I'm a pretty smart guy, but the NEED for the stock market still escapes me.

[Tyler Durden]

It still smells like a scam.

YOU sell ME one share of your endeavor. This "pays" a dividend if YOU make money with your endeavor. Not like it's more than what I could get with a good CD, though. The INVESTMENT angle comes in I "gamble" and buy a shitload of your "stock" AND if YOU make a TON of money with your endeavor, and sell off to someone else. THEN, if I sell TOO, I get more than what I gave YOU in the first place.

All of this works if I am one HELL of an astute investor, or I pay someone else a share of a TON of money to make my choices for me.

'Scuse the ol' Socialist here, but this sounds like "RICH GUY NIGHT AT THE RIGGED CASINO" to me. I don't see where JOE SCHMUCKITELLI ever stands to make enough off of this to make the old "pension system" look bad.

Am I wrong here?

[lynnertic]

1. If you bought shares of my company, it wouldn't need to borrow from a bank

That's one way to look at it I think, taking greed out of the equation.

[Tyler Durden]

4. I see that part....

In the Capitalist World, it's supposed to bring ME a benefit.

Unless I'm investing BILLIONS or my Magic 8-Ball is tied into the market, I don't see how that works. I don't know ANYONE who expects their 401k to outperform what they would have received in a traditional pension scenario.

That's what I don't understand.

[lynnertic]

26. I don't think that way

so I don't have cognitive dissonance about it.

As a Gen-Xer and an entrepreneur, I never expected a pension, and saw through the 401k the first time it was presented to me. I think of investments in the long-term or not at all.

[Tyler Durden]

35. I repeat as I have before: NOTHING lasts forever.

And not everyone can "...go ye and do likewise..."

This attitude, which is extremely centered around the "I" is dangerous to the concept of politics, and to you personally.

It's a lifeboat. If you have your end with its pool, air conditioning, and stocked bar, what happens to YOU when the people on the other end get fed up with bailing to keep you afloat?

You aren't in this ALONE. The sooner you figure this out, the better. This is NOT a slam, just an observation from one of those "old guys" you've always heard about.

[lynnertic]

70. Whoa, you got me all wrong.

I was talking about the purpose of a stock market, and you're talking about my (assumed) need to have a stocked (ooo pun!) pantry, pool and bar before I care about someone else?

And not everyone can "...go ye and do likewise..."

This attitude, which is extremely centered around the "I" is dangerous to the concept of politics, and to you personally.

I wasn't telling you to act like me. In fact, I wouldn't advise it. I was instead relating my personal experience, in an effort to explain why I'm as worried as you are. But rest assured, the fact that the concept of vaporized money doesn't keep me up at night doesn't mean I have any.

[SammyWinstonJack]

71. Well said!

:thumbsup:

[Leopolds Ghost]

190. "As a Gen-Xer and entrepreneur, I never expected a pension" even for your employees?

Sounds like you are a victim of continually decreasing expectations
thanks to assholes like Reagan, Clinton.

Even Nixon tried to expand wage and pension protections, not decrease it.

To do so even voluntarily requires a manufacturing economy like you
had in the US in the 1900s-1950s, or Holland in the 17th century, or
England in the 18th-19th.

Since we moved all productive manufacturing economy overseas, the stock
market is the imperial engine controlling it -- our economy has no other
ties to the global economy on which we depend for (excess) petroleum-based
consumer goods. The US economy is an imperial stock market driven economy
like the slave market in ancient Rome (buying and selling slaves on
faraway plantation fiefs to produce food for the capital city, and using
the dividends to buy said slaves.) In our case it is oil, not slaves,
that we start out with as a commodity to exchange. That is why the
Persian Gulf is so important to our rulers. Your money would be worthless
were it (and the plastic bags and bottles your family relies on) not tied
directly to the petrodollar.

[pitohui]

116. that isn't the way it works, shares are only a small part, big companies do borrow

i'm amazed that people still believe this old wheeze, don't they investigate even a little bit before they invest

most big companies that are publically traded do not, in fact, have huge cash reserves, they still take out loans, they still have debts

even the huge cash reserves can turn out to be mythical if the company doesn't have the ability to borrow in event of an emergency

in the early 2000s northwest airlines had what was considered to be huge cash reserves, relative to the rest of the airline industry, and yet they still ended up in bankruptcy as a result of labor troubles, katrina, etc. and not being able to borrow


being publically traded is no guarantee that a company doesn't take out bank loans, maybe that was true one day in 1936, i dunno, i can't figure out where this idea came from to be honest

a company too shaky to get loans is not a company where you should be buying stock

in any event, the stock market is a SECONDARY MARKET people, it is not a direct method for putting money in company hands

[A HERETIC I AM]

119. The point you make about it being a secondary market is clearly missed by many.

Thanks for stating this often ignored fact.

[Telly Savalas]

199. The secondary market is what makes stocks liquid.

A privately held company can get an infusion of cash by going public and issuing shares. But you're not going to have too many people interested in such an IPO if they know they'll never be able to sell the stock they just bought. Hence the need for a secondary market.

[Mr Rabble]

2. Yes you are wrong, in that you fail to recognize...

that the only thing that matters is investor profit.

Period.

We don't matter. Our health, safety and well being don't matter.

The only thing that matters is investor profit.

See? isn't that easy?

[lapfog_1]

3. Well, it's not a restricted club.

Anyone can gamble.

It's also not a zero sum game (or negative like most casino games).

However, that is NOT to say that all is fair and above board in the markets.

See Enron, Global Crossing, etc, etc.

And it's periodically "gamed" by the powers that be to ensure that they have the best of it, always.

So, if you don't mind a "Rick's Cafe" style gambling joint (shocked, shocked to find gambling going on in here!), the stock market is fine. Don't expect to get rich ala day traders.... try not to lose too much (ala bubble people). Anyone with $100 can take a chance.

Better odds of getting your money back than the lotto. (Most of the time)

[Tyler Durden]

5. Exactly my point. Sooo...where are the Market Defenders out there?

Anyone?

[soothsayer]

7. yeah, but us little guys can't pump and dump like thebig guys. Here's how they do it.

1. Buy lots of shares of a company trading at say $1.
2. Get your senator/congressman/gov buddy to award a contract to said company.
3. Watch the stock soar to $10 a share, then sell all your shares and collect your huge profit.
4. Buy short.
5. Get senator/congressman/gov buddy to pull the contract.
6. Collect your huge profit on the shorts as the stock falls.

Us little guys can pretend that we're in the market, but we're not really.

[lapfog_1]

163. Step 4 is "Sell Short"

yeah, they do that one sometimes, but they are on to much more profitable and harder to detect scams using derivatives and much more complicated transactions now. Same result, the market is "gamed".

[A HERETIC I AM]

164. Yes, of course. The "Big Guys" are always buying shares listed on the OTCBB.

Yup. Thats exactly how they do it. Buy Microcaps.

Every single company with a share price of $1.00 gets Government contracts.

Every single company that receives such a contract sees their share price rise 1000%

Every single one of the Big Guys "Buy(s)Short" (Assuming that buying a Put Option is what you mean)

Every single contract awarded is pulled prematurely.

Every single stock market transaction is specifically designed to make a share price fall.

Yup. that's it exactly.

Us little guys can pretend that we're in the market, but we're not really

Well, one thing is for sure. That's the LAST market you want to be in. If you could even find it, that is.

Of course I realize you just landed on the $1.00/share price for simplicity. Make the share price $100. Your description of how the Big Guys do it is still just as absurd.

[madokie]

6. so as to allow the people who invest to have a little bit of the cream off the top

so they will allow the corporations to continue to rape and pillage. Why do the oil companies get away with what they do, I see it as simple, they have too many stockholders who are making a few cents here and a few there and so they, those stockholders, think they have to look the other way otherwise they'd be shooting themselves in the foot so to say.
sumptin like that.
need more java

[Duer 157099]

210. Wow, I just posted nearly the identical thing

and that was before I started reading through the thread. I guess we both get it.

[KharmaTrain]

8. Why Do People Gamble?

First of all...any "smart investor" who has a majority of their money in the stock market deserves all the hell they're going through.

The market isn't a scam if you're clear-headed as to what our economic system is all about and how your money plays into that system. Some play the market like a gambling casino...daytrading and looking to get rich quick. But in many cases, the money invested in the market can go for positive things...in helping set up new companies and provide jobs. In the 90's, it was market money and the profits of the dot com boom that led to the "computer revolution" that lowered prices and made it possible for most people to afford a computer. In the energy sector, several publicly traded alternative energy companies are using their investment money to further new technologies...offering the investor a profit if the technology goes to market.

The market can have a positive side in helping corporations raise needed capital but there's never any assurance that your money is either safe or will return a profit. Don't like the system? Hide your money in a mattress.

[Prefer]

10. Life is a gamble

[Tyler Durden]

11. That's not the argument I'm making.

I want someone to tell me HOW the market is a "Good Thing" and the 401k is a GREAT replacement for the traditional pension.

I see the whole situation as a GREAT opportunity for VERY RICH PEOPLE to make more money off of VERY POOR PEOPLE.

I've been trying to understand WHY I should look on the stock market as a GOOD THING most of my life. I just don't see it.

I guess a 150+ IQ does not necessarily mean you understand everything...or...maybe I'm RIGHT.

[KharmaTrain]

14. It WAS A Good Thing

I have a good friend who taught for 25 plus years...definitely not a rich person. Her money was invested in a pension based on stocks and money markets. While her salary at best may have topped $35k a year, she was able to retire and now lives off the money from her 401k. The amount she and her union were able to nut away in the 80s and 90s have made it possible for her to live comfortably. Now I'm not sure such a good story can be said for someone coming up on retirement now...or how it will be for my daughter who has just begun her career.

For many people I know, their companies never offered retirement plans. Or if they did it was for those who were "lifers"...vested for 10 or 15 years. These days, most people are lucky to work 3 years for the same employer...and few, if any are union...thus having the option of a 401 was better than nothing.

Not sure if this answers the question...

[Phoebe Loosinhouse]

9. Well, the companies themselves NEED the stock market, but you as an investor don't NEED them

Although in 401K plans around the country you are forced to play whether you want to or not. I would like to see more 401Ks offer things like plain old vanilla US Savings Bonds for those people who are risk averse and just like to salt away good old solid cash that they get a predictable return on. The only option in most accounts is the Money Market Fund.

Anyway, I think it would be fine to invest in the stock market and various companies, if so many of them did not feel so compelled to just rip me off by siphoning off so many dollars to outrageous executive compensation instead of returning those dollars back to ME (hey! it's me! your investor, remember?) as dividends or re-investing those same dollars into R&D, or capital improvements, or (shocking) increasing the pay and benefits of the average employees.

I believe it has in fact become a Ponzi scheme, designed to benefit the upper tiers of executives, and those who sell the stocks to the detriment of everyone else. Not to mention that the stock market itself has been relatively flat (S&P index) over a long period of time. Also, of course, people never want to talk about the fact that there is actual RISK involved in investing in stocks (usually when you are too concentrated in one stock - but again, most 401ks are DESIGNED to make you too concentrated in one stock - your employers)

The haves are invested in keeping you invested in their investments.

By the way, Social Security as it stands right now is the BEST POSSIBLE INVESTMENT a person could have ever made. Most people will get back far more than they ever plunked into the system. Do you know of any stock anywhere that will pay you a dividend of $1000.00 a month? Didn't think so. So when these asshole Republicans try to kill off Social Security and tell you that you can do better in the market - don't believe them - it's just one more lie to get ahold of your dollars so that they can re-distribute them among themselves.

[NoFederales]

32. Excellent last 'graph! Really says it all about SS. nt

NoFederales

[A HERETIC I AM]

117. "most 401ks are DESIGNED to make you too concentrated in one stock - your employers"

Nonsense. Completely and utterly untrue.

[lumberjack_jeff]

181. Many are. That's why so many Enron employees were wiped out.

no job AND no money.

[A HERETIC I AM]

187. Wrong. SOME might be.

But we could be splitting hairs, right? What's the difference between many and some?

The fact is, MOST (as in "The overwhelming majority") 401(K) plans that offer company stock if it is available, also offer a number of different investment choices completely unrelated to the firm, but the plans are not specifically designed (as the poster above suggested) to overweight an employees contributions in that regard. Not all companies offer stock to their employees, whether they are a publicly traded firm or not. There are many companies that do offer closely held shares to their employees, but there is no requirement that the employees tick that box as a choice and there is no requirement that they invest a minimum amount. Publix Supermarkets and Penske Truck leasing are two companies in which this is the case. Neither has publicly traded shares yet both offer shares of company stock to their employees in their 401(K) plans. You can not be forced to buy something you do not want. There may be default allocations if you do not make a specific choice, but all of these plans allow for changes to be made by the employee. Your choices are not engraved in stone, never to be altered.

If the American public did not learn the lessons the Enron debacle should have taught them....

[lumberjack_jeff]

189. It is my understanding that (many/some) employers...

... encourage employees to purchase stock in the company, through the 401k either at a discount or sans commissions.

I'm not invested enough in the argument to go find the books, but a commonly-published advice to 401k holders is to not get too invested in the company for which you work. I believe I read this both from Andrew Tobias and from Jane Bryant Quinn.

We do seem to be splitting hairs. I think it is demonstrable that many companies do structure their benefit program to encourage their employees to invest in the company via their 401k.

Were that not the case, it seems like there would be little incentive for financial advisers to warn individuals against it.

http://www.cbsnews.com/stories/2002/05/08/earlyshow/contributors/raymartin/main508368.shtml

I don't know if this is still legal, but Enron ponied up their company match in Enron stock. Thus, an employee who saved 3% (to get a 3% match) would have a minimum of half his portfolio in Enron stock - likely more, being under the thrall of "the smartest guys in the room".

