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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
by 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 agoIn what sense would such a world be dysfunctional?
- reeboo 4y agoImagine 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 agoWhat if you got 100 back instead of 150?
- alar44 4y agoThen you lost money due to inflation or the opportunity cost of it being somewhere where it could have made money.
- lend000 4y agoThis 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 agoIf 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.