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On Playing Silly Buggers with Other People's Money.
Bond trading, I dare say most of the Stock Exchange, is gambling.
Oh no — I hear from outraged (or amused) economists — what it is, see, is if you want to invest in a company, so that they get the capital to grow or tool up or something, and you get a share of the profits in the form of dividends and yeah, maybe, there might be a little speculation, but this is Capitalism, and therefore sacrosanct!!11!
And I agree that this is a wonderful theory. Pity about the implementation. Because while a market for the exchange of capital is the idea (and, seriously, a worthy idea), the fact is of speculation on stock prices: betting that stock prices will rise. I forget the name of one of the most successful market traders of all time whose advice was to buy the stock of a company you want to keep, and trust in it. When you are paying for something you want to keep, you will tend not to fall into the same inflationary trap as someone who is betting that a bigger idiot will be along in a moment. If more people paid what they thought was a fair price for something that they actually want, we would not have had Tulipmania, or Beanie Babys, or .bombs.
Seriously, if you are trading in futures or bonds or any of that second, third, forth-level abstraction derivatives, you are not participating in the transfer of capital, you are speculating, which is a euphemism for betting. And you are using other people's money to do so. Most of the money in the Stock Market is not honest capital transfer, it is the systematisation of the unconscionable act of betting other people's life savings. And when people are winning, they go along with it. And when they lose, they are told that that's just how the market works. But in the meantime, when agambler trader loses, i. it's not his money he's lost, and ii. he promises that he'll make it up, if he can just take what's left and put down a few Gs on the sure thing in the next trifecta invest in a hot options derivative that can't lose.
Options/Futures/Derivatives Traders have long since ceased to have any function[1], and are parasitic gamblers, risking everyone's else's money on a glimmering soap-bubble of a promise. And they've stopped even pretending that they're not doing the equivalent of betting on two flies crawling up a wall.
At some point the rest of us have to stop listening to their promises and lies, take away the totes and give the entire industry an Intervention.
In case I've let rhetoric run away with me, the problem is not speculation per se, it is that these people, as an industry have been doing it with other people's money, and been expecting the rest of us to thank them for doing it. They've forgotten that they've been playing with vast amounts of imaginary money, wrapped around a core of pensions and life savings. And they've managed to convince themselves that the winning streak would last forever.
This is where you tell me where my reasoning is wrong.
[1] As I understand it, the purpose of Futures and the other derivatives was to be an insurance marketplace, so that people could invest in sea voyages and the like, on the basis of returns when the ship arrived, or the harvest gathered. When second, third, nth-order derivatives started to be normal — betting that a bet that a bet on the the future price of whatever would rise — that's when the concept disappeared up itself and became a inflationary, phantasmagoric illusion of actual wealth.
Oh no — I hear from outraged (or amused) economists — what it is, see, is if you want to invest in a company, so that they get the capital to grow or tool up or something, and you get a share of the profits in the form of dividends and yeah, maybe, there might be a little speculation, but this is Capitalism, and therefore sacrosanct!!11!
And I agree that this is a wonderful theory. Pity about the implementation. Because while a market for the exchange of capital is the idea (and, seriously, a worthy idea), the fact is of speculation on stock prices: betting that stock prices will rise. I forget the name of one of the most successful market traders of all time whose advice was to buy the stock of a company you want to keep, and trust in it. When you are paying for something you want to keep, you will tend not to fall into the same inflationary trap as someone who is betting that a bigger idiot will be along in a moment. If more people paid what they thought was a fair price for something that they actually want, we would not have had Tulipmania, or Beanie Babys, or .bombs.
Seriously, if you are trading in futures or bonds or any of that second, third, forth-level abstraction derivatives, you are not participating in the transfer of capital, you are speculating, which is a euphemism for betting. And you are using other people's money to do so. Most of the money in the Stock Market is not honest capital transfer, it is the systematisation of the unconscionable act of betting other people's life savings. And when people are winning, they go along with it. And when they lose, they are told that that's just how the market works. But in the meantime, when a
Options/Futures/Derivatives Traders have long since ceased to have any function[1], and are parasitic gamblers, risking everyone's else's money on a glimmering soap-bubble of a promise. And they've stopped even pretending that they're not doing the equivalent of betting on two flies crawling up a wall.
At some point the rest of us have to stop listening to their promises and lies, take away the totes and give the entire industry an Intervention.
In case I've let rhetoric run away with me, the problem is not speculation per se, it is that these people, as an industry have been doing it with other people's money, and been expecting the rest of us to thank them for doing it. They've forgotten that they've been playing with vast amounts of imaginary money, wrapped around a core of pensions and life savings. And they've managed to convince themselves that the winning streak would last forever.
This is where you tell me where my reasoning is wrong.
[1] As I understand it, the purpose of Futures and the other derivatives was to be an insurance marketplace, so that people could invest in sea voyages and the like, on the basis of returns when the ship arrived, or the harvest gathered. When second, third, nth-order derivatives started to be normal — betting that a bet that a bet on the the future price of whatever would rise — that's when the concept disappeared up itself and became a inflationary, phantasmagoric illusion of actual wealth.
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Then I thought about this idea, and considered to myself: what do I gain from this? Somewhere around $1000 (minus capital gains tax), and possibly a few extra shares ... let me see, assuming a sale at $(N+1) and a buy at $(N-1), it worked out to around 100 or so extra shares. Which would be nice, but then there's the risk of losing out if the share price doesn't come down that much (or worse, goes up further.)
It's that sort of thinking that drove the likes of Enron (speaking of which, I was loaned a book by a friend: "Origins of the Crash". Well worth a read if you haven't already. Fascinating stuff.)
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I'm soooo glad I never invested in the stock market.
Capitalism needs an enema.
Hi There
Sounds about right to me.