[mrreowwr_kittty]

214. I had to invest 25% in my previous company's stock in my 401k.

It was a tech stock so of course it tanked in the early 2000s. My 401k still hasn't recovered.

[Common Sense Party]

222. 25% of your OWN contributions HAD to go into company stock?

I don't think that is legal.

They cannot TELL you where YOUR contributions go.

They can decide where THEIR matching dollars go.

And now, since the 2006 Pension Protection Act, employers have to allow employees to divest of company stock after a maximum of three years.

[Tyler Durden]

229. Typical, and you bet they can.

Max of 3 years AFTER VESTING, which interval is up to the company.

[Common Sense Party]

231. No, it's NOT three years after vesting, it's after 3 years of service

"Like the NESTEG legislation, H.R. 4 requires that publicly held companies must allow workers to divest themselves of company stock attributable to employer contributions once the worker has completed three years of service. Workers would be permitted to diversify accounts attributable to employee contributions immediately."

[Tyler Durden]

234. Check your company manuals

You don't OWN the stock THEY put in until you're VESTED. THEN you own the stock. You can't do anything no matter what the law says until you're vested.

[Common Sense Party]

235. Vesting ONLY has to do with pulling the assets OUT of the plan.

You only do that when you separate from service.

While you are working there, after you've worked there for three years, you can switch out of company stock (sell your shares) and put that money into mutual funds within the plan.

You don't own ALL of ANY company match until you're fully vested. But that has to do with taking those assets with you once you leave the company.

[Tyler Durden]

237. Read the fine print....

I would tell you the company name I worked for and found this out, but the settlement permits it not.

Doesn't matter anyway. For the average person it's a lousy way to fund retirement.

[Common Sense Party]

238. It's a fantastic way to fund retirement--just not with company stock.

Now if your fine print didn't allow you to get out of company stock WITHIN your plan, that had to have been before the PPA in 2006.

My point all along has been that this has changed, mainly due to the Enron debacle.

[Phoebe Loosinhouse]

194. Well all 401 Ks that I am personally familar with,

the employer match is in employer stock. So that would mean that half of your 401K if you contribute up to the match ( as most financial advisors ADVISE you to do) is in company stock. So that would mean that your portfolio is probably half company stock. In the portfolios I am familar with, there is no way to convert the comapny stock to another option unless and until you actually leave the company. Now, I am drawing on my own experience, but I don't think this is unusual.

If there is no match from the employer, there really is no compelling reason to be in a 401K as opposed to a self-directed IRA. Many 401K programs offer amazingly crappy options for the employees.

[A HERETIC I AM]

195. Well, we can certainly find out how common this is. DU has a 401(K) plan expert

among it's members. I'll PM him and ask him if he would care to chime in.

On edit to change the word "Administrator" to "Expert" in the subject line.

I am not sure if he is actually an administrator of 401(K)'s but he works for a major national provider of such plans and works with them as his living. He is intimately familiar with their variations and provisions. That qualifies him an expert in my opinion.

[Telly Savalas]

200. In the 401k's I'm familiar with (and granted this is limited experience)

the employee is free to sell the stock within the 401k to buy different assets within the plan. This has to happen when the window is open for trading. In the time period between the end of a quarter and the SEC filing of that quarter's results, employees are not allowed to trade company stock.

[Common Sense Party]

219. I don't have statistics at my fingertips, but what you describe is

pretty unusual.

First of all, most workers in America work in small businesses. Most small businesses are privately held, not publically traded. So, having company stock as an investment in the 401 isn't an option. (Of course, most small businesses don't even have 401k plans, but that's another discussion...)

For those companies that DO have company stock, it is true that many of those companies match in shares of stock, rather than in cash that can be applied to any mutual fund available in the plan. But, as another poster mentioned, you are NOT locked in to owning that stock. You may have to hold it for a year or so, or you might only have certain windows of opportunity each year when you can redeem shares and transfer assets to a mutual fund, but you still have that option. It all depends on the individual company's plan document. Enron employees did NOT have to keep their money in Enron stock; most of them CHOSE to, though.

I would agree with your last statement, to a point. Yes, many 401(k) plans offer some lousy choices. Most plans I have seen offer at least a few good ones. If there is no match, the 401 is not as attractive. You can diversify much better on your own in an IRA, if you know what you're doing, and your fees may even be lower. The only compelling reasons why some people might still want to do a 401(k) are:
* You're not a disciplined saver, and the convenience of payroll deduction is the only thing that will get you to invest for the future
* You want to save much more than $5000 tax-deferred (you can invest up to $15,500 in the 401)
* You are a semi-active "trader" and you may want to shift things around from time to time without commissions or sales charges

My $0.02

[Common Sense Party]

220. Just found one research study:

About 1/3 of all 401(k) assets are in company stock. That's from a survey of about 1.5 million 401 participants. (Hewitt Associates)

The study did NOT say whether the employees HAD to stay in company stock or were allowed to redeem shares.

No one should EVER have more than 10% of their retirement savings in ANY one stock, IMHO, ESPECIALLY if it's the company you work for.

My example may not be worth much, but here's how it works for me. I work for a Fortune 100, publicly-traded, big insurance company. I participate in my 401(k). The 50% match my employer makes is NOT given in company stock. It goes into the same mutual funds that MY contributions go into.

We have a separate Employee Stock Purchase Plan where I can purchase shares of our stock at a discount. That's completely voluntary, though, and the company doesn't match my purchases.

[LondonReign2]

159. Also nonsense that there is no risk averse option

Every 401(k) investment plan has a low-risk/no-risk money market option (also known as a stable value investment).

In fact, if you look at the studies available, half the problem with 401(k)s is that investors keep a huge portion of their funds in the stable value account. While 99.999% safe, they pay interest at a level that doesn't even keep up with inflation much less allow for the growth needed to provide for retirement.

[Common Sense Party]

223. Especially after backing out the fees.

That's my biggest gripe with money market funds, stable value funds, etc.

They have anemic yields to begin with, but after you back out the management and administration fees, you can lose money sometimes...or only earn the tiniest of pittances.

And you're right. Too many people try to "play it safe" and park the money, but they don't even keep pace with inflation that way.

[Tesha]

12. If we didn't have it, how would a bunch of wealthy people get wealthier without working? (NT)

[earth mom]

84. BINGO! The stock market is gamed for the rich, while it screws over the rest of us. nt

[LondonReign2]

161. Bullshit.

Individual investors can play along with "the rich". In fact, you have many advantages that the mutual funds do not.

[fasttense]

13. Except for initial offerings, the stock you buy Does NOT provide funding

for the endeavor. In most cases you bought the stock from someone who bought the stock, from someone who bought the stock, from someone who bought the initial offering.

Most stock do Not offer dividends. So you get nothing until you sell the stock.

It is merely a place to park your money in the hopes that when you sell the stock it will sell for more than what you paid for it.

If you are not a smart investor, you will be lucky to break even after inflation.

The people who really make money off of stocks are those who buy up hundreds of thousands of dollars worth of stock and then turn around and sell it the minute its price is higher than what they bought it for. Even a few pennies increase, in stock you have hundreds of thousands of dollars in, will make you a large profit. The little guy will merely make a few pennies.

[ThomWV]

16. What?

Merely a place to park your money?

I thought you were going to explain the nature of the secondary market this this guy, not make silly statements that tell him nothing and in fact only aid in his already scrambled understanding of what the market is and how it functions.

[Tyler Durden]

19. Ther is nothing "scrambled" in my understanding.

You haven't explained why this is a "Good Thing" to the guy who will likely never even make a true "living wage."

This is, by the way, a modern way of re-running an economic problem that historically has caused economic collapse in the past.

I understand how the MACHINE works. Nobody has shown me that the Machine is Good or serves a NECESSARY PURPOSE, other than the maximization of profits, skewed toward the Moneyed Power Elite.

Same as it ever was.

[Tesha]

98. The key "take-away" for me is that...

> Nobody has shown me that the Machine is Good or serves a NECESSARY PURPOSE,
> other than the maximization of profits, skewed toward the Moneyed Power Elite

The key "take-away" for me is that with the purchase of stock, you
also receive some "rights of control" over your property. Now for
us little guys, that's a cruel joke. Our few shares of Apple or GM
or Exxon aren't going to give us control over anything and the big
boys wil even try to silence us at the annual meetings should we
dare show our faces.

But for the really big investors, they can direct the future
actions of the property they own.

So while buying (existing) stock certainly doesn't pump any
new capital into the corporation, it does give the big players
certain benefits.

We little people can only hope the big boys do a good job
of running things so the value of our investment increases.
Unfortunately for us, they frequently don't so the value
of our investment falls.

Tesha

[fasttense]

25. And ThomWV, I thought you would look at the stock market for what it is

And not be hypnotized by the flashing lights and mambo jumbo of the financial world.

I admit I simplified the actual stock transaction but I stand by my summary.

If as you say, you own a piece of the endeavor the poster described, exactly what piece???? What is it and where can you go to get it?

If it has a value beyond a parking space for money, exactly what part of the endeavor do you own? Most stocks do not provide dividends and yet many businesses represented by the stocks sold are very, very, profitable. Why aren't they giving out dividends?

With the most recent rulings of the dancing Supremes, you have very little authority (if any) to direct how that money can be used as a stock owner.

The limited liability can also be obtained by buying a product from the endeavor. If the business goes broke, you still own what you bought and may be able to sell it for more. You are in no way liable for the debts of the business either.

The secondary market is up for grabs--go ahead explain away.

[onenote]

69. your example of who makes money off of stocks and how is misplaced

You wrote:
"The people who really make money off of stocks are those who buy up hundreds of thousands of dollars worth of stock and then turn around and sell it the minute its price is higher than what they bought it for. Even a few pennies increase, in stock you have hundreds of thousands of dollars in, will make you a large profit."

Take the following example: you have $500,000 to spend, so you invest it a stock that sells for $2 share. Let's say it goes up $0.05 in just a few weeks or months (or even a day). So you sell all 250,000 shares and pick up your "large profit" of $12,500. NOt only is that a paltry return on an investment of $500,000 (2.5 percent), its also subject to the higher tax on a short term cap gains.

The folks that make a lot of money in the stock market are the one's that get in on a good investment, hold it as it increases in value, particularly if the stock splits, and eventually sell off a portion of their holdings after they've been held for a while.

[ThomWV]

15. You really don't have a clue how this works, do you?

I have read and reread your post and I can not fathom whatever it is you think stocks are and how this system works.

Lets get started here. When you buy a share of 'stock' what you then own is a part of the enterprise, not just a sheet of paper that has fancy printing and pretty colors. You are not buying part of someone else's business. That share you purchased represents a portion of the business that you are now the owner of, not some other guy. That is what investing means in this case. If that company had issued 100 shares then your 1 share means that you are due 1% of whatever that company makes, has, owes, or has owed to it. That dividend you are expecting, well you only get it if your company pays it out and usually you will only take money out of your company when it is making some.

The CD's you mention are another thing. Certificate of Deposit means exactly what it says. You have deposited money. Generally that money will be loaned out and interest will be paid on it. That interest has nothing at all to do with anyone earning anything, nothing had to be made, no service had to be supplied. All that happened was that money was lent and the lender agreed to pay it back along with a payment for having borrowed it in the first place (interest). You do not own anything but a promise to repay. If that loan was made to a company you are not entitled to any part of what it makes, has, owes, or has owed to it - only to the repayment of your loan plus the interest that was agreed to before the loan.

Why do we have stocks then? First to how it effects you: The answer, for you, is limited liability. What that means is that although you can lose every dime you have invested in a stock if the company folds and after doing so and paying off its creditors to the extent is can and has nothing left you - even though you are a part owner of the failed company - can not be held responsible for debts that the company is not able to pay off. All you can lose is the money you paid for the share of now worthless stock. So that is the good part for you, there is a downside liability limitation. However on the upside no matter how much money the company makes you are entitled to your fair portion of that or your are entitled to direct how that money be used. So, why would a company want to issued stock? If I stated a successful company what is the incentive to me, as the sole owner, to sell off my company to the public? Well, its a way to raise large sums of money for the expansion of the company. Bill Gates, rich as he is, could not begin to afford even one tenth of the cost of building the refineries that Exxon has. However by issuing and selling millions of shares of stock Exxon can raise the hundreds of billions of dollars necessary to build the expansive facilities it has. Often that is done because economies of scale come into play and it is more profitable to be larger than smaller. So the capital market is a place where large sums can be raised if the need be.

Well, you could raise large sums by issuing bonds too, how are they different? Bonds are different from stocks in this main way, bonds represent loans on which interest is paid. Remember that stock shares convey ownership. They do not convey ownership and when a bonds terms have been satisfied (the loan amount and all interest due has been paid and the life of the bond has ended) it becomes just a piece of paper. However they differ in another major way. Bond owners get paid off before stock holders get anything if the company fails. That makes sense if you understand that had the company remained in the hands of the sole proprietor and failed the owner would still be liable for the debts his company had incurred if it was making money or not. Bonds are that way too, to the extent the company has any money or any asserts that can be sold to raise money you, the bond holder, will get paid or if not you will be paid proportionately from whatever remains of the company.

So, that make any sense to you? I tried to make it as simple as I could but you really should know the difference if you plan to go though this world economically.

[Tyler Durden]

17. You have told me NOTHING I don't already know.

You aren't addressing the REAL issue here, and there is no reason to be condescending.

What you have not done is show me how this system, touted as the salvation of the American Worker while their pensions were looted and eliminated, works to THEIR advantage.

