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If everyone invests in the sp500 then the price of the sp500 will climb, guaranteed, because you know that next months paychecks will purchase more of it. You

If everyone invests in the sp500 then the price of the sp500 will climb, guaranteed, because you know that next months paychecks will purchase more of it. You can’t really do anything about this even if you’re actively aware of this mechanism and think it’s fundamentally over valued. It’s like a decentralized Ponzi scheme

gruez 4y ago
What isn't a ponzi scheme these days? If you're passively investing in stocks, it's a ponzi because of the reason you outlined. However, if you're actively investing and bought a stock that's a little too popular (eg. tesla), then that's also a ponzi because "the company doesn't make a profit and the way people are making money is from new investors paying older investors". Hell, even if you only buy blue chip stocks with reliable earnings, some of your original complaint is still there (ie. people mindlessly buying it because they know it's reliable, new investors paying old investors).
- fartcannon 4y ago
  I cant tell if youre joking or not because I sorta do think it is all a scam. I think the stock market is a way to keep the sociopaths doing something less dangerous than continuous war and insurrection. Whether intentionally or not, I think that's it's primary value. It basically magnifies wealth discrepancy which is what the sociopaths want. The rest of us just try not to become poor by playing their games. Whenever everyone gets too close to fair, they invent a new game, or take the ball and go home. You know? I'm only sort of kidding. :D
  - andsoitis 4y ago
    > Whenever everyone gets too close to fair, they invent a new game, or take the ball and go home. who is “they”?
    - fartcannon 4y ago
      Sociopaths
  - TedDoesntTalk 4y ago
    What an interesting world view.
    - fartcannon 4y ago
      I try and think about it from our tribal, small group primate origin perspective. I hope you're not mocking me, but if you are, I still do think it's interesting actually. :) Like maybe we didn't kill the neanderthals, you know? I think we probably convinced them to kill each other. That's kind of our specialty.
      - TedDoesntTalk 4y ago
        I’m not mocking you. But if I had that world view, I might not get out of bed in the morning.
        JumpCrisscross 4y ago
        > if I had that world view, I might not get out of bed in the morning It might be the inverse. Someone not wanting to get out of bed in the morning projecting that view onto the world.
        fartcannon 4y ago
        It's neither! What's the problem with trying to explain human motivations like greed using our evolution? I genuinely think it's interesting.
        JumpCrisscross 4y ago
        > What's the problem with trying to explain human motivations like greed using our evolution? Look up Social Darwinism. Broadly: most evolutionary explanations for social behaviour aren’t science. They’re parlour tricks. One can posit reasonable-sounding explanations for any behaviour, real or hypothetical, none of which is testable. Example: I can construct individual-selection arguments for humans being evolved sociopaths and group-selection arguments for humans being collectivist sheep. There is truth in both statements. But their predictive value is totally dependent on the immeasurable mix and mechanics thereof, all of which is blissfully ignored, both in substance and evaluation, by this framing.
