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You mention that their wealth is put into the stock market, which is only part of the story since most of that wealth is in a variety of investments with a pote

by kokey 14y ago

You mention that their wealth is put into the stock market, which is only part of the story since most of that wealth is in a variety of investments with a potential return of which the stock market is only one example. That wealth also provides the capital that funds many startups or help other companies grow. Some of these investments are rubbish, as you say, but the rubbish investments reduces the value of the portfolio. The wealth that remains and grows are because they are generally managed well by the wealthy individuals or whoever is managing it for them, picking the right investments. This is a good thing and there is a kind of trickle down that results because of this, in the form of investments being allocated to people worthy to invest in.

macco 14y ago
Wrong again, there is no such thing, than well investments. Nobody beats the market portfolio in the long run - even not Warren Buffet.
jiggy2011 14y ago
What is the difference between a good investment and a rubbish one? A good investment is one where you invest in a company that produces a product for which there is demand greater than supply. And where does demand come from?
- kokey 14y ago
  You have to be able to produce the product or deliver the service at a lower cost than people are willing to pay for it. Demand is just one factor that affects how much they are willing to pay. The most basic example is an investment in an invention that saves people time and money, so people are willing to pay a portion of the time and money they are saving. Demand is then influenced by various things, including how important or significant this saving is, and how many other options they have to achieve similar savings, including alternatives from competitors. A good investor would be someone who understands and consider all these factors.
  - jiggy2011 14y ago
    When you have a large wealth gap it simply becomes less profitable to produce goods that are of high utility to those with less money. So you may get more bang for your buck by investing in companies that give labour saving benefits to the already wealthy, thus net increasing unemployment. With less income disparity the best goods to invest in may be ones which provide quality of living improvements across the spectrum.

by kokey 14y ago

macco 14y ago

Wrong again, there is no such thing, than well investments. Nobody beats the market portfolio in the long run - even not Warren Buffet.

jiggy2011 14y ago

What is the difference between a good investment and a rubbish one? A good investment is one where you invest in a company that produces a product for which there is demand greater than supply. And where does demand come from?

kokey 14y ago
You have to be able to produce the product or deliver the service at a lower cost than people are willing to pay for it. Demand is just one factor that affects how much they are willing to pay. The most basic example is an investment in an invention that saves people time and money, so people are willing to pay a portion of the time and money they are saving. Demand is then influenced by various things, including how important or significant this saving is, and how many other options they have to achieve similar savings, including alternatives from competitors. A good investor would be someone who understands and consider all these factors.
- jiggy2011 14y ago
  When you have a large wealth gap it simply becomes less profitable to produce goods that are of high utility to those with less money. So you may get more bang for your buck by investing in companies that give labour saving benefits to the already wealthy, thus net increasing unemployment. With less income disparity the best goods to invest in may be ones which provide quality of living improvements across the spectrum.