Details on stocks
Stocks are not new. This country
has had companies with stocks since our early years. In fact,
stocks have been around for a few hundred years. However, our
country has become artificially dependent on them.
Stocks do not have to run our economy. They do because we tell them to.
It is very much a religion. It is no different than making sacrifices to a Greek god in a temple.
Companies live and die by the stocks. The executives make choices based on the stocks, or rather, the belief (faith, religious views) in the future of the stocks.
Again, stocks run our nation, only because we tell them to.
In the best world, a stock represents an investment. Suppose I invest $100,000 in your company. As the company grows, I expect money from your growth. That is why I invest - I believe I will make a large profit.
This is fair. It is even more fair when we realize that if a company fails, the investors lose their money - and that's is usually a lot of money. So, conversely, when the company succeeds, they should get a significant piece of the profits.
Stocks, then, in the best world, represent the share you have in this company, and the profits you can expect to retrieve.
Stocks become artificial when people play games. And playing games is what investors and companies do.
The President of the United States makes a speech (I don't care which one, in which decade), and the stocks will go up or down.
Rain falls in Bolivia, and the stocks will go up or down.
The CEO of General Motors has too much pizza and spends the night in the hospital, the stock will go up or down.
Do you see what I mean? Stocks are not real. The price of stocks is never based on the product. It is never based on how well the company manages its finances. The price of stocks are only based on small events and beliefs - an event happens, even a small one, and then investors have some belief about that event.
It is as crazy as reading tea leaves.
I've seen companies with a lousy product have high priced stocks.
I've seen companies with bad accounting practices have high priced stocks, and attract more investors. Some of which have gone bankrupt in a matter of months.
I've also seen companies with a good product or service have low priced stocks, or not able to attract investors.
Bottom line points:
Stocks are a sham. They are a religion - just the Clerics of Wall Street reading tea leaves. Nothing more.
Stocks run this country only because we have told them too. CEOs, Presidents of companies, major investors, they all believe in this religion. And because they make big decisions whether to grow a company or to lay off people, this religion in fact runs our country's economy.
Will it change? Not entirely. Stocks are too big a part of our fabric, from the early days, to make major changes.
Small changes are possible. I suggest the following:
For companies and investors:
- companies should pay more attention to: their quality of their product, the quality of their service, their ability to buy raw goods and sell their product so that their profit margin is large enough, and to pay attention to accounting practices.
- companies should not make decisions based on stocks. It should be based on the product, on supply and demand, on the market. Not on stock prices.
- Investors should not make decisions based on stocks. Yes, I know profit is related to stock prices, but look at the product itself and how the company is run, not just the stock prices.
For the people:
- you can still make money off of this game. You can also make money in Las Vegas. I invest in some myself, and I will make some money long term. But I wouldn't trust it as a lifestyle. And always know that it is a game, the price is based on nothing but a thousand other people reading tealeaves of the future.
- Invest all you want - I am a strong believer in investment and getting profits from that. But don't play the stock market, its like playing poker, and only a few win that way.
- remember, even though we have our economy related to stocks, the world could exist without them.
The sun still comes up. The seasons still change. Cows have no clue what the stock market is doing.
- Without the stock market, we could still exist in a modern way. Local investors could invest in local companies.
- Even if stock wasn't issued, you could make a life of contracts which stipulate a % of the profits.
- If you are starting your own company: You do need money to help make your company grow (so you can get money in order to buy those farmers goods.) You can take bank loans, or (and always in the future) you can let people invest through stocks.
- Just pay attention to the market economy (quality goods and services at a fair price). Ignore the stock market itself. If your product is good, and your ability to manage the finances is good, then the profits will take care of themselves.