Also, you have not shown me how the "little guy" who has about 1% of his yearly pittance to invest and TRY to make up for that looted and eliminated pension will succeed under this system.

THAT is the issue here. I understand how it works for the CAPITAL ELITE. This is not news. I simply do not see how it continues to be supported where the rubber meets the road.

I have ideas as to why this works:

1. The general population are easily conned idiots. This is the more likely situation. Otherwise, nobody would send the "Nairobi Bank Account" email scams in the first place. After all, the Iowa IQ series of tests IS based on a weighted average of 100.

2. The general population has no other choice. This of course happens AFTER idea #1, when the companies have convinced everyone that it's a "good thing" to "job hop." For WHO? The ELITE, of course. No Seniority means no RAISES, nobody's loyalty to have to maintain, no sense of the JOB as a subset of the COMMUNITY: there isn't a single psychologist in the country that thinks THAT is a "Good Thing."

3. The general population wants desperately to believe in the "Tooth Fairy" or "Santa Claus." Sort of a subset of #1 with a hint of desperation. The country has told them they can be "jet setters" when they retire, all they need is E-Trade, or ING, or what have you. This is the same logic (or the lack thereof) that drives Lottery Sales.

NO ONE touts the Stock Market and investment in the Stock Market as "good for America" or "supporting American Business." If it was and it did, then we wouldn't need massive foreign investment just to keep the companies floating. A corporation has ONE GOAL: MAXIMIZE PROFITS FOR INVESTORS. This is by LAW. It also discourages "Company Loyalty" in a work force, because that is considered a "Cost Center."

The MARKET is touted as YOUR RETIREMENT SALVATION. Why is this so? Because some bright boy or girl saw a way to make workers PAY for their own retirement and FUND companies as well. This made Company Loyalty go out the window, because if my retirement depends on me schlepping as much cash into stock/mutual funds which seldom involve the company I'm in, then I don't have to be loyal, and that supports the Management Money Machine as well, because I HAVE TO keep looking to "better deal" myself just to keep up.

The problem here is that Company Loyalty was a "Good Thing." It brought pride in workmanship. It made for healthier workers through benefits and lowered stress. Now, anti-depressant/anti-anxiety meds are the biggest part of the drug industry.

So you see, I understand HOW it works, I, as an INTELLIGENT citizen, just do not understand WHY it continues to pull in suckers, I mean, function the way it does.

[ThomWV]

18. Then its is clear you know nothing

I can't describe your ranting as anything other than clueless. The answer to your question is not in the stock market or stocks themselves. Your problem is with the ethics of the people who you have allowed to control your money. That is your own failure to be an effective steward of your own resources and has dam near nothing to do with the subject of your first rant.

[RB TexLa]

20. Oh, now don't try to insert facts and rational thought in a "git da rich" rant

facts and rational thought are just not welcome.

[Tyler Durden]

24. OK. DEFEND your BS.

PROVE LOGICALLY that the Stock Market is a POSITIVE and NECESSARY PART of the functioning of a healthy and viable political system.

And by the way, eat YOUR stock certificates as well. This was CIVIL before the last post by ThomWV and you.

I think it is your "Fuck the Poor" attitude that makes me put you back on IGNORE periodically. I would be a little more paranoid if I were you: in THIS country, the poor do not have to storm the "Bastille," if you get my drift. I would think someone with your pattern of selfishness would have a little more sense of "Enlightened Self Interest."

[fasttense]

29. It is nothing but a parking space for your money, unless you have

hundreds of thousands to invest.

A mattress is much safer these days.

[Squatch]

36. Hmmm

"PROVE...that (any) Market is a POSITIVE and NECESSARY PART of a...political system."

Apple, meet orange.

[Tyler Durden]

40. Hokay. The market exists in a VACUUM.

Right.

[Squatch]

46. ZOMG!!!1! I'm series!!!1eleven!

"I just do not understand WHY it continues to...function the way it does."

"The market exists in a VACUUM."

"PROVE...that (any) Market is a POSITIVE and NECESSARY PART of a...political system."

May I make a recommendation? In this thread you repeatedly assert that you do not understand how financial markets work, you seek to equate such markets to political systems, and you make patently incorrect statements about the basic mechanics of those markets.

I suggest enrolling in an evening course at your local university or community college dealing with the theory and operation of financial markets. Either that, or pick up a book like this one.

[Tyler Durden]

52. And I suggest you REALLY READ the "Capitalist Bible.."

"The Wealth of Nations" by Adam Smith. Don't cherry pick it: READ IT, as most Democratic Socialists have.

HUMAN CAPITAL is the most important item he stresses. And your silly post title belittles the argument, unless that was your aim; to look silly.

How old are you? Do YOU make more than the poverty line for a family of 4? Do you pay a mortgage?

I KNOW how financial systems WORK. I've read the REAL books. And may I suggest that if "_____for Dummies" WORKED, they wouldn't have to write BOOKS about it.

Again, you as many others have, miss the point of the thread: Is the Stock Market NECESSARY for the Moral and Ethical functioning of the Political system, or, is it as many believe, a casino for people who don't want to go to the casino, and have, what every single solitary money manager will tell you is ABSOLUTELY NECESSARY for investing:

"DISPOSABLE CAPITAL."

The coming financial disaster would be amusing if it wasn't so tragic.

[Squatch]

54. Nah. Thanks, though.

"Is the Stock Market NECESSARY for the Moral and Ethical functioning of the Political system"

Once again, apple meet orange. Neither is "necessary" for the other to exist in any respect, moral, ethical, or otherwise.

Can a political system exist without financial markets? Yup.
Can financial markets exist without political systems? Yup.

[Tyler Durden]

56. So why is it a tenant of this society that the Stock Market is GOD?

And the 401k is JESUS?

Sounds like a game I can't choose not to play.

Choice. I seem to remember something about that. Apple/Orange? This was the POINT of the thread; you concentrated on an obscure side issue in my opinion.

[Squatch]

58. Judging by your liberal use of capital letters...

that point did not appear to be an "obscure side issue". Rather, it seemed to be the central question you repeatedly asked in this thread.

And, once again, I reject your premise that the "stock market is God" and that the "401k is Jesus". That's hyperbole, on it's face, and though I know you're prone to its employment, it really adds nothing to the discussion.

[Tyler Durden]

61. This is pointless.

The argument that I raised was this: is the Stock Market necessary? The answer is for the vast number of people, NO.

You specialize in side issues, like capital letters. Some of us come from an era where capitals just meant emphasis. Sorry.

[ThomWV]

102. This fellow is not here for a discussion and is not interested in a factual answer to his question

Why is it necessary? Who has the money to buy the tooling for General Motors? If you want Kings do away with the ability of the common people to come together and pool their resources. Our knuckle-dragging friend doesn't seem to be able to grasp that fact. He also seems to have no notion of proportionality. He sees all power in owning many shares of a stock but no power in owning a single share. What he is really doing is whining about his inability to either understand the flow of money or to control his own. Pitiful if you ask me, particularly in light of his inability to either explain what his real complaint is or to have one that is rational if he is explaining it well. Either way we are wasting time trying to explain the power of combined capital to effect positive activity within the community. Let him find himself a hobbit shire and go enjoy it.

[Squatch]

106. His whole "argument" is a dressed-up rant

that starts with his acknowledgement that he does not understand what it is he's railing against. :crazy:

I knew it would come to the inevitable conclusion of him insulting others when his little world-view fell apart.

[Tyler Durden]

109. Who did I insult?

I counted several from you.

I understand the market just fine. I simply do not want to see a system where everyone including the incapable of participating are required to play.

You can play all you want. Who said you couldn't? You simply can't accept that your game doesn't work for everyone, in fact, it doesn't work for the majority.

[Tyler Durden]

107. love the personal attack.

You still haven't proved to anyone why this system is needed by the "guy on the line."

Nobody ever said if you want to play that you can't. You just want everyone to play, and that's wrong.

I understand how capital works, how the market plays a role (warped due to lack of regulation), but none of this has any meaning to the guy selling you your gas and slurpy.

Why on earth can all of you be generous enough to let the people who cannot play your game have a situation that allows them an old age with dignity? That's the point of this whole thing, but you keep trying to give lessons in economics.

This is Philosophy 375, Econ 290 is down the hall.

[A HERETIC I AM]

167. I, for one, am interested to know how it is you think a pension plan works

how it is funded, how it is sustained, what a reasonable benefit is, how much should an employee contribute (either through taxes or payroll deduction) when it should begin to pay, for how long, etc. etc.

Since you have made your position clear (to me, anyway - you don't think people should need personal retirement funding, basically) kindly explain how your alternative would work. Tell those of us that disagree with your position the mechanism you would use to fund this pension plan. The money has to come from somewhere. Where?

[Tyler Durden]

170. What was wrong with what was going on Before....

...the cult of "personal responsibility" from Reagan made each man an island?

That might work just fine, thank you. My 80 year old mother who collects from my deceased father's pension would likely agree.

[A HERETIC I AM]

174. What was going on before was based on the premise of a 75 year life expectancy......

basically.

So, your mom collects on a pension (From a company? Government?) into which she most likely did not contribute.

So again I ask, how do you propose such a plan be self sustaining? Where is the money going to come from over time? And by what method should growth of the fund be attained?

And for the record, My mother also collects from my deceased fathers pension. I know where that money comes from and how it is funded. In part by YOUR tax dollars (and mine).

My dad was CIA for 25 years so the funding comes from what is essentially an annuity that was and still is funded by tax dollars.

How do you propose a major pension plan would be funded? If it is to work like a European system, you have to convince the American public that they must pay a tax rate similar to citizens of the EU in order to support it.

I'm not suggesting it isn't possible, by any means. But good luck with that quest.

[Tyler Durden]

176. Dad's pension supports my mother.

And he took deductions from salary for a Guaranteed return. A company.

Maybe if we just finally owned up to the fact that if we Paid for pension/universal health care it would be about the same price or less than taking our chances with the market.

Go ahead and tax Me, but don't forget about those huge Tax Cuts for the Rich .

[A HERETIC I AM]

185. Are you aware of how that "Guaranteed return" is generated?

You could probably find out fairly easily if you aren't. I have a pretty good idea how they do it and it could be verified by a 5 minute look at the prospectus or annual report. And I am willing to bet you that it is in part, by investing in equities. A much larger part is more than likely done by the pension managers purchase of Treasury Securities. Hell, that pension fund might even have a big chunk in a Hedge Fund. (GASP!)

As long as you can concede that any proposal for a national pension plan would require a large tax increase across the board (and no, I haven't forgotton, nor do I forgive Shrub giving those tax breaks) in order for it to be properly funded, I would say you and I have reached an understanding.

As far as your opinion on the Stock Market in general...well...I see no point in adding to the fray.

[Tyler Durden]

204. Not the Pension Recipient's Problem...Is it?

The Pension is guaranteed by the company, who likely pays their CEO enough yearly to pay the pensions of 10,000 retirees.

The choices on how to supply the benefit are the companies...and aren't they paid the "big bucks" to know how to do this effectively?

[A HERETIC I AM]

207. No, it's not their problem. But you should be concerned because it is almost certainly tied to the

stock market in one way or another

The Pension is guaranteed by the company

I would be very interested in seeing one single defined benefit/pension plan whose returns are actually guaranteed by the employer.

[lumberjack_jeff]

183. If I remember my Lord of the Rings correctly...

The elves, dwarves and humans formed a corporation (fellowship) to do a task so that the risk didn't fall to one group and which no one group could do independently.

All three groups then shared the benefit.

[Tyler Durden]

21. Thank you for your rude and skewed response.

As it is the true purpose of government to PROTECT the interests of those who cannot protect themselves from the opportunists who claim that by my 0.0001% investment, I can control the ethics of EXXON MOBIL, HALIBURTON et al, I think when the next collapse happens, due to the short sightedness of the Profit is GOD people like yourself, you can eat your stock certificates and pat yourself on the back for your superior money management skills.

[StrongBad]

22. Ok, the post above explained very well how the stock market helps businesses in raising capital

And you seemed to understand the above post and recognize said utility to the U.S. economy. Good.

Yet, you still seem to have an issue saying that the "little guy" gets killed in the market and loses all his/her money. Thus you suggest that it appears the ordinary American has no use for the stock market and may even be foolish to invest in it.

Do you want to know why things rightfully appear this way to you and most other Americans? It's pretty simple:

You, and the vast majority of other people, don't know anything about successful investing.

Investing is an art-form and requires great intellectual dedication, research and experience. One does not become competent in the art of making money in financial markets without dedicating huge sums of time in learning how to properly succeed for the long term.

Americans are given the idea by "account executives", who are really glorified salesman who work for commission, that if they hand over their money to be put in a mutual fund or two, that 40 years down the road they'll be a millionaire.

That's bullshit. To be successful in investing you must manage your own money and have tactics that are useful in both bear and bull market conditions. You just cannot expect to throw some money in the market and expect that down the road you'll be able to retire. I do not know why people have this idea but it's a shame because it's ignorant.

There is a wealth of information out there concerning how to use stocks, options, etc to your benefit no matter what the market conditions are. And the little guy can master this too.

[Tyler Durden]

27. "The little guy can master this too" ??

You OBVIOUSLY don't know too many "Little guys." I know TONS of them.

The reason that people "...expect to throw some money in the market and expect that down the road you'll be able to retire." is that they have been TOLD SO in every single damned 401k meeting, TD Ameritrade Commercial et al. When you run the "slow con," you have to build it up; it takes TIME to sell swampland in Florida.

Also, you have to HAVE money to MAKE money. The average wage on the factory floor where I work is around $9/hour. That's $18,720 BEFORE healthcare deductions.

