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it exist to organize the buying and selling of stocks (and other shit)Originally Posted by Cheebs
Ideally stocks are good because they allow a company to bring in funds that can be used for expansion instead of taking out a loan.
Braaaaaaainssssss
At the risk of sounding retarded:
What good does the stock market do? What benefit is there? Why let it continue to exist at all? From where I'm standing, it seems like a mountain of bullshit.
it exist to organize the buying and selling of stocks (and other shit)
Ideally stocks are good because they allow a company to bring in funds that can be used for expansion instead of taking out a loan.
Braaaaaaainssssss
When I ask why the stock market exists, I'm really asking why stocks exist. I know the market is there to sell the stocks.
And when you say stocks are there to allow you to bring in funds instead of using a loan, that sounds to me an awful lot like saying napalm is there to light candles instead of using a match.
can't wake up
Loans are a different way to bring in funds.
Let's say a person has a good idea for something. They need money to do it. They can take on debt, which requires fixed or floating rate payments periodically until the face value payoff at the end. This can be challenging - what if it doesn't work out, or takes longer than expected? They will be destitute.
Instead they offer a piece of the company's growth going forward, as well as a say in decision-making. That's all a share is.
Wild Arms Junky.
They are better. It's prolly likely that middle class stock option and award packages pale in comparison to giving the CEO like 3,000,000 shares of the company. If I was a stock holder I'd actually be pissed if they auth'ed and issued new stock to pay upper management and diluting my holdings.
http://www.fvza.org/index.html
Let me paint you a picture. An ideal one.
Say I make widgets. I own a small factory to do so. It has taken me 5 years of slowly building via income to build this factory as it is. Another widget company fails and I want to get his market share. This would require me to double my factory size in a couple weeks or months, not another 5 years.
I could take out a loan and put myself in a massive amount of debt. IF someone will give me the loan.
Or I might issue stock and hope it brings in enough funds to allow me to expand (which is iffy, depending on how the market feels about the other company failing. Was it due to the widget market failing or was the company itself a failure?)
But lets say I get all the money I needed from issuing stock. Now I can order all the new equipment I need and get started on filling the void of that other company.
Braaaaaaainssssss
OK. So we need the concept. But there is a whole bunch of retarded to cut out. Having a say in decision making: retarded. Required eternal growth for ever and ever: retarded.
Retarded and dangerous.
can't wake up
Why? If you give me money with no promise or obligation to repay, I assume you'd want some say in how it is handled.
At a basic level, it is implicit. If you give me $100 million to make a Neo Geo 2, you do have a say in decision making. You're telling me I am to make a Neo Geo 2, not spend it on coke and hookers.
Furthermore, there's just no reason why the owners of a firm should have no say in how it is managed.
Look up agency costs.
Somebody's business grows every year. I could just invest my money with those guys, if yours doesn't.
I once read something that said South Korea today has the approximate GDP of the entire world in 1820. Growth has happened.
Last edited by Diff-chan; 09 Jan 2013 at 06:40 PM.
Well, sometimes there are more important things than growth.
A lot of people want to say the job of a business is to make money. The reality is that the job of business is to create value for the culture at large in exchange for capital or other resources. The " create value" part is what separates business from something like theft, rape or just crime in general.
That is why we have regulations. To help coral business into creating value and not wonder off into practices that boarder on theft.
ITT cheebs yet again doesn't understand something and talks like he does
Stocks and bonds are not the issue. They are fine investment items that are worth having a market for. It's bullshit like derivatives that should not exist
You sir, are a hideous hermaphroditical character which has neither the force and firmness of a man, nor the gentleness and sensibility of a woman.
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