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This article focuses on financial reasons not to trade - but there is also an ethical concern. The stock market is a zero sum game - for every buyer, there sho

This article focuses on financial reasons not to trade - but there is also an ethical concern. The stock market is a zero sum game - for every buyer, there should be a seller (whether it's another punter or a broker). for every win, there is a corresponding loss. As such, the stock market (trading on companies already invested in) is 100% unproductive - it's not doing any useful work (except valuing stocks, if that's useful.) Therefore, if you want to contribute to humanity, if you want to feel like your job actually accomplishes something, you are literally better off as a Barista at Starbucks, like my 17 year old self, than trading stocks. The stock market drains too many clever brains from other real industries - it is a tragedy. Think what we could accomplish if return actually reflected value added/economic utility!

maxerickson 13y ago
Some stocks do pay dividends or otherwise find a way to return earnings to investors. (So it is possible to overall make money on shares that are eventually sold for a loss) Certainly, the current market is not particularly dominated by those stocks. It is an interesting question though, what mechanism for providing large amounts of capital would result in the least whinging?
- tehwalrus 13y ago
  I'm not objecting to people owning stocks for the dividends - buying part of a debt and getting the return on it isn't a bad way to fund stuff, and it is a good way to keep your savings scaled to the economy when savings interest is puny (as now). As the author of this post suggests, the way to do this is to buy into an index-averaged fund. I do think far too much is made of price fluctuation profit, which is essentially a casino game, rigged to those with better information (i.e. not you) and completely unproductive to boot. I don't see why it should be an industry, nor why trades should count towards GDP.
  - onebaddude 13y ago
    >buying part of a debt and getting the return on it isn't a bad way to fund stuff" Receiving dividends isn't buying part of a debt; it's receiving your share of the profits of the company due to ownership. >when savings interest is puny (as now) What do you suppose happens when you "save" money? You think your cash just sits in a bank vault? No, it's put to work by capital allocators, using the same methods you find so unappealing. There is nothing "honorable" about "saving" as opposed to buying and selling individual stocks yourself. >which is essentially a casino game, rigged to those with better information I think you have an odd view of casino games. Such games reveal all probabilities, but those probabilities are titled against you. There is no unknown information, and you will lose in the long run. On the other hand, buying a stock in a company requires you to take some educated guesses about the future. What will future earnings be? What will the economy look like? What technological advances will occur? There is far more uncertainty. At the same time, you know the price you are paying for the stock, and hence, based on your forecasts, can determine whether the company offers a suitable rate of return. What other people are doing is irrelevant. For a site that is so encouraging towards investing in businesses with good ideas, I don't understand the aversion to doing the same through the stock market.
    - tehwalrus 13y ago
      > Receiving dividends isn't buying part of a debt; it's receiving your share of the profits of the company due to ownership. Apologies, I'm applying my own meta-interpretation of company funding - for a non-profit, ownership consists only of the assets since there will never be profit, by definition, so the market goodwill is defined to be 0. In such a situation, you can still get exactly the same money to change hands as an investment in a for-profit - by calling it debt. The non-profit could pay interest on the debt in the same way as dividends are paid, and so on. These work like non-voting/Preference shares. I automatically convert "real" terminology into this framework in my head, as I don't really believe groups of people (companies) can be valued philosophically. Apologies for letting it slip out! > What do you suppose happens when you "save" money? I am well aware of all this, a savings account is a less risky way of doing the same thing (although you're supposed to be investing in mortgages rather than companies). When savings rates are good, there isn't any need to risk your capital (let the bank do it for you). When rates are bad, you need to take on some of the risk yourself in order to get a good return. My analysis doesn't change. > For a site that is so encouraging towards investing in businesses with good ideas, I don't understand the aversion to doing the same through the stock market. But you aren't. If you're buying a new share issue, then sure you are. But if you're buying from someone else in the market, you are not funding the company in any way - they don't get any money out of the transaction - what you are doing is much closer to buying a debt in terms of what money actually changes hands.
tvladeck 13y ago
This is not true. Because there is a liquid market for equities, it is possible for companies to IPO into that market, incentivizing entrepreneurs to start companies and for VCs to fund them. High liquidity in the market also leads to higher-resolution pricing, which gives the economy information on where, and where not, to invest.
- tehwalrus 13y ago
  I'm not talking about a new share release. I'm talking about the buying and selling of existing shares.
  - tvladeck 13y ago
    Right. So am I. It's the liquidity of the secondary market that makes the primary market possible. That's my point.
    - tehwalrus 13y ago
      Oh I see. You mean that without the capital gains there's no reasons for VCs to invest in the first place, since listing on the stock market is VCs and founders selling their equity. I agree on that point - but then VCs and founders aren't non-productive; they built a company. You still don't need an entire massive industry for "secondary equity sales" in order to float...maybe. I'm less convinced of my own point now, well done. If I had time to build an economic model to study it, I would.
faet 13y ago
> for every win, there is a corresponding loss. If I buy at 10 and Sell to you at 15. I am up 50%. You are Even. You sell at 20. You are now up. And the buyer has yet to lose/gain money.
- tehwalrus 13y ago
  who did you buy from the first time, and what did they pay for the stock? and who bought it? The whole exercise is just shuffling money between people's accounts, nothing substantive changes in the real world.
deleted 13y ago
[deleted]

maxerickson 13y ago

Some stocks do pay dividends or otherwise find a way to return earnings to investors. (So it is possible to overall make money on shares that are eventually sold for a loss) Certainly, the current market is not particularly dominated by those stocks. It is an interesting question though, what mechanism for providing large amounts of capital would result in the least whinging?