As you, and others with disposable income, miss every time, this argument really has nothing to do with how the market works: it has to do with WHY supposedly ethical people SUPPORT the concept when it obviously does nothing for most of the Joe and Jane Sixpack's out there. Non-Enlightened Self Interest used to be a concept of the Republican Party. Not any more, I see.

And if you think this can go on like this forever, you missed the HISTORY lesson.

[StrongBad]

31. Ah yes, you proved my previous post right

You don't know the first thing about investing.

You say I don't know much about the "little guy"? Well, if you don't mind me saying so, I AM the "little guy".

Granted, I'm fairly young (25), but I come from a strictly middle-class background with parents that worked hard at their jobs to earn a living for me and my sister.

A few years ago I decided that I wanted to learn how to make money by investing. I didn't have any experience but luckily was taught by my parents that if I wanted to master something I had to research it and dedicate myself to it. So that's what I did. I read books and studied markets and developed investment strategies to put to use during all market conditions. And you know what? I succeeded. I have a normal job but I'm able generate half my salary per year at this point by investing with the knowledge I taught myself.

You'd be surprised at what financial markets could do for you if you'd open a book. I highly recommend it. It might disperse your irrational anger at an entity that is helpful to those who choose to study it.

Oh, and regarding your argument that the average person has no disposable income to invest, I started this whole process with only $2000. If a person can't save that much money over a decent period of time they have money management problems.

[MindPilot]

37. Anybody can study anything and with enough dedication do well at it

But saving for retirement shouldn't be a second job which is essentially what you are turning this into. How many hours a week do you dedicate to investing? And why the markets and not say real estate? Do you own a house? I'm not trying to be snarky, just curious. Just because you choose investing as your money-making hobby needn't be a slam against those of us who don't.

[StrongBad]

44. Hi there.

I agree that anyone can master something with enough dedication. And although to master the principles of finance is something that someone must be dedicated to, it really doesn't amount to taking on a second job.

The trick is keeping at it. I really since the beginning haven't spent more than an hour a day keeping up with financial matters. I only recent have gotten to a point where I'm comfortable calling myself competent at it. If someone were to say that ordinary people can't squeeze that sort of commitment into their day I would have to just disagree because I can't fathom that.

Going back to something I posted upthread, the real culprits here are the so-called finanical advisors who promise to make you money by investing wisely for you, but in reality are only looking to sell you stock because they make commision whether your investment goes up or down. That's why I would highly recommend that people take their financial matters and investing into their own hands by researching how to do it themselves.

And why markets as opposed real estate or starting my own business? Quite honestly, it seemed the easiest with my limited funds to start with and my ability to balance it with holding a regular job and going to school, etc.

Plus I'm perhaps lucky in that I find it all so interesting and fascinating to begin with.

[Tyler Durden]

48. Plus, you have no family, aren't sick, and likely have a low debt load...

Which, in addition to you being very young, puts you in a VERY limited demographic. That's part of my point.

[StrongBad]

51. I concede that.

I am in a pretty enviable position compared to others I realize this. But I don't think my opinions regarding personal finance are contradictory to my other values. I do think that universal healthcare, adequate assistance to the poor, investment in public infrastructure and community are all pursuits that I think we should achieve. They in my eyes are not incompatible with accepting an economy largely built on financial markets. I guess I'm just not that far left when it comes to economic matters.

This thread is about whether the market is useful or destructive. I essentially submit that it is merely neutral and its utility is determined solely by the knowledge level of he or she who chooses to engage it.

[Tyler Durden]

53. You just made my point FOR ME.

"This thread is about whether the market is useful or destructive. I essentially submit that it is merely neutral and its utility is determined solely by the knowledge level of he or she who chooses to engage it."

Participation in the game is MANDATED. It isn't a CHOICE. Therefore its utility, and its NEED within the Political System is completely intangible.

If you want BURGERS, then don't expect Burger Flippers to be accountants. You can't run the railroad that way.

[StrongBad]

59. I don't see how I proved your point

I only conceded that it was easier for me to learn how investing works because I'm fairly young, single and in good health. I never said that the average person (burger flippers included) couldn't be just as successful at this. Just that it would take longer. Its really not a matter of class or intelligence. Just dedication and persistence.

[Tyler Durden]

76. That participation in your game is not optional.

That anyone who doesn't want to eat Dog Chow had better be smart enough and savvy enough and have time and effort to spare enough to play your game.

That lets out about 90% of the population.

So they NEED your market like a fish needs a bicycle. THEY need a PENSION.

[LSK]

79. not true

You can do other things such as open a small business, invest in real estate, buy gold, pay off your house fast, live frugally.

The stock market CAN exist along with good pension systems (as it did for many years until Reagan came to power) and with universal healthcare as it does in Europe. You do know that there are European stock markets right?

[Tyler Durden]

85. OK, HOW?

You are 40 years old.

You now have the equivalent of a 4th grade reading level. You are Really good with your hands and work as a machinist for $10/hour. You and your wife (who has a bad back and can't work) have 2 kids, 10 and 12, a car 10 years old and a car 12 years old. You have a $500 a month mortgage payment, $200/month toward your hospitalization, and $100/month toward your car insurance.

You have to feed them, put aside enough to pay for your unpaid sick days you KNOW you will have (you were out a week with the flu last year).

Go.

Now tell me about your plans for a small business, real estate, gold, or stocks.

[LSK]

89. why does all that have to do with the stock market???

It has to do with a poor education system, lack of healtcare in this country, destruction of unions and outsourcing.

What exactly does that have to do with the concept of the stock market???

Is the machinist in say Sweden in the same situation? Please explain to me the existence of this then: http://omxgroup.com/nordicexchange

You are attacking the existance of a concept on problems that really have nothing to do with the cause of the problems.

Does the US stock market and business need much regulation? YES. Does the mere existance of business cause poor conditions for workers? NO.

[Tyler Durden]

92. Does the Swedish system Require you (by default) to play investor or not retire?

No.

The machinist in Sweden has backup from the government that does not exist here.

Call me when you get that regulation you talked about, and I said nothing about the mere existence of business, only the Market Casino we all have to play or fail.

[LSK]

94. that has NOTHING to do with the existance of the stock market

And I will call you sometime in 2010 when President Edwards/Clinton/Obama signs regulation laws into affect passed by the filibuster proof Dem Senate.

[Tyler Durden]

96. The argument is that our stock market serves no true need.

Any need it serves is artificial, and superseded systems in place that did a better job for common people, but did nothing to raise profits for the "Market Class."

[LSK]

104. a well regulated stock market would allow business to grow

And employ more Americans and give them better jobs.

We do not have a well regulated market.

A well regulated market would penalize companies for offshoring, giving failed CEOs huge buyout settlements and salaries and such.

Now what if John Doe invented a solar panel that was 50% efficient. He got some loans and his small company could only make X number of panels per year. But the demand required that he make Y amount of solar panels. He needs to make a 10 more factories but that requires vast amounts of money to build. More than he can get from his profits of his one factory or what any bank will loan him. So his choice is to go public and sell 100,000 shares in his company. This raises capital for him to build 10 more factories where he will fill those factories with jobs for 1000s of Americans. Yes he can offshore his factories, but if we had protective trade tariffs, it would discourage him from doing so. What if we passed a law that anything not made in America was taxed 25%. He would keep his factories in America and employ Americans.

[Tyler Durden]

110. This is still not the point I raised.

Most of the population Need the market like they need the flu.

It's a Game, and they are not equipped to play. You can play if you want. But to require the entire population to play or retire badly is wrong.

That's it, in a nutshell.

[1awake]

125. whoa.. hold on there a minute tex,

I am a single father of three (ages 7, 9, and 10). I Make approx 24,000 a year at a job I choose to keep so I can better meet the needs of my children having me around more. I moved to a location which would better allow me to live off of that small amount of money. I drive a vehicle that is 9 years old, and have no plans of getting another.

Since my first child was born, I began investing saved spare change (once I was able to gather enough) into everything from the market to IRA's.. to federal and municipal bonds. It doesn't take a genius to invest money for the long term. It takes patience and hard work.. self discipline especially when you live on a shoe string budget. Is the stock market necessary? For me and my family it is.

[Tyler Durden]

132. Good for you. Everyone Can't Do It.

That is my thesis. That to Require participation in a game one can't win is unethical.

The market cannot be the only game in town. And if there are other choices and you choose to play the game, then it is your choice.

Closing off choices to maximize profit is pro-market, legal, and utterly immoral.

[1awake]

138. This part..

"The market cannot be the only game in town. And if there are other choices and you choose to play the game, then it is your choice."


agreed.

[Tyler Durden]

143. Perfect. Thank you.

I want to ask the rest of the Market Mavens: would that have been so hard to admit?

[Yupster]

224. Sounds great

I question the muni bond part though.

Would you be better off in higher dividend but taxable corporate bonds rather than the tax free munis?

If you're a sngle dad making $ 20,000 with three kids, you arenb't paying any taxes, so why take a lower interest rate for tax free bonds.

Just suggesting of course. If you have $ 600,000 in CD's, you would need the muni help.

[Telly Savalas]

201. Sweden has equity markets too.

[Tyler Durden]

203. And this is important why?

The thesis (for the xxxxxxx time) is that the Market is not Necessary. That if you want to play it, feel free but to pigeonhole people who cannot comprehend the Market (for Whatever reason) into being at its mercy because they want to retire a tiny bit better than SS and thanks to the rich pigs running things, there are no pensions, no loyalty, and no choices as to what they can Really do with their miserable little 401k, is unethical and immoral.

[Telly Savalas]

218. You're deliberately being obtuse.

It's been pointed out several times in this thread the role that equity markets play in financing business, but every time it's pointed out to you, you claim you understand the mechanics of it then proceed to rant about something else.

[Tyler Durden]

230. You really aren't listening, are you?

Read, and then reply.

[lumberjack_jeff]

72. I fully agree. Kudos to you.

No one has your interests at heart like you do.

Do you ever wonder what people are thinking when they ridicule you for "taking such huge risks" sending $400/month to the stock market as they're writing out a check for $400 for interest on their auto loan?

In fairness, that $400 auto interest payment is risk free. There's no risk that they'll keep any part of it.

I will say though, that I don't consider it rocket science. Successful investors start as savers. An investor can improve his skills/knowledge as his needs change.

I think a 401k is one of the best tools available. Sadly, too few 401k's allow participants to invest in useful things. (i.e. low expense mutual funds). I am very glad that I saved 20% of my income to a 401k starting at about the age you did.

At age 42, I was laid off and the company has since failed. Having 20 years worth of 20% of my income invested has allowed my net worth to continue to grow despite having no work income.

Compared to working, investing is far less risky. The key is asset allocation. I don't invest in individual companies, and at this point none is invested in domestic stock.

One suggestion from someone who has been in your shoes; at 25, one's risk tolerance is high. There seems to be plenty of time for a do-over if you lose it all. I suggest a slightly different paradigm - at 25 there's plenty of time to be patient and not get greedy.

[StrongBad]

87. Thanks for the advice!

And I fully agree that just because I could start over again doesn't mean I should take huge risks hoping for a giant payoff.

[pitohui]

128. simply not true, "random" can't be mastered

you cannot master the stock market, it is when properly regulated, considered to be a "random walk upward"

no amount of smarts, no amount of study, can fix "random," you can't control it, you can't time it, you can only fool yourself that you see a pattern that doesn't exist and as long as random happens to be going your way, you can congratulate yourself on what a genuis you are

in the stock market, it is actually illegal to get and use information that other people don't have, it's the crime of insider trading, using your brain, connections, EXTRA knowledge that isn't out there for everyone to use is a federal crime, don't go there

real estate is different, if i have inside information that something is going to happen in my neighborhood (because i live there, because my mom's in real estate, because i know the developer, what have you), it's perfectly legal for me to use my brain and my connections and to buy/sell as appropriate, studying and learning and making networks actually serves some purpose

the stock market is different, and the best thing to do once you have learned the basic theory and why some of the most popular systems are kind of bogus, is to put away the books and get a good index fund with low costs/no extra fees

there is a fantasy in america that hard work guarantees success, it guarantees nothing, that's why we need a strong social safety net

[StrongBad]

136. Wrong.

The term "random walk upward" was applied to the market when thinking of it over very long term periods, and it is exactly true in that context.

However, the secret to market mastery is learning how to anticipate and profit from the short term fluctuations within that "random walk upward". This is not difficult to do.

Again, it is fully possible to consistently make money whether the market is going up, down, or sideways. There are also ways to insure any long term investments you have against short term loss. These are techniques that are not immediately known to the lay-person of finance.

[Tyler Durden]

144. Then not everyone can do it....

And you are making saving for retirement a "game of skill" that you can win, and many others cannot.

unethical.

[StrongBad]

146. Nobody is born with this ability. It is strictly learned.

And I contend that it something that pretty much anyone can learn if they want to and put in the substantial effort required.

Contrary to what you may think, I do not think that people should be wholly responsible for their retirement and not expect some assistance from either gov't or their employer.

I'm just saying that the market can be very lucrative if you're cautious and know what you're doing. And that it's necessary to have in a modern economy.

[Tyler Durden]

153. Both of those statements may or may not be true....

But they really weren't the crux of the thesis.

But I will tell you that there are quite a few people out there that for them remembering to bath regularly is rocket science.

[Tyler Durden]

39. GEE, your WIFE and your KIDS must be so tolerant on how you use your TIME.

Oh you don't have any of those?

You know something? You can benefit from this by Mark Twain. Remember that the age should be skewed for the gap in time:

"When I was 17, my father was so stupid I could scarcely stand to have the old man around. But when I had reached the age of 21 I was ASTONISHED at how much he had learned in just four years."

