Devil or Angel, Whichever You Are

[BigRedBuster]

you guys are really missing my point if you think i am talking about your average joe stock holder. those people are fine. they have no pull on the company and they could not manipulate the market.

 

brb, you could have just answered my questions instead of responding with more questions.

 

i think gm is the perfect example of what i am talking about. instead of investing in the future and making cars people actually wanted to buy (like ford), they were so concerned about next quarter profits, they would just offer rebates. essentially mortgaging their future with no plan when they got there. they utilized practices of diminishing returns until they went bankrupt. or had to be bailed out by the government, something no one really wants for a car maker.

 

but, i still would like to know what advantage hedge funds provide other than making a few rich and manipulating the markets.

Well, looking at your original post, it only mentioned "shareholders". That, to me, implies every shareholder to the company which includes your average Joe Stockholder.

 

I was so surprised with your statement it required me to ask questions to find out what you really meant. Now, you have narrowed it down to hedge funds.

 

Personally, I still don't see a problem with some people pooling their money into a partnership to invest in certain investments. They might even borrow money to make those investments. The companies who receive those investments (by and large) benefit from those investments. That is in essence what a hedge fund is.

 

Should those be highly regulated? Heck yes. Should they have more regulations than what currently is in place? Probably so. Do some people get rich from this? Yes and that is not a bad thing.

[sd'sker]

 

you guys are really missing my point if you think i am talking about your average joe stock holder. those people are fine. they have no pull on the company and they could not manipulate the market.

 

brb, you could have just answered my questions instead of responding with more questions.

 

i think gm is the perfect example of what i am talking about. instead of investing in the future and making cars people actually wanted to buy (like ford), they were so concerned about next quarter profits, they would just offer rebates. essentially mortgaging their future with no plan when they got there. they utilized practices of diminishing returns until they went bankrupt. or had to be bailed out by the government, something no one really wants for a car maker.

 

but, i still would like to know what advantage hedge funds provide other than making a few rich and manipulating the markets.

Well, looking at your original post, it only mentioned "shareholders". That, to me, implies every shareholder to the company which includes your average Joe Stockholder.

 

I was so surprised with your statement it required me to ask questions to find out what you really meant. Now, you have narrowed it down to hedge funds.

 

Personally, I still don't see a problem with some people pooling their money into a partnership to invest in certain investments. They might even borrow money to make those investments. The companies who receive those investments (by and large) benefit from those investments. That is in essence what a hedge fund is.

 

Should those be highly regulated? Heck yes. Should they have more regulations than what currently is in place? Probably so. Do some people get rich from this? Yes and that is not a bad thing.

 

when you buy a stock, you are not investing in a company. you are trading it with someone who owns that stock. there is a big difference between that and directly investing into a company for equity. the only way stock prices help is if the company has shares to sell at a higher price from the stock's value increasing.

 

and i did not really just narrow it to hedge funds, i just excluded average joes who buy stock vs. shareholders who have the leverage to make demands on a company. other than average joes, most investors are just gambling on the markets and destabilizing the economy.

 

borrowing money to invest led to the great depression. buying stock on margin is bad for the economy.

 

finally, you could have just answered my question and explain to me what shareholders provide.

[BigRedBuster]

 

 

you guys are really missing my point if you think i am talking about your average joe stock holder. those people are fine. they have no pull on the company and they could not manipulate the market.

 

brb, you could have just answered my questions instead of responding with more questions.

 

i think gm is the perfect example of what i am talking about. instead of investing in the future and making cars people actually wanted to buy (like ford), they were so concerned about next quarter profits, they would just offer rebates. essentially mortgaging their future with no plan when they got there. they utilized practices of diminishing returns until they went bankrupt. or had to be bailed out by the government, something no one really wants for a car maker.

 

but, i still would like to know what advantage hedge funds provide other than making a few rich and manipulating the markets.

Well, looking at your original post, it only mentioned "shareholders". That, to me, implies every shareholder to the company which includes your average Joe Stockholder.

 

I was so surprised with your statement it required me to ask questions to find out what you really meant. Now, you have narrowed it down to hedge funds.

 

Personally, I still don't see a problem with some people pooling their money into a partnership to invest in certain investments. They might even borrow money to make those investments. The companies who receive those investments (by and large) benefit from those investments. That is in essence what a hedge fund is.

 

Should those be highly regulated? Heck yes. Should they have more regulations than what currently is in place? Probably so. Do some people get rich from this? Yes and that is not a bad thing.

