There.\u00a0 I said it.<\/p>\n\t
And I mean it.\u00a0 Not that certain stocks are a ponzi scheme….the entire concept of the stock market is a ponzi scheme.<\/p>\n\t
Think of all the people that work in industries related to the stock market……are you thinking?\u00a0 There are newspapers, magazines, and entire TV channels that employee only people talking about the stock market all day.<\/p>\n\t
And they all have no fucking idea what they are talking about.\u00a0 They are so spectacularly wrong, even weathermen are more accurate than these people….and if weathermen are wrong you simply get wet.\u00a0 When all these clowns are wrong the global economy is wrecked.<\/p>\n\t
Stock shares are fiat money (ie. THEY ARE WORTHLESS):<\/strong> A company issues stock, but what is a stock?\u00a0 It is simply debt, and they raise public debt (issue stock), because it is cheaper than bank debt.\u00a0 If they could raise money cheaper simply by borrowing from a bank….they would.\u00a0 They issue stock debt to YOU because it is cheaper than asking a bank.<\/p>\n\t Why is stock so “cheap”?\u00a0 Well….because it is FREE.\u00a0 Bank debt is harder to get out of.\u00a0 If the company fails, the liquidated assets of the company will go first to the banks (before the stockholders).\u00a0 Since debt is concentrated with the bank, they can ask the company to do things (stock ownership is dispersed, so stockholders (unless you’re a really large one) aren’t well organized and have no power).<\/p>\n\t Do you understand? Companies give you a piece of paper (you can call it stock or you can call it currency), that gives you no charge on the company (you can’t trade it in for any product), puts you last in line for liquidated assets if the company goes bankrupt, and is worth something only because other yahoos agree to pay you for it (but it has no utility).<\/p>\n\t Stock is simply currency that a company has issued<\/strong> (like the government issues US Dollars)……except you can’t buy anything with it.\u00a0 You simply own it, like art or baseball cards, until someone else agrees to buy it from you.<\/p>\n\t The exception to this is companies that issue a dividend (you do actually get something in this case); however, the companies that don’t issue a dividend are still bought and sold very regularly (Microsoft didn’t for years and Google still doesn’t).<\/p>\n\t Stock price changes do not make (or lose) any money for the company<\/strong>:<\/p>\n\t Companies issue the public debt of stocks once, at the IPO (Initial Public Offering).\u00a0 At the IPO they sell a bunch of shares to us and we give them money.\u00a0 They then spend that money.\u00a0 They gave us “shares” (which are worthless; they are not “sharing” anything)…..we gave them money.<\/p>\n\t The stock market is simply a second hand swap meet.<\/em><\/p>\n\t Stocks are to companies as used cars are to car makers……they make NO MONEY when their stock goes up (just like a sold used Toyota makes no money for Toyota).<\/p>\n\t People investing in stocks do not help business or the economy<\/strong>:<\/p>\n\t You’re not creating jobs (except in finance) or helping the company; stocks (at their best) are supposed to reflect the underlying health of a company; they do not CAUSE the underlying health of the company.<\/p>\n\t Here is a thought experiment:<\/p>\n\t If everyone bought the stock of a company, what would the outcome be?\u00a0 Nothing except an inflated stock price.\u00a0 No one really has anything.\u00a0 Nothing has been produced (except fees for finance companies).<\/p>\n\t If everyone bought the PRODUCT of a company, what would the outcome be?\u00a0 Well, they would have something (the product), and the company would get that money.\u00a0 That is something you can work with.<\/p>\n\t Stock market prices do not predict anything<\/strong>:<\/p>\n\t Stocks may reflect some things, though what they reflect I’m not sure (human psychology about the markets themselves perhaps?).\u00a0 The smartest PHDs in the world have thrown every algorithm in the world at stock data.\u00a0 It is random from one day to the next.<\/p>\n\t The only proven way to predict the stock market is to have INSIDE INFORMATION<\/em>.\u00a0 The rest of us will never do better than the market in general except by luck.<\/p>\n\t The capital gains tax reduction on stock investments is simply a tax break for the rich<\/strong>:<\/p>\n\t The average person gets almost no income from stocks; functionally we don’t really care about the capital gains tax rate….because we don’t have any significant capital gains.<\/p>\n\t 1 percent of all taxpayers collect over two-thirds of all capital gains; that top 1% gets a tax break on their income; we don’t.\u00a0 We pay 33% or whatever, and they pay 15% on their capital gains.<\/p>\n\t It is said that a reduced capital gains tax encourages investment.\u00a0 Perhaps (I won’t go into the economic arguments here)…however, in the labor vs. business struggle…..labor has really been losing out over the past twenty years.\u00a0 Its hard to have sympathy for the capital gains crowd (since they just wrecked the world economy).<\/p>\n\t What is good for the stock market is not what is good for America<\/strong>:<\/p>\n\t Correlation is not causation.\u00a0 It is true that if the underlying reality of the the economy is good then you’ll probably have a decent market return; however, you CANNOT WAG THE DOG in this case.\u00a0 Propping up the stock market will not cause a fundamentally sound economy.