Some of us have been through beaucoup college, life, and disaster. Being 25 in this case does not make you a expert, and if the market crashes, as they always do given time, maybe you can eat your certificates.

Your slurs against poor common working families are what make them look at you and say "That stupid kid is to damned YOUNG to know ANYTHING about REAL LIFE." $2000 is more than 20% of the yearly wage of some schmuck making $9 an hour, BEFORE HEALTHCARE AND TAXES.

[ret5hd]

41. I submit you don't know half as much as you think you do or you claim...

You are 25. You've been investing for a "few years". You've been studying the markets for a "few years".

You are 25. Lets say you've been studying the market for 10 years now, since you were 15. That was 1998.

I submit you know next to nothing about bear markets. I hope we don't hear of you on a window ledge.

[StrongBad]

49. Want to know a secret about bear markets?

You can make just as much money during them as you can with bull markets!

Of course to explain this would take a little bit, but it involves hedging any stock you own with options, or by just primarily trading put options instead of calls to compensate for the negative bias.

But I've traded during the last big bear market (around 2002-2003 during the Enron debacle and all that) and honestly it was one of the easiest times to make money. The hardest is when it's not quite bullish or bearish and is mainly neutral.

[ret5hd]

50. As I said, I hope we don't hear of you on a window ledge.

[Tyler Durden]

55. "JUMP! JUMP! JUMP!"

(The scream of crowds in 1929 watching the formerly well-to-do standing on ledges.)

[pitohui]

131. hedging is paying the vig in both directions

long term you end up a big loser

most of the time the market is just doing nothing, so most of the time you are getting eaten alive by your costs

having some success in 2002 and then having to wait for a severe correction again all the way until 2008, i dunno, pal, but you're going to have a tough time in retirement if that's the plan, retirees need to have income coming in every month, every year, not just once every five years

remember the original post was about RETIREMENT investing, stock market versus pensions

[newportdadde]

62. A 25 year old options trader.. this will end well.

[wtmusic]

74. Poor Advice of the Year Award

"To be successful in investing you must manage your own money".

Wrong.

Most people -- probably in the 90th percentile -- would be far better off putting their money in a managed account and let someone who knows what the hell they're doing make money for them.

Most people don't have the time or fortitude to successfully manage their own money.

And the little guy can master this too.

So you've "mastered" investing. Wonderful, it's about time someone has. :eyes:

[StrongBad]

80. There's nothing I can say to this...

...because you're obviously ignorant on the matter and my personal experience has fully contradicted your claims.

But feel free to merely keep pace with the Dow, asssuming you've been lucky enough to have found an account manager that actually cares about your future and not his commisions.

"Most people don't have the time or fortitude to successfully manage their own money."

The logical question that follows is: So why do they feel that they should entrust their money to someone who in all likelihood knows marginally more than they?

[Tyler Durden]

95. You missed his point completely.

Can you be a Dentist for yourself and your family? According to the logic of the Market, all you have to do is study and spend enough time practicing and then you can do it.

Not everyone can do it, and the 401k Market Game requires everyone to play. That's what's wrong.

You want to get rich and retire to St. Kits? Go for it. the rest of us will be happy to afford medical care, housing and groceries.

[StrongBad]

97. I really disagree with that assumption. Anyone can do it.

Comparing learning basic principles of personal finance to mastering the field of Dentistry is just silly. The level of difficulty between the two of them is enormously different.

I promise, it's not rocket science.

[Tyler Durden]

121. Anyone can play the market is a Right Wing Talking Point.

It was raised by the Reaganites so many times I can't count.

No. Not everyone can do it. I'm sorry, but there aren't 10 people in this 275 person building who are doing it and making out.

Even the rich boss isn't getting richer on the market.

[StrongBad]

127. It's not a right-wing talking point, it's the truth.

Just because the limited people in your office aren't "making out" it doesn't mean it doesn't work. It just means they don't know what they're doing.

[Tyler Durden]

134. And I assume You will Pay to Educate them .

and yes, it's a right wing talking point. Not everyone has this ability. If you do, more power to you.

But if you require all to play a game you're good at...Then it's immoral.

It's not the Truth, but it is what's happening now. It doesn't make it right.

[StrongBad]

139. I do think basic financial literacy should be much more emphasized

Our educational system doesn't provide this knowledge. I would gladly support it being taught in schools and funded by taxpayer dollars.

[Tyler Durden]

145. Then when it is implemented, your system is ethical.

Until it is not, it's just another way to rig the game.

[StrongBad]

147. What system?

I thought we were talking about whether or not the stock market is necessary and useful? I already said that I don't think a person should be on their own concerning their retirement.

[Tyler Durden]

155. The thesis is: is the stock market Needed.

Answer: it should not be Necessary. If one does not care to or does not possess the acumen (for Whatever reason) to participate, one's future level of retirement should not ethically or morally depend on the Market through the ubiquitous 401k.

It is Optional. But to tacitly Require participation is not ethical or moral.

That's the whole thing.

You suggested everyone be educated as to financial matters so as to make them capable of handling what you suggest. Well and good. it isn't what I'd suggest, but after universal public education for such matters, at least the Moral issue goes away.

[pitohui]

135. it is most certainly not the truth

"anyone" can play the market, really?

those guys living under the claiborne bridge in tents? the inner city single moms? my disabled friend whose check for an entire month including housing is $600 a month?

in many areas, wages are so high that by the time you pay rent and food, there is nothing left, i know people who routinely get the electricity turned off, in america, no electricity

i know many people who have zero disposable income at all, playing the market is just not gonna happen

the market is effectively closed to you unless you are of a certain class, pretending it isn't is just silliness

people need to eat every day, they can't wait 20 years for their ship to come in

[StrongBad]

141. These are entirely separate issues

It is true and grossly unfortunate that because of sub-par social welfare in the US that people slip through the cracks and are treated as disposable.

Do I think that we need to spend more of our governmental revenue helping these people? Of course, that's why I'm a Dem (and I mentioned this upthread already).

However, though it is something Democrats should strive to remedy, it doesn't change the fact that for those who actually do have the means to invest, that it has the power to create great growth in money if done wisely.

And this thread wasn't about the stock market as a means of retirement. It was just questioning as to whether it should exist at all.

[Tyler Durden]

149. That is where you missed the point completely

As did so many other of your market mavens.

The Point was is it Needed. I should not be Necessary. If you wish to play, More Power To You. Go for it.

But to require that persons without your expertise or the means and ability to obtain it, is simply another method to rig the game.

The common Working Man should not have to play your game to retire decently. That was my thesis. Not whether or not the Market should exist, but whether it should be Necessary for the retirement of the people.

[LondonReign2]

166. Here's the thing

StrongBad is talking about ways to beat the market. Not everyone (almost no one)can do that over long periods of time -- George Soros, Jimmy Rogers, Peter Lynch, and Warren Buffet are rare exceptions.

But, ANYONE, even the mechanic with the 4th grade reading level, can invest in an index fund that tracks the market (minus the .25% or less a good one such as Vanguard's charges). And, over time, those funds have earned 10%+...the only vehicle that consistently out paces inflation.

It doesn't take any special knowledge. It doesn't take vast sums of money. And the game isn't rigged against the poor.

Or if you want, go to a professional fee-only advisor to get more sophisticated advice. Yes, you'll pay something, because you are paying for expertise, just like when you go to the doctor, dentist, or tax accountant.

Truly, the requirement is to be disciplined to save/invest some money rather than spend it all.

[pitohui]

122. he obviously hasn't read anything serious about investing at all, it's kind of sad

some people just have to learn the hard way

it's clear he's only read pop literature, anything even remotely serious has to wrestle with the question of randomness and the random walk, it's one of the great questions of economics, WHY is it that learning and educating ourselves means that we still don't do any better than the monkey with the dartboard?

this central un-answered question is one of the great questions of economics to my mind, it seems logical that educating ourselves would make us better investors, but in fact, year after year, and decade after decade, the educated people and the stock brokers who have dedicated their lives to studying the market don't do any better than the index funds that have no manager at all -- they get lucky for a year or two or three but in the LONG RUN, which is all that counts when you're investing with 40 years left to retirement, they never out-perform the market as a whole

we have ONE example of someone who has systematically beaten the market over decades (warren buffet), we have way more than one example of someone who has won the lottery, but people don't just get it

random means random, you can't outwit random except by being lucky and luck can't be planned

sorry, mr buffet is apparently a nice guy but ONE lucky man in a world of billions, well, anyone who plans their future on being the next lucky guy out of billions is just sad and setting themselves up for a lesson

one study that amused me was the study showing that women actually do better as investors (on average) than men, why, because they simply don't do as many trades, since they don't assume they are in the know and they don't listen to bullshit "tips," so they are exposed to less transactional costs -- knowing less on average about the market they actually end up earning more because they don't spend as much

the problem with educating yourself about the market is that you start to think you know something, and you start putting a lot of money into action on trades, and those transactional costs (the house "vig") end up eating you alive over time

[AngryAmish]

160. Don't assume Buffett is lucky at picking stocks

B-H main strength is in management, in which luck does not play as much of a factor as in picking stocks.

Otherwise, I agree with you re picking stocks.

[AngryAmish]

47. All caps, now that is persuasion!

[Tyler Durden]

78. Oh stick it in your ear.

Some of us are old enough to remember when capitals simply meant emphasis, or "pay attention to this point here."

Another example of "You all have to play my game because I say so."

This should work well when you have to compromise with Dylan's "Mystery Tramp."

[AngryAmish]

103. When all is emphasized, all is ignored.

[Tyler Durden]

111. one word in 20 was capitalized.

if they all showed up capitalized, I would suspect your computer.

[AngryAmish]

140. Computer is fine

Just knock off the all caps, 'kay?

[Tyler Durden]

156. Just to please you.

[Egalitariat]

23. You should stick with CDs***

nm

[Atman]

28. Because the hoi poloi don't like to rub elbows with the grannies at the casino.

The noise of the trading floor is like the intoxicating "DING DING DING DING DING" of the slots to them. Plus, their kind of gambling is way more fun because it fucks with other people's lives. They love that.

.

[Tyler Durden]

30. Another reason why the Stock Market exists.

You see that my post wasn't asking HOW the market exists or makes money, it was why we even NEED the damned thing.

Which, of course, no one has explained yet. They would rather explain how the car works rather than why we have to go somewhere in it at the moment.

[KG]

33. yes, it's a scam.

it allows a small minority of people get rich with someone elses money.

[StrongBad]

38. Post 15 explained perfectly why it is needed

Did you forget? It's because the money generated through stock offerings does two things for businesses and the economy:

1) Limits liability. You don't have to put your personal income on the line if you want to start or own part of a business.

2) Raises huge amounts of money for the business. The money generated through a stock offering far exceeds anything that one could offer of one's personal income to help one's business.

That's all concerning the business side of the equation. Regarding the private investor side, see my posts above once more. Thanks.

[Tyler Durden]

45. You haven't proved why it's NEEDED.

You have proved how it works. There's a difference.

It is not NEEDED by the common working man, unless you think MASSIVE CORPORATE SALARIES, such as those at Hershey for example, whose execs are pulling production to Mexico to save 10% even though they are extremely profitable, is a GOOD, ETHICAL PROCESS.

There IS no "Private Investor" that you claim. He doesn't exist. The last figures I saw on the average 401k funding level was UNDER $30,000. And don't blame the individual for "Not being informed." The system SET THE RULES. If you have to be a part time accountant to even RETIRE anymore, than the SYSTEM, although functional, is UNETHICAL. THAT is my argument. Do we NEED it? No. Do people with capital to spare, or people who want to "play the market" WANT it? Yes.

Which is more moral? THAT is my thesis. You all are missing the point. SHOW ME the system is NEEDED, that is, ETHICAL and IMPORTANT to the average citizen who is, whether you accept it or not, shouldering the risk for your casino through lowered wages, benefits, and job security.

[lumberjack_jeff]

81. Why is a used car lot NEEDED by someone who doesn't drive?

It's a marketplace. The fact that someone doesn't need its services doesn't imply that the services shouldn't be provided to those who do.

If you have a moral problem with investing, good luck to you. Investing has worked out fine for a guy who calls himself lumberjack - it needn't be rocket science.

[Tyler Durden]

88. I have a problem with a system you can't opt out of and live.

Good for you. Hope you get your money out before the crash. It will happen. They always do, unless you believe in the 1000 Year Dow.

so to speak.

[Squatch]

90. Once again, you illustrate your monumental lack of understanding

which people, including yours truly, have attempted to explain to you (at your request, I might add).

"Hope you get your money out before the crash."

This advice is naive, at best. Foolish, at worst.

[Tyler Durden]

100. Talk to the wall, you are rude.

Hope that works well for you . History says otherwise.

But it would have made you a little more moral person to let the schmoes at the bottom at least keep there pensions. That doesn't seem to work in your "every man for himself" system.

Feel free to reply. I won't, as you decided to make this personal. That usually happens when someone gets pissed off that their argument has run out of gas.

[MilesColtrane]

126. Trying to understand...

Someone is forcing you to invest your money in a 401k?

[Tyler Durden]

142. Please.

Just read. I'm way too tired to take on another sparring partner.

And if the market works for you, fine. but the other 80% of the country isn't in your league.

That's the Red Sox playing the Toledo Mud Hens and it's unethical.

[MilesColtrane]

150. OK chief...whatever.

[Tyler Durden]

151. Forgive me, I have simply run out of gas.

I state the Stock Market is not "Needed" meaning it should not be Necessary. anyone who wished to play may feel free, but as long as we do not educate all participants, and we as much as "require" participation due to the ubiquitous 401k as opposed to the long passed pension for a decent retirement, then it is unethical in its requirement for participation.

