What purpose does the stock market serve?

[untermensche]

There is no ideal stock market. There are only existing stock markets.

And the existing stock markets are set up so the richest can take for themselves as much of the fruits of labor as possible.

 

[coloradoatheist]

There is no ideal stock market. There are only existing stock markets.

And the existing stock markets are set up so the richest can take for themselves as much of the fruits of labor as possible.

And without a stock market, we wouldn't have a middle class. All we would have is wealthy land owners and the peasants.

 

[Togo]

There is no ideal stock market. There are only existing stock markets.

And the existing stock markets are set up so the richest can take for themselves as much of the fruits of labor as possible.

And without a stock market, we wouldn't have a middle class. All we would have is wealthy land owners and the peasants.

We've had middle classes in history without having a stock market. I can see the point you're trying to make, but you're overstating it.

 

[ksen]

And without a stock market, we wouldn't have a middle class. All we would have is wealthy land owners and the peasants.

We've had middle classes in history without having a stock market. I can see the point you're trying to make, but you're overstating it.

Especially since we are heading right back to the modern equivalent of only having wealthy landowners and peasants with this stock market in place.

 

[dismal]

I reject your rejection.

I reassert my rejection of your assertion.

 

[Sarpedon]

There is no ideal stock market. There are only existing stock markets.

And the existing stock markets are set up so the richest can take for themselves as much of the fruits of labor as possible.

The Dow that can be told is not the Eternal Dow.

--David Foster Wallace.

 

[untermensche]

There is no ideal stock market. There are only existing stock markets.

And the existing stock markets are set up so the richest can take for themselves as much of the fruits of labor as possible.

And without a stock market, we wouldn't have a middle class. All we would have is wealthy land owners and the peasants.

We have a middle class because of unions.

If it were up to capitalists there never would have been one.

And as we see, when the power of unions dies the progress of the middle class stops.

 

[TV and credit cards]

And without a stock market, we wouldn't have a middle class. All we would have is wealthy land owners and the peasants.

We have a middle class because of unions.

If it were up to capitalists there never would have been one.

And as we see, when the power of unions dies the progress of the middle class stops.

We have unions because we have corporations. We have corporations because investors pooled their money and said, yeah, I'll take a risk.

Beyond that, the game is rigged for the wealthy to succeed. I've seens stocks move inexplicably, until tomorrow, after the move, then it all becomes clear to me, the average moke watching CNBC.
All my money is in pickle jars. That's the future.

 

[Bronzeage]

We have a middle class because of unions.

If it were up to capitalists there never would have been one.

And as we see, when the power of unions dies the progress of the middle class stops.

We have unions because we have corporations. We have corporations because investors pooled their money and said, yeah, I'll take a risk.

Beyond that, the game is rigged for the wealthy to succeed. I've seens stocks move inexplicably, until tomorrow, after the move, then it all becomes clear to me, the average moke watching CNBC.
All my money is in pickle jars. That's the future.

If this were true, you'd be better off with pickles in the jars.

 

[SimpleDon]

The stock market is a secondary market. People who make or who lose money in the market do so from other people, not from the companies whose stocks are traded.In this respect it is like a gambling house, betting on a football game for example.

I can tell you from personal experience that the stock market is the last place that an established corporation goes to to raise money for expansion say. Selling company held stock or issuing new stock is almost like taking out a permanent interest only loan that is never paid off. Stock shares are carried as liabilities for the corporation.

One of the characteristics of our current economics is an over appreciation of the role of capital and an under appreciation of the role of demand, which comes from wages. This has gotten us to the point that we are now, with too much capital in the various different forms of stocks, bonds, derivatives like futures, etc., all of the magic of Wall Street that when looked at are nothing more than paper not really much more than different forms of money. We seem to have forgotten that it is the single job of all of the various parts of the financial markets is to turn paper wealth into real economic wealth which is production facilities producing products for consumption. Wall Street has turned the production of different forms of paper, different forms of money, into an end unto itself, separate from and competing with real investment to increase the real wealth of the nation.

Capital in the modern economy is nothing more than money and money is not real wealth to the over all economy or to the nation. Money is the incentive that is created to get people to build real wealth, factories that produce product and to educate and to train our people. By this measure we and our financial markets are failing, no matter what the valuation of our stock market is.

 

[dismal]

I can tell you from personal experience that the stock market is the last place that an established corporation goes to to raise money for expansion say. Selling company held stock or issuing new stock is almost like taking out a permanent interest only loan that is never paid off. Stock shares are carried as liabilities for the corporation.

Nope. Secondary offerings are quite common.

http://soberlook.com/2012/11/total-equity-offerings-in-us-hit-all.html

 

[Jayjay]

I'm just suggesting that our societal focus on the stock market may not necessarily be a good thing for society. Policies that are good for the stock market aren't necessarily good for society. For example when good employment numbers come out instead of being greeted with fanfare and joy we are instead treated with stories about how those numbers will negatively effect the stock market.

That sounds counter-intuitive. Got a link?

 

[bilby]

The purpose of the stock market is the same purpose that all markets have - they provide liquidity. It doesn't matter if you are trading in companies or potatoes; a market is the way to go.

A potato farmer wants to sell his entire crop in one place; but cooks want to buy a few potatoes at a time. The cook doesn't want to trudge from farm to farm looking for someone with potatoes to sell; and the farmer doesn't want to go door to door looking for people who want to buy potatoes today. So when the local town says 'We will have a market in the town square every Tuesday from 7am to 3pm', they provide liquidity - and a stock market does exactly the same thing for companies (or bits of companies).

