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Mar. 3rd, 2011 01:46 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
tylikThis is one of those things that has been bothering me for a while. The primary method of investing that is available to most people in this country is the stock market. (Okay. And the government bond market, which should be considered separately.)
What's interesting about this is that aside from the initial public offering, it's only kind of an investment. I mean, it's clearly an investment from the point of the stock speculator - they buy stocks and hope they will go up. But it's not really an investment in the sense of investing in something. This huge amount of money is pumped into a market that's all about owning pieces of a company, and is driven by the performance of the company... but none of that speculation actually gets channelled back into the company so the company can buy more stuff so that they can do better work.
There's something weirdly fictional about the whole thing. (Yes, I'm aware that having a higher stock price is useful to a company, especially since the company usually continues to hold its own stock.) Furthermore, I suspect this contributes to market fluctuations - it's much easier to lose faith in your investments when the money you put in has almost nothing to do with the performance of the company.
I keep thinking this must be terribly naiive of me, but I just can't quite work out why. It certainly seems dreadfully inefficient - it's money going into getting more money, rather than money going into making something real (and hence getting more money).
What's interesting about this is that aside from the initial public offering, it's only kind of an investment. I mean, it's clearly an investment from the point of the stock speculator - they buy stocks and hope they will go up. But it's not really an investment in the sense of investing in something. This huge amount of money is pumped into a market that's all about owning pieces of a company, and is driven by the performance of the company... but none of that speculation actually gets channelled back into the company so the company can buy more stuff so that they can do better work.
There's something weirdly fictional about the whole thing. (Yes, I'm aware that having a higher stock price is useful to a company, especially since the company usually continues to hold its own stock.) Furthermore, I suspect this contributes to market fluctuations - it's much easier to lose faith in your investments when the money you put in has almost nothing to do with the performance of the company.
I keep thinking this must be terribly naiive of me, but I just can't quite work out why. It certainly seems dreadfully inefficient - it's money going into getting more money, rather than money going into making something real (and hence getting more money).