\u00a0 It will simply cause the stock holders to get rich…while the underlying fundamentals (labor, jobs, etc) continue to worsen.<\/p>\n\t Chew on that.\n<\/p>\n","protected":false},"excerpt":{"rendered":" There.\u00a0 I said it. And I mean it.\u00a0 Not that certain stocks are a ponzi scheme….the entire concept of the stock market is a ponzi scheme. Think of all the people that work in industries related to the stock market……are you thinking?\u00a0 There are newspapers, magazines, and entire TV channels that employee only people talking […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0},"categories":[10],"tags":[28,66],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p3IMYj-5a","jetpack-related-posts":[{"id":465,"url":"http:\/\/chasingeden.com\/?p=465","url_meta":{"origin":320,"position":0},"title":"Of course the Earth isn’t flat. Of course smoking is bad for you. What does this have to do with the stock market?","author":"kellio","date":"September 15, 2011","format":false,"excerpt":"We will all look back in 100 years and wonder why people ever invested in the stock market. \u00a0It will seem like such an obviously misguided and\u00a0colossally\u00a0bad idea; how did we ever think that could work out? I admit that I do not understand the stock market. \u00a0It isn't that\u2026","rel":"","context":"In "Inside My Head"","block_context":{"text":"Inside My Head","link":"http:\/\/chasingeden.com\/?cat=9"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":597,"url":"http:\/\/chasingeden.com\/?p=597","url_meta":{"origin":320,"position":1},"title":"I think pensions are a good idea","author":"kellio","date":"May 23, 2013","format":false,"excerpt":"Retirement is a modern concept; people historically worked until they couldn't work anymore, at least in some capacity. Regardless, like most people, I would like to retire. \u00a0The question is: \u00a0How do you get the money? A Pension is a defined benefit; it pays a fixed amount per year until\u2026","rel":"","context":"In "Inside My Head"","block_context":{"text":"Inside My Head","link":"http:\/\/chasingeden.com\/?cat=9"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":31,"url":"http:\/\/chasingeden.com\/?p=31","url_meta":{"origin":320,"position":2},"title":"Home ownership: Does it make sense?","author":"kellio","date":"November 27, 2007","format":false,"excerpt":"Or more to the point: does it make sense for me? In a word, No. I'll explain why: A 150 to 200k dollar mortgage ends up between $1000 and $1200 bucks a month. Then you add on internet, gas, power, maintenance, cable, insurance, etc, etc, etc. The price is getting\u2026","rel":"","context":"In "Inside My Head"","block_context":{"text":"Inside My Head","link":"http:\/\/chasingeden.com\/?cat=9"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":49,"url":"http:\/\/chasingeden.com\/?p=49","url_meta":{"origin":320,"position":3},"title":"Home ownership (part II): Advantages and Disadvantages","author":"kellio","date":"February 17, 2008","format":false,"excerpt":"Advantages: It is better than coming home to a rental. There is a sense of increased comfort when everything is yours and you know that if you don't like the way the kitchen is...you can tear it out and make it how you like. (Not that I'm likely to do\u2026","rel":"","context":"In "What I'm doing"","block_context":{"text":"What I'm doing","link":"http:\/\/chasingeden.com\/?cat=3"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":552,"url":"http:\/\/chasingeden.com\/?p=552","url_meta":{"origin":320,"position":4},"title":"Tax cuts for the rich do not stimulate the economy. They aren’t even a neutral. Tax cuts for the rich are a drain on the economy.","author":"kellio","date":"May 15, 2012","format":false,"excerpt":"A little high level data\/history here, and then we'll jump into Myths related to taxes for the rich. \u00a0I will provide a logical plausible mechanism for why low taxes for the rich do not stimulate the economy. 1. \u00a0The GDP growth rates during times of high marginal tax rates on\u2026","rel":"","context":"In \"economics\"","block_context":{"text":"economics","link":"http:\/\/chasingeden.com\/?tag=economics"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":612,"url":"http:\/\/chasingeden.com\/?p=612","url_meta":{"origin":320,"position":5},"title":"I still think pensions are a good idea (Part II)","author":"kellio","date":"May 30, 2013","format":false,"excerpt":"A friend of mine, whose opinion I respect, commented on my last post about why I like pensions: \"I think your post opens you up to some pretty serious critique, though. I mean, essentially what you are saying is, \"Why should I have to be responsible for my own future\u2026","rel":"","context":"In \"economics\"","block_context":{"text":"economics","link":"http:\/\/chasingeden.com\/?tag=economics"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/posts\/320"}],"collection":[{"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/chasingeden.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=320"}],"version-history":[{"count":6,"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/posts\/320\/revisions"}],"predecessor-version":[{"id":329,"href":"http:\/\/chasingeden.com\/index.php?rest_route=\/wp\/v2\/posts\/320\/revisions\/329"}],"wp:attachment":[{"href":"http:\/\/chasingeden.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/chasingeden.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=320"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/chasingeden.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}