? You can take a $100 investment and invest in a single stock or you could put $10 in a diversified portfolio....or put $100 in an index fund... None of these options require investing more money..

amelius 5y ago

Of course it is a scam. Otherwise, why wouldn't we have government-run banks which invest our savings in the background for us?

bern4444 5y ago
Why would you want the government controlling even more of your money? They already take large chunks. I'd rather control the remaining bits. It's not their job to invest your money (at least the money that you have left after they take a nice chunk for taxes). The tax money you give them is invested in the country (defense, roads, teachers etc)

closeparen 5y ago

Do you think it makes you less of a sucker to pay someone’s 10x profit on real estate in a neighborhood they campaigned to downzone?

achenatx 5y ago

because you are wrong.. when you own shares in a company you are entitled to the cash flow of the company. Over time the price trends towards the future cash flow of the company. In the short term the price can be anything, but if a company continues to grow and generate cash/profits, then the value will go up. There is too much money chasing too few companies so multiples are high, but that is a temporary situation (that could last a decade). Anything that happens in the short run is irrelevant to long term investors. In fact retail investors have a huge advantage over professionals in that they dont have to show returns every quarter.

caeril 5y ago

It's a scam, but only in the sense that it's become completely controlled by central banks. Since 2008, any 10% drawdown, regardless of how stretched actual valuations are, is met by panic at the Eccles Building, followed by anything from dovish jawboning to unprecedented asset purchases. This results in valuation expansion regardless of underlying GAAP profits, particularly for stonks in the "growth" category. Equity (and bond) markets now only ever go up. But the great thing is that you can participate in the scam just as easily as the next guy. Just buy the index and wait. Jay Powell's got your back. I used to be a "hard money" guy who raged against the "injustice" of the "rigged" system. but think practically - you can either be mad, or you can join in and benefit. One is better for your mental health than the other.

wilkommen 5y ago
You figured it out! I see it the same way as you.

chollida1 5y ago

> The house wins more often than we do What house? There is no house. its a market of competing parties, with multiple exchange venues so you can't even say the exchanges are the house. Hedge funds compete against market makers given that they compete head on, which one would you consider to be the house, they both can't be:)