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Yes you absolutely do earn returns on money that isn’t doing anything. If I buy a share of Apple and the share price goes up, I’ve just made a return on money t
by wilkommen 5y ago
Yes you absolutely do earn returns on money that isn’t doing anything. If I buy a share of Apple and the share price goes up, I’ve just made a return on money that isn’t doing anything. The money I spent on that share didn’t enable any real economic activity other that me buying that share. My money didn’t go to Apple to enable them to grow their business. It went to some other investor who is primarily engaged in the same activity as me - investing.
- deleted 5y ago[deleted]
- ImprobableTruth 5y agoWhat you're doing is providing liquidity to earlier investors and taking on their risk, that's absolutely your money doing something. Without this, investing in an IPO would be a much more risky endeavor.
- goohle 5y agoFor example, I raised some money from Alice, so I have obligation to pay $1M(+%) to Alice. In other words, Alice invested $1M into me. Now, my business grows, risks are reduced, so Bob paid $1.25M to Alice. Now, I have obligation to pay $1M(+%) to Bob instead of Alice. What's wrong with that?
- JackFr 5y agoI buy a liquor store for $1 million. A year later someone offers me $1.25 million for the liquor store. Would you argue that my million dollars was doing nothing? The income the liquor store earned was income on my $1 million. The $250,000 may have been because of a change in tastes for liquor, or improvements I've made to the business through efficiency or reinvesting the icnome. But what of the original owner who took my $1 million. He is retired and he has most of it in the bank (who will use it to make loans) while he spends the rest over the years as his retirement income. The share of Apple is no different.