4 ms·

>He didn't create value. ??? He created $15 billion of value for his shareholders. >The banks had created value The banks have destroyed their shareholders'

• condor 18y ago
  he created $15B of net worth for his investors, not value. It was a wealth transfer, no net creation.
  • coliveira 18y ago
    He offered the service of buying financial assets from people who wanted to increase their gains by amplifying risk. Whenever you offer a service you expect a reward.
    • condor 18y ago
      not disagreeing or saying he didn't 'earn' the money, i think he did. but he did it as an agent of efficiency vs. innovation/creation.
      • gaius 18y ago
        Operations can be innovated too. E.g. Dell creates no new technology in their products, but they did a whole lot of value-creating innovation in their supply chain.
  • axiom 18y ago
    It was a wealth transfer, no net creation. Not so much. He allocated resources correctly. That's what putting money in the stock market is fundamentally about. If you allocate resources correctly, you win. Allocate them incorrectly and you lose. He made $15 billion by pushing down prices of assets that were overvalued (that's what short selling does.) i.e. He made the crisis slightly less terrible by driving down prices of junk securities (only slightly because 15 billion is a drop in the bucket compared to the size of the market as a whole.)
    • condor 18y ago
      I agree he allocated resources by buying/selling assets, but nowhere in the purchase/sale of those assets is value created. Prices move, but value isn't created, the underlying assets don't generate anymore than they would have had he not purchased or sold them. GOOG trading at 700 vs 200 doesn't create value, GOOG will still earn the same amount in the future whether it trades at 200 or 700. Please take some time to think about this.
      • axiom 18y ago
        Suppose there's an economy where everyone is spending 80% of their energy building refrigerators. All day that's what people are doing. Nobody actually needs these refrigerators, so they just keep building them and stacking them up in the corner. Then one day an intrepid young entrepreneur decides "hey, this whole refrigerator building thing is kind of silly. It's kind of a waste of resources. I think I'll start betting against refrigerator companies." Then he takes a whole bunch of money (that's not currently tied up in building refrigerators of course) and short sells the stocks of companies that make refrigerators. This causes their stock price to go down a bit (or rather, to go up more slowly) which drives money out of refrigerator building and into other things, like making televisions or something. A year or two pass and suddenly everyone has an epiphany. All these refrigerators everyone has been building and stacking neatly in the corner aren't actually worth $2000 apiece. In fact, since there's so damn many of them, they're only worth like $3.50! the economy crashes! all the refrigerator companies go out of business! all the investors in refrigerator companies lose their shirts! people are committing suicide left and right because their refrigerator stockpiles are suddenly worth nothing! But our intrepid entrepreneur is doing quite well. You see, all that money he drove into making televisions was safe because the value of televisions was not inflated. TV's were actually worth $1000 apiece, and there was no oversupply of TVs so their price stayed at $1000. So what was the value of the entrepreneur's work? well, he kept a whole bunch of energy from being expended on building stockpiles of refrigerators. He didn't himself go out and build televisions or anything. No, his labor was more abstract and more intellectual, but still quite valuable. Resource allocation is everything.
        • 18y ago
  • light3 18y ago
    Here we go again... like it or not he used his time and abilities to minimise loss and generate net worth for his investors, and that is valuable. It is valuable because I would pay a fee to him in order for him to manage my money. Indeed you do not need to have created something to be of value. The financial markets are a place to trade value, it can be viewed as a game, with given rules, rules which are accepted by ALL market participants who are exposed to RISK whether they know it or not. He played the game better, whether out of luck or skill he won. Just like sports stars they play by the rules and are valuable without the need to create, because its just that entertaining to see peak human performance.