- oneoff786 4y ago
  Making shareholders liable for company debts in the event of bankruptcy would be a start.
  - shukantpal 4y ago
    That's a foolish idea, happy to know it's from a one off.
    - oneoff786 4y ago
      We’re all one offs in the end
      - shukantpal 4y ago
        I'm not a one off 786.
- deleted 4y ago
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- deleted 4y ago
  [deleted]
- kaashif 4y ago
  While the stock market may be stupid, it's not a Ponzi scheme. A Ponzi scheme involves a fraudster lying about where the money is going and coming from, and thus defrauding people. If people know what they're buying, and they later really sell it to a willing buyer without lying to them, that's not even any kind of fraud, let alone a Ponzi scheme.
  - salawat 4y ago
    It's funny, because I have yet to have a company give me access to the entirety of their books to analyze. That's info asymmetry. Ergo, lying. Specifically by omission. So the Ponzi essence is still there.
    - JumpCrisscross 4y ago
      > I have yet to have a company give me access to the entirety of their books to analyze Have you gone to a shareholder meeting? Submitted a question to an earnings call?
- datadata 4y ago
  Debt based monetary policy is the root ponzi here. Our rate of assuming new debt depends on the assumption of endless economic growth.
renewiltord 4y ago
Okay, I'll buy your 358 VOO Puts expiring May 27 at 1¢ each. Easy money for you. I will pay you $100 for 100 such contracts (usual lot size 100). EDIT: Counter offer or decline acceptable. I can go up to $1k on this. I have money in play from this site up to 3x payout. Your call.
- oneoff786 4y ago
  These gotchas aren’t nearly as clever as you think.
- oneoff786 4y ago
  You edited your post to add more detail for some reason. No, it’s still not clever. Believing passive investing at scale causes irrational rises in price does not mean it’s wise to assume the price will definitely go up or down. It’s obviously not the only effect in the market. Going long on the general market is a bet that things will generally continue. That’s about it.
  - renewiltord 4y ago
    I comment in bursts, which has me hit rate limits on HN. Then I have to use edit-functionality till rate-limit-expiry. In any case, if you don't want to play that's fine. I enjoy this; you don't. No reason to be offended. Offer open to others. Has been taken up in the past. Fun for all.
deleted 4y ago
[deleted]
kaashif 4y ago
> It’s like a decentralized Ponzi scheme A Ponzi scheme is a type of fraud where someone lies about where the money paying off earlier investors is coming from - they say it comes from investment in some kind of business or other businesses, but it actually comes from later investors' investments. The stock market is transparent, it is obvious that when you buy something, part of the return will come from a later investor buying it from you - that's the whole point of buying something. It's not a Ponzi scheme if there's no-one lying about where the money comes from.
thrwyoilarticle 4y ago
>If everyone invests in the sp500 ...being the key phrase. There's a long way to go to 100%.
- oneoff786 4y ago
  It doesn’t need to be 100%. It just needs to be a fairly large portion of the holders of the sp500. Technically it can’t be 100%, else there’s nobody to buy from. Many of the heavily targeted companies are at 20-30% index fund ownership.

