Fair points abbaddabba. I'm not trying to bust your chops.
The stock market is the greatest gift to the poor that the world has ever seen. You can own a piece of a fantastic company that gives you 10%/year on your money even if you have only $500 to your name. You can bet on ideas you have about the nature of the world in a market with a positive rake.
Abundant energy and open access in capital markets is a very good thing. If you reduce the energy of a system, you reduce its creative and problem solving power, which is what capital market do for us, ultimately - creatively solve human problems through large amounts of waste. With that in mind, to answer your question:
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Originally Posted by Abbaddabba
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Originally Posted by ToothSayer
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Originally Posted by Abbaddabba
Are you arguing that because they occasionally fling their money at successful businesses that it's justifiable?
Yes I am.
And also because they often fling their money at unsuccessful businesses. That is a good thing, not a bad thing, if you think it through.
You haven't made a persuasive case for why.
It's not good for the average joe investor. Why are the gains to others more than proportional?
I tried to explain this via ecology. The most robust ecosystems with the greatest diversity and creative solutions to hard problems are the ones with the highest amount of energy flowing in, and the highest amount of competition and cut-throat predation.
Research and trying out of new ways of doing things - which is ultimately the only way that economies can grow - is incredibly wasteful, mostly because it has an extremely low success rate. But it's also the key to all progress. But to get that progress, you need to recklessly throw vast amounts of capital at new ideas until you find something that works. And often, the results are serendipitous - even the smartest people can't pick what will likely win and what won't. What research will bear fruit.
This makes wasteful money important. For one, you can see how the inflowing energy into the system is a key component of just how far the research goes, and how much serendipity there is that moves us forward. The other point is that sane, careful people aren't going to put large enough amounts of money into highly speculative ideas, not when you can earn a comfortable return on capital of around 10% on safe bets. And so society stagnates without this influx of new wasteful energy.
America's exceptional economy is in part from this reckless dreaming, greed and waste. It works.
There are other reasons why it's a good idea for high energy capital markets to have lots of fools in them betting their money, but I don't have time right now.
Last edited by ToothSayer; 02-04-2016 at 06:37 PM.