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Most of the stock market activity is secondary trading, which has little to do with allocating capital. Trading existing shares just redistributes ownership.
by olalonde 1y ago
Most of the stock market activity is secondary trading, which has little to do with allocating capital. Trading existing shares just redistributes ownership.
- f33d5173 1y agoThe stock market has a number of essential components without which it could not exist, all of which support it's role in allocating capital. If there was no secondary market to sell their stock to, someome might not invest in the first place. If there were or were not market manipulators cheating others out of money, that would make no difference as to whether someone invested in a company.
- mlrtime 1y agoSecondary trading enables risk transfer, which is important for allocating capital. Your first sentence is somewhat accurate, your second is not at all, specifically "just".
- olalonde 1y agoI didn't say stock markets don't serve a useful purpose. Regardless, my original point is simply that traders should focus on fundamental value, not try to guess what others are thinking. If they choose to play that game and get burned, that should be on them. There's no real necessity to regulate "market manipulation".