[lumberjack_jeff]

179. Investing is no more "necessary" than books

If you can't read, it admittedly limits your life choices.

That said, there's a lot to the investing world other than stocks.

I'm not happy about the disappearance of pensions, but I like the idea that my retirement goes with me and is under my control.

[Tyler Durden]

205. Then it should be Your Choice for it to be that way....

...and the other choices should be available as well.

This is fair? No?

[lumberjack_jeff]

206. You can buy an annuity.

For all practical purposes it is the pension you want.

[Tyler Durden]

209. Got the money up front?

Isn't that how most of them work?

Besides, the original reason for pensions was to instill loyalty in employees for an employer that was shitty otherwise, like in PAY.

We're right back to gotta HAVE money to MAKE money.

[A HERETIC I AM]

217. You can purchase an Annuity for as little as $2000

and depending on the type, you can contribute to them at any rate and frequency you like.

[Tyler Durden]

228. If you make $10/hour, that's almost 15% of your income before taxes...

And we're right back where we started.

We either value the labor of the common working person, or we don't, and we do so at our peril.

[Yupster]

225. I would add two more reasons why the stock market exists

1. is liquidity. If a company has hundreds of owners and one wants to sell, the stock market creates a smooth way for that owner to release his ownership in the company in an efficient way without creating a turmoil within the company.

2. is transition, especially at death. If a guy or 10 guys own a company, and one dies he can leave his share to his five kids in equal shares. If five of them want their shres in cash, the company is in big trouble. The stock market handles this problem also by allowing smooth transfer of an owner's shares at death without disrupting the company.

If I could suggest one change, it would be that shareholders should have to approve all bonuses, and also any compensations of over $ 400,000. The proxies we currently get say "Approve the proposed plan of executive compensation." Yes or no. It would be nice if we knew what the plan was. It should be required to be spelled out within the proxy notice.

[pitohui]

118. hoi polloi doesn't mean what you think it does

grannies at the casino are by definition the hoi polloi

never use the ten dollar word if a two dollar word will do, esp. if you don't know what the ten dollar word actually means

hoi polloi is a fancy way of saying the common folk, and yeah, i can't spell it either, you and me both

[Atman]

133. You're correct, even if kind of rude.

Funny thing is, I do know what hoi polloi means, but for some strange reason when I was typing the response I was thinking of the old Three Stooges episode. But I'm not alone. Usage definition #2 in my dictionary...

2. Hoi polloi is sometimes used incorrectly to mean 'upper class' -- that is, the exact opposite of its normal meaning. It seems likely that the confusion arose by association with the similar-sounding but otherwise unrelated hoity-toity.

Never use 3¢ snark when a simple polite response will do.

:hi:

.

[aikoaiko]

34. Stocks or money markets can be inherited by my heirs

not so much with pensions.

[Tyler Durden]

60. That is not the point.

Your HEIRS can benefit from your personal estate, but the rest of the world should not have to play a financial game you are good at and they aren't just so your kid gets a Porsche.

Am I wrong here?

[aikoaiko]

113. Well you compared owning stocks to the old pension system

And I was letting you know about one of the benefits of investing in stocks that is absent with pensions.

In my job, my employer "matches" my every 5% with 8-12% contribution. Over the long run, its a great deal that I can cash out and put into something more safe or just cash out.

And when I die (especially if I die young) will get a nice inheritance to help their life.

Making money in the stock market is not difficult over the long run.

[Tyler Durden]

123. I'm getting tired of explaining this

You and the others in your position are rarities. You aren't even close to the average.

To expect the average person to play in your league is worse than unethical or immoral: it's cruel.

If absolutely everyone could do what you're doing, there would be no such thing as bankruptcy or falling stocks.

[Orangepeel]

42. why is it better than a pension for the little guy barely making a living wage?

It isn't, most likely, which is why I oppose privatizing social security.

But the republican argument is that it gives the little guy control. If he/she is a smart investor and does choose to put 401K money in stocks that are going to go up, he/she can make more money than the fixed amount provided by a pension. The pension fund is also invested in the stock market, but usually (usually), in less risky investments. Also, if the company the little guy worked for goes belly up and loses the pension fund, the little guy already has the money.

[Tyler Durden]

57. It only works if EVERYONE is a smart investor.

The point of a PENSION SYSTEM is to level the field. You can be the best machinist in the world, and not know DICK about the market. OR you can be a Day Trader, spending your evenings with Dow Jones and be the worst machinist in town.

Who do YOU want making sleeves for hydraulic systems YOU are trying to sell to your customer?

[MindPilot]

43. Good post and good questions--things I've wondered myself

I often thought why is "the market" so friggin' important that there are entire TV and radio broadcasts dedicated to how it "performed" -- like it was a sports team or something? And what is with all the pomp and circumstance at closing? It looks to me like a bunch of rich guys applauding themselves for having gotten through the day. Clap! Clap! Yea! Look as us; we actually worked for a day. Oh that was so hard--gambling with other peoples' money! We're workin' men!! Clap for us!

[Tyler Durden]

63. Have you notice HOW HARD its proponents defend it?

I personally don't care if they play, stay or pray. I just want the option not to have to take a second, UNPAID job as my own personal accountant and money manager to not have to eat Dog Chow when they won't employ me anymore.

[Squatch]

65. Investing successfully is really not that hard...

all you have to do is take the time to read relevant financial reports, articles, etc. And, if you can find the time to read a book like "The Wealth of Nations", you probably have time to read the Wall Street Journal every now and again. :)

[Tyler Durden]

73. You judge by your personal standards....

I argue for the Necessary Member of Society...The Machinist with a 3rd grade reading level who comes into my office once a day to have me help him with a process print.

There are too many Necessary Members of Society that cannot play your GAME. I can read the WSJ anytime I want, but it's not what I'm depending on to save my ass in 7 years when I'm 62.

You think EVERYONE can "bootstrap" themselves, like you have? You're dreaming, and that it the point of all this.

I've read Wealth of Nations. Twice. Once in 1971, and again in 1982. Good book, excellent points on how Capitalism is supposed to really work.

[Squatch]

77. Fall on your sword often?

"I've read Wealth of Nations. Twice."

LOL.

"I argue for the Necessary Member of Society"

LOLx2. Tyler Durden, DU's resident self-proclaimed defender of the little guy.

[Tyler Durden]

82. I wish I could watch people like you...

...Bargain with Dylan's "Mystery Tramp," except I wouldn't have the heart: I'd have to pull your cookies out of the fire.

You guys think you're the top of it all, and believe me, when you NEED one of those little guys, who will they talk to?

Me, who has that guy over on weekends for burgers, or You, who thinks he just ought to read the WSJ if he expects to actually RETIRE one day?

It's a COMMUNITY, and your attitudes do not make you part of it.

[Squatch]

86. Yeah, I have those guys over for burgers, too.

Only I make mine from foie gras I just had flown in on my private jet.

"...who thinks he just ought to read the WSJ if he expects to actually RETIRE one day?"

"...I've read Wealth of Nations. Twice. Once in 1971, and again in 1982. Good book, excellent points on how Capitalism is supposed to really work."

I'm detecting a theme here. You cannot, apparently, make the mental connection between turning something you read into action or results, which would explain your obtuse rants against (insert topic here).

[Tyler Durden]

91. No, you don't see everyone can't "go ye and do likewise."

But, as anyone with a "Stake" in a system, like the Bush's have in oil, it is impossible for you to conceive of how anyone can be incapable of playing your game (the market) and be other than jetsam in the stream of society and disposable because "...it's just their own fault for not playing my game."

You would make an Excellent Republican. That's how they think, you know. Ultimate Personal Responsibility, you can't pull yourself up then what good are you...blah blah blah.

[Squatch]

93. Why am I not surprised you would resort to that?

"You would make an Excellent Republican."

Well, you would make an excellent twat. :)

[Tyler Durden]

101. Thank you again for making my point for me...rudely.

[Whisp]

236. Tyler, thanks for starting this thread.

hugely important subject and great insights from you and other fair minded people here.
thanks

very sad to see the 'i got mine so fuck you' attitude so prevalent here, tho.

[Lydia Leftcoast]

68. Just judging from my life experience, Tyler is closer to reality for the

vast majority of Americans.

I've known lots of people who've played the stock market. There are two categories of people who grow rich:

1) Those who bought many shares of a low-priced stock of a startup company that boomed. When I was in grad school, I knew a family whose initial shot of wealth came about generations ago because they bought large numbers of shares in the Coca Cola company when it first went public. However, that was a gamble that could have gone the other way.

2) People who make a second career out of investing and monitor the markets the way monks attend services.

I'd be more sympathetic to the stock market if it didn't operate so much like the way a poster above described CDs. That is, people are buying and selling pieces of paper that supposedly represent a percentage of a company. Yet the big money these days seems to be not in making things that are needed by society but in mergers and acquisitions, what Robert Reich called "paper entrepreneurism" back during the Reagan administration.

How am I helping society by purchasing shares in a company whose main activities seem to be shipping jobs overseas, acquiring other companies and stripping their assets, and granting huge bonuses to its top executives?

The stock market is gambling with its genteel make-up on.

Years ago, I once heard a sermon in which the priest told of his great-grandfather, who was quite a successful riverboat gambler. He fell in love with a young woman from an upper middle class family and wanted to marry her. The young woman's father said that he would not let his daughter marry anyone who didn't have a respectable job. Accordingly, the gambler gave up his gambling ways and became a commodities trader, prospering with exactly the same skills he had used to part riverboat passengers from their money.

[rockymountaindem]

64. Two posters have explained the stock market to you fairly well under the circumstances

and yet you keep coming back to the idea that we don't "need" the stock market. Just think of it this way: if you're going to put a product out for sale, you're hoping to develop a "market" for it. The market is just the space in which goods and services are exchanged. So, if we know companies are going to sell shares to raise money (as has been elaborated upon in this thread), then there's going to be a "market" erected where those goods (shares) can be traded. It's a simple as that. Companies put out shares, people buy them, so there's the market. Why is that hard to understand?

Furthermore, the stock market is not a form of "savings". It's a form of speculation in which people seek to use some of their money to purchase part of a corporation which they *hope* or *think* will increase in value. It's not a guarantee. Of course, I don't dispute anybody's right to try and make money by speculation, but there aren't any guarantees. If you want to save your money, put it in a savings account. You get a set level of interest as a guarantee and it's federally insured. The point is that the stock market is no better or worse than any other kind of market. Nobody's forced to take part in it, but it's not a scam. People can and do succeed, I know several of them, all of them people I'd call regular middle-class types. But that's not going to prove anything to you. So let me put it this way. Instead of investing in stocks, lets say that you invest all your money by buying up 10,000 toasters on the hunch that there's going to be a giant craze for toast in the next two years. Now, three things could happen. There could be a decline in the demand for toast and/or an increase in the supply of toasters which makes your toaster investment decline in value. The relative demand for toast and toasters remains the same, in which case you don't lose money when you sell the toasters two years later, but you haven't made any profit off your venture and you've tied up your money in toasters for years with no gain. Or, the toast craze could develop in which case you sell your toasters to the toast-crazed masses and make a slew of cash. The stock market is kind of the same. You invest your money in a company because you think it can increase in value largely owing to factors beyond your control, and your investment can either gain, lose, or maintain value. However, I don't think you'd rail against the "need" for or the morality of the toaster market, even though you could just as easily lose your ass there, too.

[Squatch]

67. ...

:thumbsup:...epsecially to your last sentence.

[Tyler Durden]

105. You aren't on the same page.

If that's your gig, go for it.

But to require some worker with an effective 4th grade education to do the same thing so he can one day stop working is immoral.

I know how the market works. I said it is not needed. there are lots of things out there that aren't needed, like football, or Tropic cruises. I don't care if they exist, but the old age security of the least able to participate in your game should not be a counter in the Stock Market.

It's unethical and immoral. You got the cash and want to play? Go ahead, but don't ask the $10/hour guy to understand any of this so as to base the future of his family on it. That's just wrong.

[rockymountaindem]

108. Who, exactly, is forcing anybody to participate in the stock market?

You, I, or anybody else can do any number of things with our money on our own free will. Nobody's forcing anyone to be in the stock market.

[Tyler Durden]

114. Unless you don't want to retire.

The final destruction of the Pension is being accomplished in this country.

Now, if you want to eat, pay doctor's/medicine bills and have a roof at age 70, then you better learn to play the market and manage your 401k.

Mine never made any money, but people will just say I'm saying "sour grapes," so I haven't said it to this point.

Tell the guy with the $20,000-$25,000/year income how he's going to "invest," and I'll go with the market.

[lumberjack_jeff]

66. Limited Liability Corporations got their start...

in the old world financing voyages to the new world. Voyages were expensive (and highly risky) endeavors. It made sense for groups of people to pool their resources and to spread their risk across several such voyages. Without limiting the liability of the participants to that which they agreed to risk, it was difficult to raise the money.

Those who invested money expected profit - the more the better. But the better the profit, the more attractive the venture was as an investment. The more attractive, the higher the value of each "share" of the corporation. Stock markets came into being to quantify these changes in value and to provide some liquidity to the shares that the investors purchased.

As another poster observed, when you invest in shares of a company, you are not loaning the businessman money, you are buying part of the business. It is not his endeavour, it is yours.

The economic world turns around the concept of limited liability.

I suppose you could use craigslist to buy and sell shares of corporations - but it would still be a stock market.

[CorpGovActivist]

75. Hey Tyler...

... http://www.google.com/search?hl=en&q=dtcc+idesofoctober">this might help.