 

when you buy a stock, you are not investing in a company. you are trading it with someone who owns that stock. there is a big difference between that and directly investing into a company for equity. the only way stock prices help is if the company has shares to sell at a higher price from the stock's value increasing.

 

and i did not really just narrow it to hedge funds, i just excluded average joes who buy stock vs. shareholders who have the leverage to make demands on a company. other than average joes, most investors are just gambling on the markets and destabilizing the economy.

 

borrowing money to invest led to the great depression. buying stock on margin is bad for the economy.

 

finally, you could have just answered my question and explain to me what shareholders provide.

 

If, that hedge fund or other investor happens in a vacuum, you are correct. However, that doesn't happen. All things are related.

 

For instance, a company doesn't just sell it's stock (most of the time) and never see it again. They buy and sell their own stock. So, let's say a company sells it's stock at the IPO for $50. That stock may rise to 60-70 and maybe the company sells more stock. Well...let's say then something happens and that stock then drops to $20-30. If the company has been somewhat successful, they can then buy back a portion of their own stock. If the stock then rises again to say $60, they can then resell that stock and create more cash to expand their company or develop new products.

 

This is just one example. Many types of different investors in the market (yes, including people like hedge funds) creates even more liquidity in the market for their stock and it allows them to do this easier. The higher the volume their stock sells, the easier it is for the company themselves to use it to create capital in their own company.

 

PS....how can I answer a question when I don't know what "stockholders" you are talking about. I think i have proven from my posts that I took your post as meaning all stockholders of all companies when in fact you only meant professional investors in public companies.

 

As for hedge funds. They do serve a purpose. I don't like them. And, I hope to God I never have to deal with one directly. However, many times those investors will invest in much riskier companies that simply need capital to get through a rough spot. Without people willing to invest in those risky investments, many companies wouldn't exist anymore. In return for that risk, they demand higher returns. I have no problem with that. That's just the how the game is played and if you dive into it, you better know how it's done.

[sd'sker]

well, i think we are not really disagreeing, brb.

 

simply put, my problem is with the manipulation and short-shortsightedness that can be caused by shareholders and brokerage firms. i understand how stocks work. but the concern is that a lot of investors have moved away from sound strategies and just buy and sell solely based on speculation. then that influences the value of the stock more than the strength of the company.

 

but, yes, i guess i should not have been so flip in my broad generalization of a remark.

[tschu]

Here's why you aren't incorrect, sd'sker: The people who call the shots at publicly-traded companies usually get company stock as a huge percentage of their compensation package. So their personal income and wealth is directly tied to the share price of the company. And it doesn't matter if the company goes bankrupt due to a decade of pushing the inevitable off just one more quarter because the executives can always dump their stock before sh#t hits the fan and get out clean. We've seen it happen time and time again.

[sd'sker]

Here's why you aren't incorrect, sd'sker: The people who call the shots at publicly-traded companies usually get company stock as a huge percentage of their compensation package. So their personal income and wealth is directly tied to the share price of the company. And it doesn't matter if the company goes bankrupt due to a decade of pushing the inevitable off just one more quarter because the executives can always dump their stock before sh#t hits the fan and get out clean. We've seen it happen time and time again.

i feel like i am rarely incorrect.

 

it just seems somewhere along the line the idea of corporations and shareholders was corrupted to the detriment of the general public. that does not mean it always is, but it can be. and when it is, it can be catastrophic. just research the history of corporations and their purpose and how they look now.

[tschu]

Yeah I agree. We're way past "corporations are people" and to the point where corporations are much much more important and powerful than people. To the benefit of very few, at the expense of many.

[sd'sker]

Yeah I agree. We're way past "corporations are people" and to the point where corporations are much much more important and powerful than people. To the benefit of very few, at the expense of many.

i agree. and again, i do not think that stockholders are necessarily bad. especially the average joes or when it helps a company grow. i just think they can manipulate the markets and handicap companies. you just have to look at who and what benefits to determine its value.

[tschu]

A good background about how we got to where we are is "The Ascent of Money" ...it's like a 5 or 6 part series that PBS or BBC or somebody like that did back right after the crisis to explain how we got to where we are. It starts back from explaining how we came to have money, how banks came about, the rise of corporations, stock markets, and finally the explosion of high finance.

