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Owning stock is the polar opposite of having money in a vault - it is giving money to the economy. Specifically to a part of the economy that is a money-generat

Owning stock is the polar opposite of having money in a vault - it is giving money to the economy. Specifically to a part of the economy that is a money-generating machine: a company. Put in circulation precisely to be invested on the economy.

ryandrake 1y ago
When you buy a stock, "the economy" is not getting the money. Some other investor is getting it, who may or may not be putting that money to use. They may just turn around and buy another stock, giving that money to another investor, who buys a different stock, and on and on and on, with no other actual economic activity happening.
- alexey-salmin 1y ago
  If the stock market worked the way you imagine, it wouldn't exist.
  - steve1977 1y ago
    It’s a pretty accurate description of how the stock market works. How would you describe it? The only time money actually flows to the company is when stock is initially offered. A company might be valued billions in the stock market, but this is not money that the company can work with.
    - alexey-salmin 1y ago
      > The only time money actually flows to the company is when stock is initially offered. > A company might be valued billions in the stock market, but this is not money that the company can work with. Both of these statements are demonstrably false. Why do you think companies go public (which is quite troublesome) in the first place? Just vanity to see the billions they don't have access to? Or to allow investors to make money without helping the company in any way? It's clear why investors would come to a purely speculative market with no intrinsic value (e.g. crypto) but it's unclear why a company would offer their shares to be traded like a shitcoin. Being public is the instrument for the company first and foremost. There's the IPO, then companies continuously issue and buyback stocks depending on the cashflow. Look e.g. at the graph of Tesla's outstanding shares [1]. Then companies also sell bonds or borrow money using their own stock as the collateral. The bigger valuation you have the more capital you have access to. Not to mention that even in the OP's simplistic view of the market there is an actual "new value" aspect: if you buy stocks from a VC or a founder, they use it to fund the next startup. [1] https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-outstanding https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-...
      - steve1977 1y ago
        I'm not seeing how this is contradicting to what I said. IPO is initial offering of stock. That's when money flows to the company. Fair point about using stock as collateral though.
        alexey-salmin 1y ago
        What about issuing more stock after IPO? For many companies money flows in continuously, check the Tesla graph I sent above. It wouldn't be called "Initial Public Offering" if it was the "Only Public Offering" like you suggest.
        steve1977 1y ago
        I think my terminology might not be the test (non-english native speaker). When I say initial offering, I mean whenever stock is newly (initially) issued - whether that's in IPO, after an IPO or also in a private offering. Not sure what the correct term would be. My point was, money essentially only flows into the company at that point. E.g. company issues stock, investor A buys it. When investor A sells to investor B, money only flows between these two investors. No money flows to the company. Unless - as you have pointed out - company assumes the role of an investor in its own stock. But the fact alone that a stock price is rising as such does not generate any new capital to work with for the company. And that is a point many people seem to misunderstand. When Microsoft is worth 3.76 trillion USD, that doesn't mean that Microsoft has 3.76 trillion USD it can work with. That was the point I was trying to make.
        alexey-salmin 1y ago
        That's true but saying that investors moving money between each other is a "pretty accurate description of how the stock market works" is simply incorrect. The above is a mere byproduct of the market working. The market "works" by giving companies and entrepreneurs access to capital, the rest is a derivative of that. Otherwise you can as well trade postal stamps rather than stocks.
- YZF 1y ago
  It's a lot more complicated than this. For example, money can be borrowed using stock as collateral and spent. Companies can and do also issue more stock. There are also indirect effects, for example investors putting money in new ventures. Either way the economy is not zero sum game where there's a fixed amount of money. If the stock market grows there is more money. That money reflects future expectations discounted to today but it's still more money. On the original question, how does Ballmer being very wealthy impacts the rest of us, there is no easy answer. It depends on what he does with his money. It can be neutral, positive, or negative. The sentiment though seems to be mostly driven by jealousy and a sense of unfairness. It's in fashion these days (in some circles) to hate the "rich" (which is basically anyone better off than yourself more or less).