tehwalrus 13y ago
I'm not objecting to people owning stocks for the dividends - buying part of a debt and getting the return on it isn't a bad way to fund stuff, and it is a good way to keep your savings scaled to the economy when savings interest is puny (as now). As the author of this post suggests, the way to do this is to buy into an index-averaged fund. I do think far too much is made of price fluctuation profit, which is essentially a casino game, rigged to those with better information (i.e. not you) and completely unproductive to boot. I don't see why it should be an industry, nor why trades should count towards GDP.
- onebaddude 13y ago
  >buying part of a debt and getting the return on it isn't a bad way to fund stuff" Receiving dividends isn't buying part of a debt; it's receiving your share of the profits of the company due to ownership. >when savings interest is puny (as now) What do you suppose happens when you "save" money? You think your cash just sits in a bank vault? No, it's put to work by capital allocators, using the same methods you find so unappealing. There is nothing "honorable" about "saving" as opposed to buying and selling individual stocks yourself. >which is essentially a casino game, rigged to those with better information I think you have an odd view of casino games. Such games reveal all probabilities, but those probabilities are titled against you. There is no unknown information, and you will lose in the long run. On the other hand, buying a stock in a company requires you to take some educated guesses about the future. What will future earnings be? What will the economy look like? What technological advances will occur? There is far more uncertainty. At the same time, you know the price you are paying for the stock, and hence, based on your forecasts, can determine whether the company offers a suitable rate of return. What other people are doing is irrelevant. For a site that is so encouraging towards investing in businesses with good ideas, I don't understand the aversion to doing the same through the stock market.
  - tehwalrus 13y ago
    > Receiving dividends isn't buying part of a debt; it's receiving your share of the profits of the company due to ownership. Apologies, I'm applying my own meta-interpretation of company funding - for a non-profit, ownership consists only of the assets since there will never be profit, by definition, so the market goodwill is defined to be 0. In such a situation, you can still get exactly the same money to change hands as an investment in a for-profit - by calling it debt. The non-profit could pay interest on the debt in the same way as dividends are paid, and so on. These work like non-voting/Preference shares. I automatically convert "real" terminology into this framework in my head, as I don't really believe groups of people (companies) can be valued philosophically. Apologies for letting it slip out! > What do you suppose happens when you "save" money? I am well aware of all this, a savings account is a less risky way of doing the same thing (although you're supposed to be investing in mortgages rather than companies). When savings rates are good, there isn't any need to risk your capital (let the bank do it for you). When rates are bad, you need to take on some of the risk yourself in order to get a good return. My analysis doesn't change. > For a site that is so encouraging towards investing in businesses with good ideas, I don't understand the aversion to doing the same through the stock market. But you aren't. If you're buying a new share issue, then sure you are. But if you're buying from someone else in the market, you are not funding the company in any way - they don't get any money out of the transaction - what you are doing is much closer to buying a debt in terms of what money actually changes hands.

tvladeck 13y ago

This is not true. Because there is a liquid market for equities, it is possible for companies to IPO into that market, incentivizing entrepreneurs to start companies and for VCs to fund them. High liquidity in the market also leads to higher-resolution pricing, which gives the economy information on where, and where not, to invest.

tehwalrus 13y ago
I'm not talking about a new share release. I'm talking about the buying and selling of existing shares.
- tvladeck 13y ago
  Right. So am I. It's the liquidity of the secondary market that makes the primary market possible. That's my point.
  - tehwalrus 13y ago
    Oh I see. You mean that without the capital gains there's no reasons for VCs to invest in the first place, since listing on the stock market is VCs and founders selling their equity. I agree on that point - but then VCs and founders aren't non-productive; they built a company. You still don't need an entire massive industry for "secondary equity sales" in order to float...maybe. I'm less convinced of my own point now, well done. If I had time to build an economic model to study it, I would.

faet 13y ago

> for every win, there is a corresponding loss. If I buy at 10 and Sell to you at 15. I am up 50%. You are Even. You sell at 20. You are now up. And the buyer has yet to lose/gain money.

tehwalrus 13y ago
who did you buy from the first time, and what did they pay for the stock? and who bought it? The whole exercise is just shuffling money between people's accounts, nothing substantive changes in the real world.

deleted 13y ago

[deleted]