Let's get rid of the stock market by SignyM

REAL WORLD EVENT DISCUSSIONS

Let's get rid of the stock market

POSTED BY: SIGNYM
UPDATED: Saturday, August 26, 2006 15:02
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Saturday, August 26, 2006 7:51 AM

I believe in solving problems, not sharing them.

Quote:
In addition to a possible sale of money-losing Jaguar — a brand into which Ford has poured an estimated $5 billion, including its $2.7-billion purchase in 1989 — executives reportedly are considering a stock buyback plan to take the company private.

www.latimes.com/business/la-fi-ford26aug26,0,6990397. story?coll=la-home-business

Why should we get rid of the stock market?

Stocks rise (and fall) from so many random factors that a stock price only rarely reflects the health or direction of a company. ANYTHING can affect the market, and it can affect the market in unpredictable ways. Let's look at unemployment. You'd think that low unemployment indicates a healthy economy. People buying goods. So stocks should rise. Unless the stock marketers are worried about inflation, and increasing interest rates, in which case stock prices fall. (I've seen both.

) A stock will rise and fall because of another company's quarterly report. Because "the stock market" is too high- or too low. It's pure speculation. Even the people who watch the market every day can't figure out what's going on.

So, what? you say. Look at it from the Board's point of view: their assests and fortunes rise and fall from factors outside of their control. They can't afford to look any farther than the next quarterly report, otherwise they'll be punished. It makes long-term business decision-making impossible and encourages the kind of manipulation that we saw in Enron.

It used to be that stocks were a good way to raise capital, but there are so amny other ways (bonds, loans, limited partnerships etc) that
it's not necessary. Meanwhile, corporate decisions are being made by people who are like rats getting shocked at random and uncontrollable intervals... it's a crazy-making system. And corporations are being "run" by absentee landlords: stockholders who have no working knowledge of the company, or it's products.

www.inc.com/resources/inc500/2005/
www.forbes.com/2005/11/09/largest-private-companies_05private_land.htm
l

BTW- my stocks are doing nicely. Check out AMD.

---------------------------------
Reality sucks. Especially when it contradicts our cherished ideas.

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Saturday, August 26, 2006 10:13 AM

SERGEANTX

I don't really have a beef with the stock market, but I would like to see corporate law undergo some radical changes. As it is, corporations can exist as wealthy nation states without geographical boundaries. What's worse is they act without any real accountability and the people profiting from they're misdeeds provide no incentive for moral behaviour.

SergeantX

"Dream a little dream or you can live a little dream. I'd rather live it, cause dreamers always chase but never get it." Aesop Rock

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Saturday, August 26, 2006 3:02 PM

DREAMTROVE

Actually, as with most of the legal system in this country, the laws are already there. Same-industry mergers have been illegal for nearly a century.

My opinion: All mergers should be banned. But the situation would improve immensely if we just followed the existing law. The heart of the problem is an overreaching executive which infiltrates the regulatory agencies to permit mergers which favor the growth of its own corporate backing base.

Getting rid of the stock market is a silly idea. The market exists to democratize investing. If we went back to corporate loans as the principle capital mechanism, the sleaziest banks would manipulate companies in secret deals with bribes and handouts and thus set corporate policy. In the market, shareholders vote in accordance with their investment, so each dollar holds equal sway, which is as it should be.

It's not the stocks, but the mergers, which need to go.

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