When you buy stocks, you are in fact directing resources, in the form of goods/services, into building a company, which is a form of capital. This effect is th

When you buy stocks, you are in fact directing resources, in the form of goods/services, into building a company, which is a form of capital. This effect is the ultimate outcome of a long chain of reactions that originates with the exchange of your money for the seller's stock. If you had spent your surplus income buying consumer goods instead of the stock, that chain of reactions—and the outcome of new capital they produce—wouldn't have happened.