; )

- Dave

[Tyler Durden]

115. Hey CGA!

Nice to see you alive. I'm hanging by a thread, "Griefed" doncha know.

I ain't sayin' nuthin about nobody for a while. Somebody here called me a "no no word" though. Bet nothing happens.

[CorpGovActivist]

148. Let's Go outside and Have a Fffffffffffffffffff...

... fun run together, shall we?

; )

Can you run while singing Kumbaya?

- Dave

[Tyler Durden]

152. Shoot, my knees won't let me run at all....

Unless being chased by some evil entity. Not specifying Any particular evil entity, or that any specific entity could be, or Should Be more or less evil than another, especially if that entity has particular special.............................................

this shit is going to drive me nuts. got any pot? I want to get high SO BAD.

[CorpGovActivist]

154. Have Some Water...

... although I can neither endorse tap, nor filtered, nor bottled at this point in time.

- Dave (KNPnta)

[Tyler Durden]

157. Actually, I must demure on the subject of water.

I can neither confirm nor deny the existence of any water like substance in or around my person or any requirements for such fluids.

[CorpGovActivist]

162. I Must Take Issue with How You Mischaracterize Water...

... it is not merely a fluid.

You are oversimplifying the issue, and you obviously know it. Clearly, you don't care to discuss vapor, steam, ice, slush, snow, sleet, freezing rain, or heavy water.

- Dave

[Tyler Durden]

168. I must apologize for my faux paux in dealing with water....

and I apologize for the use of French in apologizing.

[CorpGovActivist]

169. "Would you like some Freedom Fries with that crow pie?"

:rofl:

- Dave (KNPnta)

[Tyler Durden]

172. I want you to know I am Alerting on you for Non-PETA sensitivity.

Shame on you for making crows into pies! Hey, I actually do like crows by the way. have known a couple. smarter than some of the posters on this thread.

(Can I "cap" PETA? I got called for CAPS for crying out loud)

I wish to apologize for insinuating that some people on this thread were not as smart as crows. I want to say I think they are equally as smart as crows.

I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize I wish to apologize

[CorpGovActivist]

173. No Noodles Will Have Been Harmed in the Self-Flailing That Will Now Ensue ... KNPnta

[Tyler Durden]

177. I do hope your noodles are of an Approved National Origin....

Wait, is that PC or non-PC, and can I put PC in caps??

I have a migraine now.

[CorpGovActivist]

178. They're Certified Fair Trade, Picked off the Noodle Trees by Union Workers Only

- Dave (KNPnta)

[Tyler Durden]

182. Then I must Alert on you fro supporting .....

oh crap. what Were you supporting? and this caps Bs is starting to get boring.

[CorpGovActivist]

184. please alert; on ... me 4 supporting eecummings and his brilliant? use of lowercase^punctuation

[earth mom]

83. I HATE the stock market! The country & the world are a slave to it

& it does NOT benefit the little guy aka THE MAJORITY of the people.

Companies MUST show profits to satisfy their investors. So guess who gets the ax when they don't have enough profits to show? That's right, people just like you and me. :grr:

As was said upthread THE STOCK MARKET IS A PONZI SCHEME. :puke:


p.s. Yep, I use all capitols for emphasis. Guess I'm an old fogie in that regard. Whatever. :eyes:

[Tyler Durden]

124. I shake your hand...

...If you can find my little commune (6 acres, 3 greenhouses, 5 wind turbines is the plan if I get one more year to pull it off) you are welcome.

The Market Guys can eat their stock certificates. High in fiber I guess.

[leftofthedial]

99. it IS rich guy night at the rigged casino

it is the basic building block in the transfer of wealth from the workers to the oligarchy

[pitohui]

112. well we can all agree that it doesn't replace the pension

at this point, it's moot, ronald reagan set in motion the process and most people's pensions have been stolen by now or will be stolen in the next few years so crying that "it ain't fair" doesn't do any good since the people have not risen up

even educated people, like the airline pilots, ultimately were not willing to rise up over having the work of a lifetime taken away, when their pensions were stolen, if people won't fight for themselves, they won't fight for you, so the battle over pensions is over, people of my generation and younger (say younger than age 50) are not going to have pensions

at that point, you can either give up on any hope of retirement or else you look for alternatives

keep in mind that next the rich will steal social security from the middle class by calling out for "means testing" so that if you own a house or have otherwise provided for yourself without managing to become rich, they will stealing your social and handing this over to halliburton too, that's why the GOP constantly cries for "social security reform," they've seen people won't protest when pensions are stolen, so why not go for the whole banana?

so...real world...

the stock market is not a "need," it is a desperation play, if i invest in guaranteed instruments like CDs, bonds, etc, i can't ever get enough to retire, because inflation of basic needs like food, health care, fuel always out-paces the return of the investment

so i have no option but to try the market, a slim chance of success if better than zero chance

naive people, like the 25 year old poster below, imagines that the stock market will return what it did during the late 20th century, about 11 or 12 percent a year, at that return, i can invest in index funds, keep up with inflation, and actually be able to retire -- if that happens great, but i'm older than 25 and i already know that the 25 year old is making the great mistake of projecting a past situation to project future results -- the very thing the SEC warns on every prospectus that you cannot do -- so here's a shout-out to the kid, you haven't really read anything if you haven't read the first page of the prospectus, and you certainly haven't read anything serious about investment, just pop literature that doubles as sales material, if you haven't studied risk/return -- keep in mind the people who invested at age 25 when i was that age did not expect being a "millionaire" to mean that you still couldn't afford to retire! what do 25 year olds think being a "millionaire" will mean they're 65, it will either be about a year's income or the currency will be revalued! they just haven't done the math, they've relied on cant put out that promotes the financial industry

my investment company (a major) has pointed out in the prospectus that the 20th century was the greatest century of growth in all of human history, this growth isn't sustainable for americans, a return over time of 6% in the 21st century is more likely -- in this situation, i don't come out ahead after taxes and inflation but at least i will have something to retire on

but the kids don't read the prospectus, they read rah-rah investment pop literature and think, wow, i'm gonna have a million dollars!

if the average return over the decades is smaller that we think it will be, then, as you say, yes, we are screwed, the last six years have not been encouraging, the dollar has lost half its value vis a vis the euro and still going down, the stock market has in essence returned less money than the CD i already know that i can't get enough over inflation/taxes to retire on

so it's damn scary but what do we do instead?

what then do you suggest? just give up and say "oh woe?" a tiny chance of success is better than no chance

[Tyler Durden]

120. Oh no. You just said exactly what I wanted to hear.

Spot on.

I only wanted agreement that what has happened (thanks for the Reagan reference: may he roast) is not ethical or moral, and geared toward the wealthy.

Oh, and I'm over 50. The pension issue was killed long before I ever had a shot.

Thank you for your honesty, and being the first to actually get the point.

[pitohui]

137. thanks

i hate to be so negative and i think some of the other posters will feel i'm being unnecessarily so, but that's the way i see it

[Tyler Durden]

129. This thread proves the quote by Upton Sinclair:

"It is difficult to convince a man of something if his paycheck depends on his not understanding it."

The Mechanics of the Stock Market will always be shouted by those who strongly believe it is their only hope of wealth, and they believe just as strongly that wealth is the only thing of importance.

I hope my morality and ethics will not jeopardize the existence of my "commune" when the crash comes. It will be hard to turn people away, unless of course they offer me money-then it will be easy.

[Subdivisions]

130. Sounds to me like someone who is too close to retirement

made the wrong investing choices (read: high risk) for his 401K program and is now scared half to death.

Edited to add: But, I could be wrong.

[Tyler Durden]

158. Yep. You're wrong.

Have a middle priced house almost paid for, and have options on land up north, just waiting for the price to drop.

Studied Wind Turbines, Greenhouses, Hydroponics, Electric Vehicle Conversion. I'll be fine, thanks.

I just have enough morality left to see some of the poor suckers around me that will be stocking at Walmart or 7-11 to get by until they drop dead in the saddle as not deserving the hand dealt.

[NeedleCast]

165. Yes, You're Wrong

"Playing" the stock market for large gains over a short period is pretty much a tool reserved for the wealthy but there's a lot of stuff you can do on the investment side that provides high gains that a CD or similar device while carrying little risk.

I'll give you one example that I use myself, called a DRIP fund. You usually need a broker to set it up for you, but after that you can send in money any time you want. The DRIP stands for Dividen Re-Investment Program. Simply put, instead of paying you a dividen check every month or quarter, the company take what money it would have sent you and buys your more stock with it. It it (generally) a very long term thing (which is what I use it for, long term savings/retirement). I don't much care whether the stock goes up or the stock goes down. I've got two DRIP funds and honestly coulnd't tell you what the price of either stock is other than a vague ballpark based on past performance. I pay right next to zero attention to my DRIPS except to glance at my quarterly statements and make sure their strill dripping...as it were. So instead of getting a few checks several times a year for 10 bucks here and 50 bucks there, whatever money I'd have gotten goes into buying me more stock.

The stock market is, at it's basic level, just a way for companies to get a big wad of capital cash up front and be able to pay it back over a period of time in smaller (and hopefully to the investor) amounts that will add up as an advantage to the investor. Hell, it doesn't even require that the company make any money, as the dot com boom-then-crash showed us. Companies with shit business models that consistantly lost money were raking in big piles of initial capital. Unfortunatly when the investors came calling and the dot coms had empty pockets, it ended with a quickness.

There's a lot of good that comes from the stock market to a shrewed investor who's willing to take a minimal risk for a marginal gain. Those that try to "get rich quick" almost always fail.

[Tyler Durden]

171. Enjoy it. Have fun with it.

But the Market Based 401k retirement or Nothing is fascist. My opinion.

And there are many, many people not up to the game. Also my opinion.

However if You wish to play, go for it.

[NeedleCast]

175. It's not really playing the game

Having read through the thread, there's a lot of examples of how the market can be advantageous for even, yes, the little guy. Your response has pretty uniformly been "if everyone isn't educated on it evenly, it's not fair." You seem to be under the impression that there are no means of retirement vice a 401K. Again, I don't think this is the case but even if it were, the vast majority of us would be in the group that doesn't know a lot about the market (including myself). Thats what money managers are for and again, even "the little guy" can generally aford to get periodic advice. As a person now in my mid-30s who is probably somewhat behind the power curve on my 401K due to spending five years in the military (where 401K is not an option at present). About 70% of my 401K investment package is in slow, sustained grow stocks and the remainder is moderate risk investments. You really don't need to have any market knowldge for a 401K to perform as intended.

Another part of your argument is that the market is not neccessary. True. No more neccessary than chocolate chip cookies are neccessary.

Your opinion that there are many, many people not "up to the game" is correct. I'm one of them. Hasn't stopped me from making money because I take a minimum of risks and it doesn't take a 150 IQ to figure out that the faster the promise of "getting rich" the riskier the investment, right? I'm not trying to get rich quick. I'm not trying to play the market. I invest 7% of my income in my 401K. My company matches 75% of that 7%, pre-tax. My 401K has been worth more every quarter I've had it than it was the previous quarter with zero participation from me other a one time change to the partitioning of my investments.

[Tyler Durden]

180. I have no problem with anyone who wants to play the market.

I merely say it is a gold mine for employers who do not wish to own up to pensions.

If you wish to go with the market, feel free but If someone cannot or chooses not to go with it, something other than 401k should be an option.

And don't feel bad about the "power curve." We endured two more financial catastrophes and at 55 and 50 respectively, our 401k balance is $1k.

We do almost own our house though.

[NeedleCast]

186. I guess my age gives me a mixed opinion on pensions

and maybe my field of work too (IT/Training), because it can be a very mecenary field in which both employer and employee loyalty is suspect at best.

I agree that the 401K is a beneficial tool for employers but that's part of the system that is NOT the fault of the market. Place the blame where it belongs...at the feet of companies who treat their employees as little more than tools. I'm lucky (for now) in that the market for my field is strong in the area I live and that I have a solid reputation in what I do that gives me the option to be pretty choosey on where I work.

Unfortunatly, even in my relativly brief professional career I've experienced the disloyalty of some of the super-giants corporations (specifically Lockheed-Martin). My first job out of the military as a bright-eyed dumbass was on a contract that Lockheed was still bidding on but had (according to their HR peeps) "no chance of not getting..it's a lock!" Five months of sitting on my ass (getting paid) to do nothing later, Lockheed failed to win the contract. The five of us that had been retained for this contract were then told "don't worrrrrry, Lockheed is huge, we'll find something else for you to do!" Within a month, all of us had been let go. I learned real quick like that with these big companies, if you're not activly making money for them, you're going out the door as soon as possible.

So I guess that's why I'm a little more leary of pensions than people a generation older than me. A pension was a reward for your loyalty to a company over the long run but we live in an age where companies seem to be increasingly dis-loyal to their employees. Honestly TD, I feel safer in my 401K and in my other long term market investments than I do with the promise of a pension and the risk of having it jerked out from under my feet at whatever time the company I'm working for feels it's convinient.

I agree that we need more retirment options, but it's not the fault of the market that those options are limited I don't think.

[Tyler Durden]

202. Not the fault of the Market??

It is just as much to blame as any other player: they have money to gain and lose, so they're suspect.

[Zynx]

233. You are a smart person for using DRIPs.

I use one through Procter and Gamble. I've made good money over the last 7 years with it.

[maui9002]

188. Not sure about the need, but stock market is very beneficial IMO

For the following reasons:

1. Public markets allow companies to raise substantial amount of capital needed to grow businesses (which typically then employ more employees). If there were no public market, then shares held by owners would not be freely tradeable, which would decrease their value.