That's the purpose of a market. The stock market is no different, in terms of purpose, to a vegetable market.

 

[fromderinside]

Wait until I atta boy a few others

 

[Wiploc]

I'm just suggesting that our societal focus on the stock market may not necessarily be a good thing for society. Policies that are good for the stock market aren't necessarily good for society. For example when good employment numbers come out instead of being greeted with fanfare and joy we are instead treated with stories about how those numbers will negatively effect the stock market.

That sounds counter-intuitive. Got a link?

http://krugman.blogs.nytimes.com/?_r=0

For a specific instance, you can scroll down to to the entry of 2:43pm on Dec. 10. ("Jean Claude Yellen," right after the video of Peter Gabriel). Or you can just read random entries; it comes up frequently.

If the economy heats up too much, it will crash. If it crashes, we can stimulate it by lowering interest rates or deficit spending. If it overheats, we can cool it down by raising interest rates, of cutting back on government spending. We're not good at it, but this is how we're supposed to smooth out the business cycle.

The example given, "good employment numbers," is only one example. Good crop prices, good exports, good anything else would suffice. It just wouldn't---or shouldn't---suffice by itself. If the economy overheats as a whole, then it needs to be cooled down. This is how we avoid an abrupt crash and a hard landing.

There is, of course, another point of view, sort of:
"Fear the Boom and Bust," a Hayek vs. Keynes Rap Anthem
"Fight of the Century," Keynes vs. Hayek round two.

 

[untermensche]

We have a middle class because of unions.

If it were up to capitalists there never would have been one.

And as we see, when the power of unions dies the progress of the middle class stops.

We have unions because we have corporations. We have corporations because investors pooled their money and said, yeah, I'll take a risk.

Beyond that, the game is rigged for the wealthy to succeed. I've seens stocks move inexplicably, until tomorrow, after the move, then it all becomes clear to me, the average moke watching CNBC.
All my money is in pickle jars. That's the future.

Unions began because corporations were so nasty and abusive, not simply because corporations existed.

Corporations exist because a few with wealth want to exploit something for gain.

Usually human labor is exploited to extract the gain.

 

[Loren Pechtel]

You mean if the company sells more stock on the market?

b) if there were no liquid stock market in which to sell people would be reluctant to buy in the IPO

Sure.

I'm not advocating the destruction of the stock market. I guess I'm just questioning the pivotal role it plays in all of our lives. Is that really necessary? Is it actually helpful to our society to have so many decisions decided based upon how the stock market will react?

IPO = Initial Public Offering. There can be and often are other secondary offerings.

I'm sorry if it plays a pivotal role in your life but that's a personal choice.

You only got half of it.

If there is no secondary market for stock then the primary market becomes far less valuable. Thus companies can't raise anything like as much in their IPO, economic growth suffers.

 

[Loren Pechtel]

You mean if the company sells more stock on the market?

b) if there were no liquid stock market in which to sell people would be reluctant to buy in the IPO

Sure.

I'm not advocating the destruction of the stock market. I guess I'm just questioning the pivotal role it plays in all of our lives. Is that really necessary? Is it actually helpful to our society to have so many decisions decided based upon how the stock market will react?

IPO = Initial Public Offering. There can be and often are other secondary offerings.

I'm sorry if it plays a pivotal role in your life but that's a personal choice.

You only got half of it.

If there is no secondary market for stock then the primary market becomes far less valuable. Thus companies can't raise anything like as much in their IPO, economic growth suffers.

 

[dismal]

We have unions because we have corporations. We have corporations because investors pooled their money and said, yeah, I'll take a risk.

Beyond that, the game is rigged for the wealthy to succeed. I've seens stocks move inexplicably, until tomorrow, after the move, then it all becomes clear to me, the average moke watching CNBC.
All my money is in pickle jars. That's the future.

Unions began because corporations were so nasty and abusive, not simply because corporations existed.

Corporations exist because a few with wealth want to exploit something for gain.

Usually human labor is exploited to extract the gain.

And now the only growing unions are government employee unions because governments are so nasty and abusive.

 

[Loren Pechtel]

I'm just suggesting that our societal focus on the stock market may not necessarily be a good thing for society. Policies that are good for the stock market aren't necessarily good for society. For example when good employment numbers come out instead of being greeted with fanfare and joy we are instead treated with stories about how those numbers will negatively effect the stock market.

That sounds counter-intuitive. Got a link?

The pattern is very real: What's going on is that good employment numbers suggest the Fed will not be quite so pro-growth and that will hurt the stock market.

However, what's really going on is far more newscasters that need to say something than anything meaningful.

- - - Updated - - -

The purpose of the stock market is the same purpose that all markets have - they provide liquidity. It doesn't matter if you are trading in companies or potatoes; a market is the way to go.

A potato farmer wants to sell his entire crop in one place; but cooks want to buy a few potatoes at a time. The cook doesn't want to trudge from farm to farm looking for someone with potatoes to sell; and the farmer doesn't want to go door to door looking for people who want to buy potatoes today. So when the local town says 'We will have a market in the town square every Tuesday from 7am to 3pm', they provide liquidity - and a stock market does exactly the same thing for companies (or bits of companies).

That's the purpose of a market. The stock market is no different, in terms of purpose, to a vegetable market.

Bullseye