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This Is Biden’s Soft Landing, and He Deserves Some Credit
(newrepublic.com)
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this post was submitted on 19 Nov 2023
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politics
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No one is going to lend you money at an interest rate lower than the deflation rate, ever.
Every stock purchase is an investment in a company, always. That's literally what you're buying
The money then gets spent, which does not happen under your mattress.
You've got some very foundational aspects of this entire process quite wrong.
Why wouldn't they lend you money at 1% when the deflation rate is 2%? Their money is worth 2% more plus they get 1% more from you.
Not every every stock purchase is an investment in a company, because you're buying off someone who is not the company. The company doesn't make that money. It's kind of like used sales vs new sales. Again, only when the company issues new shares or does an IPO do they make money off stock sale.
If I buy a stock and sit on it, that's essentially money sitting there. Whether it's cash or a digital record claiming I own X number of shares in a company, it's not doing much.
If I've gotten foundational aspects of this process wrong, you've yet to demonstrate how.
There are only a set amount of shares. Shares being in demand increases their price. I am sure you can see him w this does financially benefit the company.
Yes an IPO is when the most stock is sold, but new shares happen all the time. It's disingenuously pedantic to suggest purchasing stock is not an investment in a company, by both literal and figurative definitions.
Sure, bud, in a regulated market without exemptions for market makers who can naked short sell (crate synthetic shares that do not exist) for the sake of liquidity. Or how about 90% of our market being traded off the tape without affecting prices?
He is pointing out past ipo you are speculating on growth, which is what trading is speculation, not guaranteed returns.
GameStop ruined the brains of a generation
Gamestop pointed out unfettered greed in the market that's supposed to determine the health of a society. While conviently pointing out the flaws in all our regulatory processes surrounding that market. It fucked the business plan of wall street, not anyone's brain.
Yeah wall streets really hurting. For sure.
Purchasing stock off a secondary exchange is about as much investing in a company as purchasing a used game and hoping to resell it for a higher price. The company gets no money from these transactions. It's just glorified gamblers making money.
That's a gross over simplification to the point of being untrue. Besides the obvious facts that many companies continue to issue new shares on a regular basis, companies absolutely care about their stock prices for a variety of reasons, and not just so stockholders make money.
Start here if you really want to know more about how a company leverages its stock price, even when not selling more shares at the moment.
https://www.investopedia.com/investing/why-do-companies-care-about-their-stock-prices/
https://www.usatoday.com/story/money/columnist/krantz/2012/10/14/falling-stock-price-hurt-investors-company/1624761/
https://fairmontequities.com/how-does-a-decline-in-share-prices-affect-companies/
Not that often really, because shareholders can vote on those propositions and they generally would rather open a short position and gain back their investment then speculate on future growth prospects that are looking shaky needing more investment. More common in massive companies, you see share buybacks to entice big investors with the allure of we are doing well so we will buy back shares periodically to raise your investment. They do it enough and eventually as an investor you know they are going to offer more shares at some point so that control of the board does not become too consolidated, start a short position at that point wait for the next bottom and buy in before the next buyback to play both sides.
Except stock price is based on a number of factors and does not necessarily match demand.