2. Public markets allow the average guy (perhaps our definition of the average guy might differ) to make a relatively modest investment in a variety of companies and also allows that investor to sell out of the investment quickly if he or she needs the money or thinks he or she can make a greater return on another stock or other investment option (CDs, bonds, real estate, gold, etc.). Without a public market, those who wanted to invest in a business would generally need very large sums of money (because larger investors taking a large position in a company have the ability to insist on some control over when the investment will be liquidated.

3. Public markets are regulated (and I recognize that the quality of the regulation can and should be improved). Before the 1933 and 1934 securities acts were passed, there was rampant fraud in the securities markets--those acts brought about an entire regulatory framework that requires disclosure and prohibits a variety of acts that would be considered unfair. Does the system work perfectly? Of course not, but the system is always being challenged (both by those who resist regulation and those who promote regulation) and offers some of the best shareholder protections in the world.

With all that being said, I don't think we have to have a public stock market, but it's what the vast majority of Americans want. The concerns you raise, in my view, are not an indictment of the stock market, but in the ways those involved in the stock market manipulate the system. Same with the legal system, the welfare system, and the political system, all of which I think are worthwhile, but that are often manipulated based on greed and the quest for power. But that doesn't mean we should abandon the system; it just means we need to improve or fix it.

[Leopolds Ghost]

191. The stock market is the only tie our nation has to its rulers who manufacture our goods overseas.

He who produces the goods makes the rules.

Of course, the US could use the stock market to influence its rulers, but
they would respond by disinvesting in the US entirely and moving to London
to ride out the ensuing recession (since London, Brussels and Holland still has direct imperial ties to a third world cottage industry hinterland
it can rely upon.)

[Leopolds Ghost]

192. The stock market is the only tie our nation has to its rulers who manufacture our goods overseas.

He who produces the goods makes the rules.

Of course, the US could use the stock market to influence its rulers,
but they would respond by disinvesting in the US stock market, since
it is tied to nothing more than the petrodollar and a Manhattan location
convenient to many world rulers' homes, and moving to London to ride out
the ensuing recession (since London, Brussels and Holland still has
direct imperial ties to a third world cottage industry hinterland
it can rely upon.)

Folks need to realize that, according to Amy Chua, a centrist economic
historian, there have been only three cultural-political-ideological
centers on which the concept of modernity and capitalism has depended:
the Low Countries (Antwerp/Amsterdam/Rotterdam), London, and Manhattan.

These three metropolitan regions created the concept, defined it
and refined it through an infusion of cash from people fleeing the persecution
of Catholic/Anglican European leaders in the 16th-19th centuries,
coupled with direct and exclusive trading ties to specific hinterlands.

(for the Low Countries, it was the East Indies diamond/spice cartel,
created with funds generated from the economic collapse of the
Spanish Empire and resultant Inquisition, resulting in the collapse
of the Ottoman trade route and a flood of American gold across Europe;
for England, the British Empire, which was essentially funded by the
Low Countries through a merger engineered by the wealthy and influential
Puritans, who also funded the American colonies; for New York, the
Ohio/Mohawk valley and later the Pennsylvania coal and Standard Oil
petrodollar which gave Manhattan control of US investments around the world.)

Religious minorities in Holland (not monks in Ireland or Muslims
in pre-Inquisition Spain, as has been popularly asserted, and it
would be nice if true), actually created the West as we know it today.

They sheltered the Jews of Spain who were Europe's only link to the
Muslim trade routes that controlled the East Indes trade before the
rise of the British Empire. (This is where the myth of the wealthy
Jew came from, since Sephardic Jews in Europe, a tiny minority, helped
fund the rise of Holland to world power status, and together with
Puritans/Baptists from England and Germany, all of whom had been forced
by persecution into a tiny colony of Spain, essentially created the
Judeo-Christian "Protestant work ethic" and used it to turn the tables
on their persecutors, who had been reliant on funding from wealthy
liberal urbanites -- most of whom were non-Catolic because of
traditional religious prohibition on usury -- the very people they were
spending money to persecute. We are seeing the same phenomenon with
the rise of Islamic fundamentalism, funded by the Saudis who rely on
joint Christian-Muslim fundamentalist trade networks to purchase goods
with their petrodollars, despite the fact that these people are all
sending their relatives out to try and kill each other -- a show to
distract the politicians who are funding the oil wars.)

17th century Holland created the conditions for the "Enlightenment".
They perfected realist painting and sculpture after the (economic,
post-Spanish collapse) decline of Italy. They invented the bourse,
the stock exchange, religious freedom, and rule by an elected
bourgeoisie under the traditional European town model.

Both the "left wing" and "right wing" of traditional Western politics as
we know it today are based on concept of rule by an urban economic elite
(in the case of the right -- originally called "liberals" and still
known as liberalism in Eastern Europe and Latin America to this day --
this is the bourgeoisie, or merchant class, what can today be defined
as the investor class; in the "left" (of America and Western Europe
to this day -- originally called "Jacobins" or "Levellers" and later
"socialists") it is the professional and administrative "new class".

The people that created Holland and the concept of the urban west, which
depends on the stock market as opposed to traditional (Catholic/Islamic)
banking practices, were the inventors of Deism / Unitarianism
(Congregationalism, Episcopalianism, Enlightenment notions of a clockwork
Newtonian universe that can be perfected through the use of machines,
and "rationalist" Atheism, all of which are associated with the rise
of religious freedom) and its polar opposite, Calvinism
(Baptism, Puritanism, and fundamentalism, also creatures of metropolitan
ideological ferment under conditions of religious freedom, original
supporters of religious freedom for much the same reason as Mormons
support it today -- and false appropriators of the "radical Protestant"
label -- the real radicals in the Protestant reformation, the
Anabaptists, who directly opposed the rule of an urban or rural elite,
were unwelcome in capitalist countries and were unwelcome in
aristocratic Catholic countries -- they got massacred.)

Calvinists, who believe in salvation and rule by the "Elect", had a
huge hand in creating the notion of (un)representative democracy by
an empowered investor class, as we know it today. Unlike the
Congregationalists, Anglicans, Jews and Deists who helped invent
capitalism in Holland, and attempted to rationalize and humanize
the new philosophy of borgeois governance, Calvinism is about the
raw accumulation of wealth and power, with no reward for good
intentions in this world or the next.

Like Cartesian philosophy, the science of economics and social studies
as we know it today is a cultural-religious invention founded on
so-called (misattributed) "Judeo-Christian Protestant values", not a
product of hard science or physical invention that could not have
happened any other way (as is often assumed when stuff like the "history
of democracy and freedom" is portrayed -- with every step being a life
or death struggle against the forces preventing a specific ideology from
being developed in what is the ultimate hindsight fallacy.)

Modern western urban culture, the culture of the "investor economy" and
the "machine mentality" of the professional classes, was the product of
specific cultural religious wars in specific manufacturing centers (that
funded the European colonies) in the 17th and 18th centuries. This is
why "mainline" Protestant and Jewish denominations are associated with
the "main street" urban professional upper middle class, and generally
support "middle class values" (seen as values of the "ownership community"
-- even in the most liberal precincts of America, if one is not
a property owning tax payer, one unconsciously assumed to be a
second class citizen by default) -- while breakaway denominiations of
the "working class" cast themselves as insurgents, either at war with
the present economic system (rare, since so many people cannot imagine
any other way of running the "machine city" -- hindsight fallacy)
or seeking to supplant the existing elite and empower the rural
working class as the new boss of the existing machine through
class envy or a lottery mentality, or else re-establish rule by
a professional class under the philosophical terms of a religious minority (as in the case of the secular anti-religious left and the
fundamentalist Southern Baptist church).

Capitalism and the "age of reason" are not organic concepts any more than
Marxist-Leninism is an organic concept. They are ideologies generated by
particular (and highly specific) urban microcultures to fit a particular circumstance.

[Leopolds Ghost]

226. So none of you have read Amy Chua's book.

On the rise of hyperpowers to global economic dominance.

You should. She is an economic historian and by no means an economic liberal. In fact, I'd say she comes down on the DLC side of things.

She puts the lie to all of this rubbish about how "the capitalist system"
is SUPPOSED to work.

It is a system and ideology designed and jerry-rigged to fit the needs of
a certain group of people in a unique (and uniquely dated) point in time.

We have left that point in time and are now in an era of global corporate feudalism,
while professional-class "pro-business" dems continue to spout
rubbish about how
anyone can join the ranks of the investor class -- which they claim (false consciousness)
membership in. Because they don't want to feel like second class citizens and they
don't want to feel like they sold their soul to a miserably selfish and socially darwinist
organization simply in order to buy a house in "a neighborhood with good schools". No, the market
should function like that, they reason. It's human nature. No, actually it's
political science, based on the actions of a few 17th century burgomeisters.

These neighborhoods not only have good schools, they have no pink elephants.
The professional class citizens thank their 401(k) for this.

When it is really the actions of their government that are to blame for
protecting their house, job and financial security to the exclusion of
the lower classes.

[ileus]

193. join an investment club...you'll learn so much for xxx a month.

I was in a investment club for three until I switched jobs, the individual invested 130 a month and we had 35 people. Some stocks we won big on, some we broke even on, and some we lost our arse on. In the end when I left I'd made around 30% over my investment...It was a great exercise....Too bad we didn't buy more google stock...

I have a company pension and a 403B, the 403 is worth (even today) a load more than the pension, I manage where my money goes with my own research into the options they give us. Our company opted out of SS since we're a nonprofit....

All private companies dream of the day they go public, and usually long time workers of those companies that have stuck thru the hard times and good are rewarded well.

[jeffrey_X]

196. The biggest pyramid scheme in the history of the world.

It's amazing how many people at the top get filthy rich and so many at the bottom never get anything.

[jeffrey_X]

198. people get rich or poor based on speculation and cooking the books.

I'm invested in it a few different ways, so I guess I'm hypocritical but that's the way I see it.

[rhett o rick]

197. Same as the need for Las Vegas. nm

[Duer 157099]

208. Here, I will explain it as simply as it can possibly be explained

The whole purpose of the stock market is to give the average citizen a vested interest in the success of corporate America, and thus not wince so badly when corporations rape and pillage -- because they are shareholders and benefit. See? It's all so simple. And sinister. And effective.

[jeffrey_X]

211. please explain hedge funds and derivatives and how they help the average american

thanks.

[Duer 157099]

213. that's putting the cart before the horse

sure, once the market was established, all sorts of peripheral (gambling) activities would be tacked on.

I never said those aspects of the market necessarily helped the average American -- although if they play the market, it might.

[mrreowwr_kittty]

212. Nothing wrong with the big casino per se.

But it's really scary that more and more middle class people are placing their retirement security on it.

A book you might find interesting (and troubling): The Great 401k Hoax

[high density]

215. What else are people to do?

Bonds and savings accounts currently yield 4-5% a year, which will decrease as the Fed keeps reducing rates. Inflation eats that up, and if those are in taxable accounts, forget it!

[mrreowwr_kittty]

216. Increasingly it's our only choice as defined benefit plans give way to contribution type.

Pension plans are better (not perfect but better) because you have more of a guarantee and professionals managing the plan. With the 401ks, if you're neither financially savvy nor inclined to manage your account, you might not have enough available to you when you need it.

Another thing most people aren't aware of is that in addition to the market risk, there is a tax risk. 401ks and IRAs are fully taxable, at your ordinary income rate when you take distribution. That's generally higher than capital gains and who knows what the tax rates are going to be if you don't retire for another 20 to 30 years. People who were socking away pre-tax money in IRAs back in the 70s and 80s when the tax rates were higher really made out because they will take the money out at a lower rate. Younger people now are facing the opposite situation.

[begin_within]

221. It's just rich people making money off each other, and it's really just gambling.

[zeos3]

227. The stock market is not a casino.

In a casino, the house has the obvious edge (and I know this argument can be made for stocks as well) but I prefer to see the stock market as going to the track. It's all speculation now and you're betting against other people and the only one's who know for sure are the riders and the owners. Meanwhile, I'm looking on the ground for any discarded winning tickets but just collect a pile of worthless paper.

[Zynx]

232. Hardly a casino. In a casino you don't have a legal right to anything.

In corporate accounting, there is a concept known as shareholder's equity. This is, in theory, what the shareholders could get if the company is liquidated. Assets-liabilities=Shareholder's equity. I practice that is rarely the case because a company doesn't liquidate as it is distressed. However, you do have a legal right to real equity.

Now, we don't tend to value the company based on its book value. We rather value companies more often than not based on current net income and future net income. Now there are certain times when investors are willing to pay an awful lot for companies that have no real value. That's speculation. It should not be engaged in by anyone, even professionals. It's a difficult game to play.

The reason why we bid stocks higher as they grow their earnings is that the company as a whole becomes more valuable. Conversely, when the company's earnings decline, the stock declines with them. Smoothing out all the many dramatic short term swings, you would find stocks correlate quite nicely with their earnings over time.

[ProfessorGAC]

239. Only Mature Companies Though

I'm sure you'd agree. That's the difference between speculating on potential and an analytical basis for investing, bidding up, and selling short.

I think most investment experts agree that a company has to be publicly held a minimum of ten years before that correlation becomes evident.
The Professor

[Zynx]

241. I notice correlations seem to become evident in 18-24 months.

However, that's been over a short time. When multiple compression occurs, a company can become dramatically undervalued and that can go on for some time.

[Desertrose]

240. Thanks, Tyler...good post!

Love this line....
"'Scuse the ol' Socialist here, but this sounds like "RICH GUY NIGHT AT THE RIGGED CASINO" to me."

I agree completely!
DR