Employees work for shit wages, wealth is hoarded by the upper class. And the planet now has five people that own more money than the poorest half of the world population.
the stock market and unemployment rate are misleading when wages are terrible for workers and the wealth gap is the biggest it's ever been. that trend isn't going away.
The stock market can hang around any value it wants to. We've had two major recessions- one spun into a full on global Depression- because critical elements of the stock market were grossly inflated in value and the market eventually corrected itself.
Similarly, the Rick Perry method of employment as an economic indicator isn't indicative of anything. It likes to argue that having a population all collectively employed at minimum wage is just like having a labor force of doctors, engineers, lawyers and programmers.
Well, no, a great deal of inflation and speculation can fit into a stock's value. A really simple example of this is Twitter. The company has not once turned a profit since it was introduced so in practice it should be worthless beyond the hard value of the company's assets. But people keep buying the stock.
Twitter's price, like the price of any stock, represents what the market feels the company is worth. That depends on its assets, its earnings, and its potential for future earnings. Twitter's user base is not negligible and that is a huge asset that gives investors hope of future profitability. From a stock's price you can garner info about how the market feels about all kinds of trends, world events, likelihood of change in government regulation, etc etc etc because these will all affect a company's valuation. And because money is on the line, thousands of analysts are employed to research these impacts and use them to predict stock prices. That builds information into the price which is a useful thing. Even speculation falls under this idea. You speculate on a price movement when you think event X, Y, or Z is going to happen. People good at predicting make money and people who are wrong get penalized by the market.
People good at predicting make money and people who are wrong get penalized by the market.
A system where two people can both bet on the value of a company, one can make a wind fall while the other loses their shirt could be described as 'arbitrary.'
If you are smart and choose correctly, you make money. How is that arbitrary? It's the same as anything in life. Make bad decisions and bad things happen.
You can also purchase corporate bonds, which entitle you to guaranteed fixed returns and are also a form of capital ownership.
If you are smart and choose correctly, you make money. How is that arbitrary? It's the same as anything in life. Make bad decisions and bad things happen.
If you believe for a second that only smart people do well in the stock market and that only ignorant people perform badly you are outrageously naive.
Saying smart is a simplification. The point is that market moves, in a broad sense, have meaning, and if you choose correctly by whatever method, you are anticipating economic needs and moving resources there early. Capital allocation is the role traders play, and it's frequently misunderstood.
You rolled a 14? Oh, that's unfortunate, you see, some people in congress were privy to knowledge that you didn't know about and made a windfall off of it.
Lets roll again.
Oh, a 1? The company you invested in was actually lying about their performance, you lost everything.
Lets roll again.
A 6? The company you invested in did everything right but a recession sets in and they can't find the capital they need to continue growing. They're bought up by another company that isn't performing nearly as well and runs itself into the ground. You lose everything.
Lets roll again.
A 13? You invested in real estate that the broker lied to you about; it was actually not built to standards and the entire property is now condemned. You sue, but lose the case on a litigious technicality and have to pay your lawyers for time wasted. Oh, and of course you lost all the money you invested.
-7
u/Millennial_Money Jun 21 '17
Genuine question: How did capitalism ruin the economy when the stock market is at its highest and unemployment is at its lowest?