gruez 4y ago

What isn't a ponzi scheme these days? If you're passively investing in stocks, it's a ponzi because of the reason you outlined. However, if you're actively investing and bought a stock that's a little too popular (eg. tesla), then that's also a ponzi because "the company doesn't make a profit and the way people are making money is from new investors paying older investors". Hell, even if you only buy blue chip stocks with reliable earnings, some of your original complaint is still there (ie. people mindlessly buying it because they know it's reliable, new investors paying old investors).

fartcannon 4y ago
I cant tell if youre joking or not because I sorta do think it is all a scam. I think the stock market is a way to keep the sociopaths doing something less dangerous than continuous war and insurrection. Whether intentionally or not, I think that's it's primary value. It basically magnifies wealth discrepancy which is what the sociopaths want. The rest of us just try not to become poor by playing their games. Whenever everyone gets too close to fair, they invent a new game, or take the ball and go home. You know? I'm only sort of kidding. :D
- andsoitis 4y ago
  > Whenever everyone gets too close to fair, they invent a new game, or take the ball and go home. who is “they”?
  - fartcannon 4y ago
    Sociopaths
- TedDoesntTalk 4y ago
  What an interesting world view.
  - fartcannon 4y ago
    I try and think about it from our tribal, small group primate origin perspective. I hope you're not mocking me, but if you are, I still do think it's interesting actually. :) Like maybe we didn't kill the neanderthals, you know? I think we probably convinced them to kill each other. That's kind of our specialty.
    - TedDoesntTalk 4y ago
      I’m not mocking you. But if I had that world view, I might not get out of bed in the morning.
      - JumpCrisscross 4y ago
        > if I had that world view, I might not get out of bed in the morning It might be the inverse. Someone not wanting to get out of bed in the morning projecting that view onto the world.
        fartcannon 4y ago
        It's neither! What's the problem with trying to explain human motivations like greed using our evolution? I genuinely think it's interesting.
        JumpCrisscross 4y ago
        > What's the problem with trying to explain human motivations like greed using our evolution? Look up Social Darwinism. Broadly: most evolutionary explanations for social behaviour aren’t science. They’re parlour tricks. One can posit reasonable-sounding explanations for any behaviour, real or hypothetical, none of which is testable. Example: I can construct individual-selection arguments for humans being evolved sociopaths and group-selection arguments for humans being collectivist sheep. There is truth in both statements. But their predictive value is totally dependent on the immeasurable mix and mechanics thereof, all of which is blissfully ignored, both in substance and evaluation, by this framing.
oneoff786 4y ago
Making shareholders liable for company debts in the event of bankruptcy would be a start.
- shukantpal 4y ago
  That's a foolish idea, happy to know it's from a one off.
  - oneoff786 4y ago
    We’re all one offs in the end
    - shukantpal 4y ago
      I'm not a one off 786.
deleted 4y ago
[deleted]
deleted 4y ago
[deleted]
kaashif 4y ago
While the stock market may be stupid, it's not a Ponzi scheme. A Ponzi scheme involves a fraudster lying about where the money is going and coming from, and thus defrauding people. If people know what they're buying, and they later really sell it to a willing buyer without lying to them, that's not even any kind of fraud, let alone a Ponzi scheme.
- salawat 4y ago
  It's funny, because I have yet to have a company give me access to the entirety of their books to analyze. That's info asymmetry. Ergo, lying. Specifically by omission. So the Ponzi essence is still there.
  - JumpCrisscross 4y ago
    > I have yet to have a company give me access to the entirety of their books to analyze Have you gone to a shareholder meeting? Submitted a question to an earnings call?
datadata 4y ago
Debt based monetary policy is the root ponzi here. Our rate of assuming new debt depends on the assumption of endless economic growth.

renewiltord 4y ago

Okay, I'll buy your 358 VOO Puts expiring May 27 at 1¢ each. Easy money for you. I will pay you $100 for 100 such contracts (usual lot size 100). EDIT: Counter offer or decline acceptable. I can go up to $1k on this. I have money in play from this site up to 3x payout. Your call.

oneoff786 4y ago
These gotchas aren’t nearly as clever as you think.
oneoff786 4y ago
You edited your post to add more detail for some reason. No, it’s still not clever. Believing passive investing at scale causes irrational rises in price does not mean it’s wise to assume the price will definitely go up or down. It’s obviously not the only effect in the market. Going long on the general market is a bet that things will generally continue. That’s about it.
- renewiltord 4y ago
  I comment in bursts, which has me hit rate limits on HN. Then I have to use edit-functionality till rate-limit-expiry. In any case, if you don't want to play that's fine. I enjoy this; you don't. No reason to be offended. Offer open to others. Has been taken up in the past. Fun for all.

deleted 4y ago

[deleted]

kaashif 4y ago

> It’s like a decentralized Ponzi scheme A Ponzi scheme is a type of fraud where someone lies about where the money paying off earlier investors is coming from - they say it comes from investment in some kind of business or other businesses, but it actually comes from later investors' investments. The stock market is transparent, it is obvious that when you buy something, part of the return will come from a later investor buying it from you - that's the whole point of buying something. It's not a Ponzi scheme if there's no-one lying about where the money comes from.

thrwyoilarticle 4y ago

>If everyone invests in the sp500 ...being the key phrase. There's a long way to go to 100%.

oneoff786 4y ago
It doesn’t need to be 100%. It just needs to be a fairly large portion of the holders of the sp500. Technically it can’t be 100%, else there’s nobody to buy from. Many of the heavily targeted companies are at 20-30% index fund ownership.