failed_trad3r
Registered: Oct 2009
Posts: 43 |
11-06-09 10:33 AM
Quote from Chausey:
It's true that money chases money hoping to sell and make money before there is no money.
Stock ownership is a scheme. It takes outside money to make an outsider any money.
The market was to exist to help companies raise money. But the largest companies didn't see that as the reason to come into the market. The stock market is emphasized in society, money comes into it directly from the Federal Reserve now to help maintain that "historic multiple". There would be no benefit to bringing a private company public if it was not a means to a richer end. Period. Bill Gates didn't need the hassle of quarterly guidance, he and Paul Allen could have just collected the company profit...except the stock market allowed them to cash out the future earnings all at once which is a better bet to take rather than risk that there will be future earnings.
Again, the stock market needs to be valued by society for it to work. This is why politicians (figureheads for corporate interests) wanted to create Health Savings Accounts. The 401k is the same idea, pin Joe-6-Pack's retirement to fundamentally change his political position. However, as the public does leave the market, it will be less important to the public to maintain high multiples. The stock market is a means to an end for company owners looking to cash out.
The stock market is not a fully-fleged ponzi scheme, but more partially. Future earnings are retained in the stock price, but future earnings are never certain. In that sense the stock market is like a creditcard. You are bringing sales from the future into the present. A creditcard in that regard can be a form of cheating the future, like with the stock market. It is cheating society, like the stock market is cheating ther investors.
Does it matter? For traders not so much. For investors, it is however an interesting philosophy and does have a grain of truth. The main advantage of dividend yield over interest yield is that dividend are quarterly. This means dividend yield can be lower then yearly yields. That is an interesting prospect for compounding strategies.
Even more interesting would be monthly dividends.. if you reinvest in the stock itself for low or no costs and dividend is stable, it is way more profitable.
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