 

Really I think that the majority of the problems come from the existence and flat-out absurdity of the unregulated high finance activities (for every financial object such as a mortgage that exists, at the height of the 2008 crisis, there were dozens of times that mortgage's value in "bets" via derivatives on its future value or lack thereof. Synthetic CDOs and the like. Welcome to the derivatives market! the investment banks themselves make these bets at 30x leverage and you can see how absurd amounts of debt get thrown around in ways that jeopardize the financial system, not to mention are detrimental to average joe. High Frequency Trading is essentially large trading firms skimming a tiny fraction off the market, millions -even billions - of times per day. It's like if I took a 5-dollar bill from your wallet every time I saw you - you wouldn't miss it but over time I might steal thousands of dollars), as well as the immense power that corporations have amassed, not only for being huge but also simply for being a legal existing entity. Bending over backwards to shareholders being a property that fits in with the second.

[HUSKER 37]

A good background about how we got to where we are is "The Ascent of Money" ...it's like a 5 or 6 part series that PBS or BBC or somebody like that did back right after the crisis to explain how we got to where we are. It starts back from explaining how we came to have money, how banks came about, the rise of corporations, stock markets, and finally the explosion of high finance.

 

Really I think that the majority of the problems come from the existence and flat-out absurdity of the unregulated high finance activities (for every financial object such as a mortgage that exists, at the height of the 2008 crisis, there were dozens of times that mortgage's value in "bets" via derivatives on its future value or lack thereof. Synthetic CDOs and the like. Welcome to the derivatives market! the investment banks themselves make these bets at 30x leverage and you can see how absurd amounts of debt get thrown around in ways that jeopardize the financial system, not to mention are detrimental to average joe. High Frequency Trading is essentially large trading firms skimming a tiny fraction off the market, millions -even billions - of times per day. It's like if I took a 5-dollar bill from your wallet every time I saw you - you wouldn't miss it but over time I might steal thousands of dollars), as well as the immense power that corporations have amassed, not only for being huge but also simply for being a legal existing entity. Bending over backwards to shareholders being a property that fits in with the second.

Thanks TsChu +1

 

Somehow or another, HB remains my main source of imformation.

 

http://topdocumentaryfilms.com/the-ascent-of-money/

 

 

Professor Niall Ferguson examines the origins of the pillars of the world’s financial system, and how behind every great historical phenomenon – empires and republics, wars and revolutions – there lies a financial secret.

Episode 1: Dreams of Avarice. From Shylock’s pound of flesh to the loan sharks of Glasgow, from the ‘promises to pay’ on Babylonian clay tablets to the Medici banking system, Professor Ferguson explains the origins of credit and debt and why credit networks are indispensable to any civilization.

Episode 2: Human Bondage. How did finance become the realm of the masters of the universe? Through the rise of the bond market in Renaissance Italy. With the advent of bonds, war finance was transformed and spread to north-west Europe and across the Atlantic. It was the bond market that made the Rothschilds the richest and most powerful family of the 19th century. And today governments are asking it to bail them out.

Episode 3: Blowing Bubbles. Why do stock markets produce bubbles and busts? Professor Ferguson goes back to the origins of the joint stock company in Amsterdam and Paris. He draws telling parallels between the current stock market crash and the 18th-century Mississippi Bubble of Scottish financier John Law and the 2001 Enron bankruptcy. He shows why humans have a herd instinct when it comes to investment, and why no one can accurately predict when the bulls might stampede.

Episode 4: Risky Business. Life is a risky business – which is why people take out insurance. But faced with an unexpected disaster, the state has to step in. Professor Ferguson travels to post-Katrina New Orleans to ask why the free market can’t provide adequate protection against catastrophe. His quest for an answer takes him to the origins of modern insurance in the early 19th century and to the birth of the welfare state in post-war Japan.

Episode 5: Safe As Houses. It sounded so simple: give state-owned assets to the people. After all, what better foundation for a property-owning democracy than a campaign of privatisation encompassing housing? An economic theory says that markets can’t function without mortgages, because it’s only by borrowing against their assets that entrepreneurs can get their businesses off the ground. But what if mortgages are bundled together and sold off to the highest bidder?

Episode 6: Chimerica. Since the 1990s, once risky markets in Asia, Latin America and eastern Europe have become better investments than the UK or US stock market. The explanation is the rise of ‘Chimerica’, the economic marriage of China and the United States. But does it make sense for poor Chinese savers to lend to rich American spenders?

 

Canada seems to have blocked the viewing of the full 5 hour video showing on Youtube