TexasRed wrote: ↑Mon Feb 08, 2021 7:00 pmAs a small investor with a personal investment account, a retirement IRA, and nearly a decade of experience in both traditional stock and crypto trading there is so much wrong with this.
Firstly the price of a stock going up is absolutely a benefit to the company that issued it. If the share price goes up it provides the company with greater capital flow and allows them to take advantage of capital offers while also increasing the value of the assets of the various share holders, and the company itself. It also creates collateral that the company can use to take out credit against. (i.e. a
collateralized loan)
It doesn't create any capital flow, because again the company isn't selling anything or buying anything.
It can be used as loan collateral, sure. That's one of the fun game of vulture capitalists. But companies can use many other things for loan collateral - such as actual land and capital. And any bank knows that stock collateral is no more than a proxy for that, and treats it as such.
Buying shares in a company also means that you literally own a portion of that company. whether it's a fraction of a single share or millions of shares you own a portion of the company equal to the size of the share ratio that you own. As a result you have the right to vote in company decisions, and the weight of your vote is based on ratio of shares that you own. I know this because I routinely receive emails informing me of upcoming board votes and asking if I have an opinion and do I wish to cast a vote.
Sure. You can cast 1/100,000,000 of a vote on a board which is pretty much preselected.
Do you have any actual interest in the company, any knowledge of what the company does, or how they operate, or how the board's policies might affect employees? No. In point of fact it's probably a blessing that shareholder vote is irrelevant, because if you did know you'd probably do something awful.
Want an example? Apple. Apple is constantly running into trouble with government agencies, both US and foreign, when it comes to them handing over customer's private data. Now in the last few years Apple has had it's arms twisted into compliance in certain areas but generally they take a strong stand in that regard and rarely back down. Why? because that's what the shareholders voted for. I own Apple stock, not very much, but I own some regardless (They pay a fairly nice dividend).
Now you ask "well why do companies always make decisions that harm small investors and regular people" Well it's simple, the 1980's happened and in the space of a decade the US's largest industry became financials. As a direct result of this it became very hard (or perhaps frustratingly complex would be a better way to say it) for regular folks to buy, sale, and trade stock. Then comes the fintech revolution, and suddenly anyone with some patience, a willingness to learn, and has ten or fifteen bucks sitting in their account at the end of the week could suddenly get involved.
You see because of financialization up until only five years ago or so, most stock was owned by a fairly small number of people, and in turn it was these people who set the direction of the company, but now millions of millennials are flooding into the market and sucking up all the spare stock, this is why the stock market has boomed by the way (that and stock buybacks but the arguments I've seen over which has had the biggest effect are both amusing and often undecided). While the real economy has lagged, billions of dollars of spare cash and stimulus checks have been flowing into the markets. Stocks, just like any other asset are affected by supply and demand, we've been seeing a lot of asset shortages over the last ten to twelve months and as a result prices keep going up, and the number of shareholders is rapidly increasing for the first time in decades. We are witnessing history, as the old, grumpy, stick in the mud conventual traders on wallstreet are being forced to come to terms with this. They don't like it but they have no choice. Decentralized finance is here to stay and eventually wallstreet will either adapt or go extinct.
Well first of all, on Apple, here's your vote:
Shareholders vote for all of Apple's recommendations at annual meeting
https://appleinsider.com/articles/20/02 ... al-meeting
Wow that was extremely valuable I can't believe I ever called that a rubber stamp formality.
This idea of a financial revolution by "the little people" is so insanely delusional I have to check if we're on a science fiction forum. *check*... okay, I didn't log into AOL Luddites by accident, so what the fuck is this?
We have decentralized AIs constantly scanning millions of twitter posts, news articles, etc. and relating that to sales prices
on a daily basis. They have databases of billions of articles and news, and can relate that to sales data. And predictive algorithms are very, very damn good at this. We don't have to imagine this in some future world - trading companies are already doing this. And the predictive algorithms are frighteningly good.
Slow? Do you know how hard it is to outrun a computer? How hard it is to beat one? You've got some fucking 1990s model stuck in your head where the investing firms are making stock trades with ticker tape. Not only do they make trades using supercomputers in milleseconds,
they have faster access to the data than you.
https://www.motherjones.com/politics/20 ... ll-street/
You exist in this bubble where you think the market can somehow be used as a tool for good because you think an ordinary, middle class person can outthink a fucking supercomputer. That ANYONE can outthink a supercomputer.
Stocks are meaningless to actual companies, and have nothing to do with value, and you're not going to get rich trying to play quickdraw against a machine.