4 ms·

One of the proper, necessary functions of any investment market is to take money away from people who do the wrong things with it. That is how the system is ME

One of the proper, necessary functions of any investment market is to take money away from people who do the wrong things with it. That is how the system is MEANT to work. "I am an amateur who guessed randomly and threw money at things I didn't understand" is a confession, not a defence.

seydor 4y ago
If you are saying that the CEO of every company that defrauded/did something criminal to other people should be forced to pay back the stock to the people who invested in it, then yes, let's see it
marginalia_nu 4y ago
> One of the proper, necessary functions of any investment market is to take money away from people who do the wrong things with it. Why is that?
- paulmd 4y ago
  because someone has to be on the other side of every transaction and socially because the goal of the system is to get participants to behave in "optimal" fashion, for a certain very specific definition of "optimal".
- reeboo 4y ago
  Because ideas that don't add value should not be pursued, else you are wasting resources. Imagine how dysfunctional the world would be if you could never loose money investing in something.
  - marginalia_nu 4y ago
    In what sense would such a world be dysfunctional?
    - reeboo 4y ago
      Imagine you invested $100 into my company. Let's say my company specialized in doing absolutely nothing, as in, the company had a bank account and produced/sold nothing. In our little toy world where you always make money on investments, two weeks in I returned $150 to you (you've made $50). This brings up questions like "where did that extra $50 come from", but maybe you get the point of the original comment now.
      - marginalia_nu 4y ago
        What if you got 100 back instead of 150?
        alar44 4y ago
        Then you lost money due to inflation or the opportunity cost of it being somewhere where it could have made money.
        lend000 4y ago
        This incentivizes people to blindly make lots of normally risky and/or stupid investments with no fear of consequences and the potential of high upside if one of them pays off. This lack of consequences is subsidized by someone (taxpayers), who need to fund the burden of all the salaries of the unproductive companies that were paying salaries / buying materials / etc.
    - locustous 4y ago
      If that money is consumed as capital to further the goals of the business there has to be the possibility that nothing is available that can be returned. This is the underlying principle of investment, that the money is being utilized by someone for potential economic gain. If that money is just parked such that its always available for a return then it isn't really an investment.
neilv 4y ago
And the people doing the wrong things are often cheered on by obvious scammers (e.g., crypto/blockchain) and the very suspicious (e.g., WSB making an echo chamber party that embraced behaving stupidly/irrationally, and could also be directed to manipulate the market).
swatcoder 4y ago
> take money away from people who do the wrong things with it The quiet part: "Silly workers, thinking they could buy they're way into the capital class with some surplus hours of earnings. They don't even know how the game works! Ah well, back to the toiling for them I suppose."
- alar44 4y ago
  [dead]
- 8f2ab37a-ed6c 4y ago
  They could have bought VTI like the rest of us. If you want extraordinary returns, you need to take extraordinary risks.
  - swatcoder 4y ago
    “Risk vs reward” is a different model than the OP’s proposition that loss comes from wrong choices by investors. A risky bet that loses doesn’t mean the bettor did something wrong, and one that wins doesn’t mean the bettor did something right. They played odds against unknown factors and came out up or down. If the market is efficient at all, it’s in the aggregate, not on an individual basis. But for “amateur investors” enough loss may mean that they’re out of the game, which is different than for those who have the luxury of more capital. Personal outcomes for “amateur investors” are very much about luck, even when pursuing more ostensibly conservative strategies.
    - DontchaKnowit 4y ago
      Idk man I dont get how this is different for retail vs pros. Its not like you have to have a certain amlunt of money to invest : we have nano options and fractional shares now. Theres no barrier to entry. E.g. you can run the same strategies as pros with the same risk of losing your bank roll. Having more money doesnt make it inherently less likely that youll lose all of it

seydor 4y ago

If you are saying that the CEO of every company that defrauded/did something criminal to other people should be forced to pay back the stock to the people who invested in it, then yes, let's see it

marginalia_nu 4y ago

> One of the proper, necessary functions of any investment market is to take money away from people who do the wrong things with it. Why is that?

paulmd 4y ago
because someone has to be on the other side of every transaction and socially because the goal of the system is to get participants to behave in "optimal" fashion, for a certain very specific definition of "optimal".
reeboo 4y ago
Because ideas that don't add value should not be pursued, else you are wasting resources. Imagine how dysfunctional the world would be if you could never loose money investing in something.
- marginalia_nu 4y ago
  In what sense would such a world be dysfunctional?
  - reeboo 4y ago
    Imagine you invested $100 into my company. Let's say my company specialized in doing absolutely nothing, as in, the company had a bank account and produced/sold nothing. In our little toy world where you always make money on investments, two weeks in I returned $150 to you (you've made $50). This brings up questions like "where did that extra $50 come from", but maybe you get the point of the original comment now.
    - marginalia_nu 4y ago
      What if you got 100 back instead of 150?
      - alar44 4y ago
        Then you lost money due to inflation or the opportunity cost of it being somewhere where it could have made money.
      - lend000 4y ago
        This incentivizes people to blindly make lots of normally risky and/or stupid investments with no fear of consequences and the potential of high upside if one of them pays off. This lack of consequences is subsidized by someone (taxpayers), who need to fund the burden of all the salaries of the unproductive companies that were paying salaries / buying materials / etc.
  - locustous 4y ago
    If that money is consumed as capital to further the goals of the business there has to be the possibility that nothing is available that can be returned. This is the underlying principle of investment, that the money is being utilized by someone for potential economic gain. If that money is just parked such that its always available for a return then it isn't really an investment.

neilv 4y ago

And the people doing the wrong things are often cheered on by obvious scammers (e.g., crypto/blockchain) and the very suspicious (e.g., WSB making an echo chamber party that embraced behaving stupidly/irrationally, and could also be directed to manipulate the market).

swatcoder 4y ago

> take money away from people who do the wrong things with it The quiet part: "Silly workers, thinking they could buy they're way into the capital class with some surplus hours of earnings. They don't even know how the game works! Ah well, back to the toiling for them I suppose."

alar44 4y ago
[dead]
8f2ab37a-ed6c 4y ago
They could have bought VTI like the rest of us. If you want extraordinary returns, you need to take extraordinary risks.
- swatcoder 4y ago
  “Risk vs reward” is a different model than the OP’s proposition that loss comes from wrong choices by investors. A risky bet that loses doesn’t mean the bettor did something wrong, and one that wins doesn’t mean the bettor did something right. They played odds against unknown factors and came out up or down. If the market is efficient at all, it’s in the aggregate, not on an individual basis. But for “amateur investors” enough loss may mean that they’re out of the game, which is different than for those who have the luxury of more capital. Personal outcomes for “amateur investors” are very much about luck, even when pursuing more ostensibly conservative strategies.
  - DontchaKnowit 4y ago
    Idk man I dont get how this is different for retail vs pros. Its not like you have to have a certain amlunt of money to invest : we have nano options and fractional shares now. Theres no barrier to entry. E.g. you can run the same strategies as pros with the same risk of losing your bank roll. Having more money doesnt make it inherently less likely that youll lose all of it