ryandrake 1y ago

When you buy a stock, "the economy" is not getting the money. Some other investor is getting it, who may or may not be putting that money to use. They may just turn around and buy another stock, giving that money to another investor, who buys a different stock, and on and on and on, with no other actual economic activity happening.

alexey-salmin 1y ago
If the stock market worked the way you imagine, it wouldn't exist.
- steve1977 1y ago
  It’s a pretty accurate description of how the stock market works. How would you describe it? The only time money actually flows to the company is when stock is initially offered. A company might be valued billions in the stock market, but this is not money that the company can work with.
  - alexey-salmin 1y ago
    > The only time money actually flows to the company is when stock is initially offered. > A company might be valued billions in the stock market, but this is not money that the company can work with. Both of these statements are demonstrably false. Why do you think companies go public (which is quite troublesome) in the first place? Just vanity to see the billions they don't have access to? Or to allow investors to make money without helping the company in any way? It's clear why investors would come to a purely speculative market with no intrinsic value (e.g. crypto) but it's unclear why a company would offer their shares to be traded like a shitcoin. Being public is the instrument for the company first and foremost. There's the IPO, then companies continuously issue and buyback stocks depending on the cashflow. Look e.g. at the graph of Tesla's outstanding shares [1]. Then companies also sell bonds or borrow money using their own stock as the collateral. The bigger valuation you have the more capital you have access to. Not to mention that even in the OP's simplistic view of the market there is an actual "new value" aspect: if you buy stocks from a VC or a founder, they use it to fund the next startup. [1] https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-outstanding https://www.macrotrends.net/stocks/charts/TSLA/tesla/shares-...
    - steve1977 1y ago
      I'm not seeing how this is contradicting to what I said. IPO is initial offering of stock. That's when money flows to the company. Fair point about using stock as collateral though.
      - alexey-salmin 1y ago
        What about issuing more stock after IPO? For many companies money flows in continuously, check the Tesla graph I sent above. It wouldn't be called "Initial Public Offering" if it was the "Only Public Offering" like you suggest.
        steve1977 1y ago
        I think my terminology might not be the test (non-english native speaker). When I say initial offering, I mean whenever stock is newly (initially) issued - whether that's in IPO, after an IPO or also in a private offering. Not sure what the correct term would be. My point was, money essentially only flows into the company at that point. E.g. company issues stock, investor A buys it. When investor A sells to investor B, money only flows between these two investors. No money flows to the company. Unless - as you have pointed out - company assumes the role of an investor in its own stock. But the fact alone that a stock price is rising as such does not generate any new capital to work with for the company. And that is a point many people seem to misunderstand. When Microsoft is worth 3.76 trillion USD, that doesn't mean that Microsoft has 3.76 trillion USD it can work with. That was the point I was trying to make.
        alexey-salmin 1y ago
        That's true but saying that investors moving money between each other is a "pretty accurate description of how the stock market works" is simply incorrect. The above is a mere byproduct of the market working. The market "works" by giving companies and entrepreneurs access to capital, the rest is a derivative of that. Otherwise you can as well trade postal stamps rather than stocks.
YZF 1y ago
It's a lot more complicated than this. For example, money can be borrowed using stock as collateral and spent. Companies can and do also issue more stock. There are also indirect effects, for example investors putting money in new ventures. Either way the economy is not zero sum game where there's a fixed amount of money. If the stock market grows there is more money. That money reflects future expectations discounted to today but it's still more money. On the original question, how does Ballmer being very wealthy impacts the rest of us, there is no easy answer. It depends on what he does with his money. It can be neutral, positive, or negative. The sentiment though seems to be mostly driven by jealousy and a sense of unfairness. It's in fashion these days (in some circles) to hate the "rich" (which is basically anyone better off than yourself more or less).