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Redditors are right about the unfairness of the market

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Re: Redditors are right about the unfairness of the market

#61

Post by vadavaski »

_wldu wrote: post #42

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that…

> Just like casinos in Las Vegas

It has nothing to do with a cassino. It's not a zero sum game. It generates value from profits, it makes the general market more liquid, pricing assets. Not everybody is day/swing trading with futures.

> rich people taking money from poor people

That's a pretty strong affirmation, do you have sources with backtests? otherwise, well, it's enough to have 01 consistent counter-example. Of course, if you day trade, you'll give your money to whoever knew how to properly price an asset first. But that's just being unwise.

The article bases its theses on the fact that there is insider trading - and its variations - which is a failure on the judicial system, not markets in general .

Re: Redditors are right about the unfairness of the market

#62

Post by DSMan195276 »

nradov wrote: post #28
ianai wrote: post #17

Earlier quoted context omitted.

at least consider a ban on stock buybacks like was the case until that regulation was rolled back in the 80s.

There's nothing really wrong with stock buybacks. They're just a tax efficient method for companies without strong growth opportunities to return value to shareholders.

I think part the above person's complaint may stem from what happened a few years ago, which is that a decent number of businesses had their taxes reduced and simply used the extra money to do stock buybacks instead of improve or expand the company, increase pay, etc.

Now that said, stock buybacks on their own are not necessarily a "bad" thing, and if a company has no uses for a bunch of cash on hand then giving it to shareholders via buybacks can make sense rather than hold on to it. But I do think it's a fair complaint that if we're "giving" a company money in the form of tax breaks and they're using it to do stock buybacks (effectively saying they have no real use for it, as you mentioned) then it's unclear the tax breaks are actually useful to begin with. If they weren't allowed to use that money to do stock buybacks then they would have had to find some other use in the company for it (though in reality, since budgets are pretty flexible it wouldn't be too hard to get around that kind of requirement...)

Re: Redditors are right about the unfairness of the market

#63

Post by fxtentacle »

agumonkey wrote: post #56
_wldu wrote: post #42

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that…

Can HNers gather for a poll ? A lot of people (including me) spent a lot of time reading, operating, spending time on investing. There are a few bits of value here, and some profits to make. But it seems to me that learning, crafting, sharing is way more beneficial long term. Even if you win, you're never shielded from inflation, being conned buying a car, a house... In a way wisdom and relationships appear more impo…

In my opinion, investing money into yourself in the form of tools and learning will always yield the best ROI. But obviously, that's a lot less sexy than the hope of one day retiring because you have so much "passive income". It's just that most examples for "passive income" aren't that passive, e.g. all those people advocating SaaS and Apps as a lifestyle business.

Re: Redditors are right about the unfairness of the market

#64

Post by OJFord »

chii wrote: post #40
OJFord wrote: post #34

Earlier quoted context omitted.

Presumably GP is worried that (with the company's inside information about itself) there is a strong growth opportunity, as it will turn out, and that the company might decide to reissue once it's realised that growth. Not saying I really agree, they typically offer a premium (which is just like rolling a dividend into it) and it would seem highly unusual to have a company that seemed growth/non-growth according to w…

> with the company's inside information about itself a company acts in the interest of its shareholders. If you're saying that a majority shareholder hides this info from the rest of the shareholders, triggers a buy back under a false pretense, then realize that growth (making the share worth more), then that's just financial fraud. If a company has an opportunity for growth, this information is unlikely to be privat…

Yup, I did say I didn't agree, just laying out what I assumed was the thinking.

Re: Redditors are right about the unfairness of the market

#65

Post by OJFord »

DSMan195276 wrote: post #62
nradov wrote: post #28

Earlier quoted context omitted.

There's nothing really wrong with stock buybacks. They're just a tax efficient method for companies without strong growth opportunities to return value to shareholders.

I think part the above person's complaint may stem from what happened a few years ago, which is that a decent number of businesses had their taxes reduced and simply used the extra money to do stock buybacks instead of improve or expand the company, increase pay, etc. Now that said, stock buybacks on their own are not necessarily a "bad" thing, and if a company has no uses for a bunch of cash on hand then giving it t…

Tax payers may very well object to that, but the shareholders (in that capacity) shouldn't.

Re: Redditors are right about the unfairness of the market

#66

Post by mental1896 »

vadavaski wrote: post #61
_wldu wrote: post #42

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that…

> Just like casinos in Las Vegas It has nothing to do with a cassino. It's not a zero sum game. It generates value from profits, it makes the general market more liquid, pricing assets. Not everybody is day/swing trading with futures. > rich people taking money from poor people That's a pretty strong affirmation, do you have sources with backtests? otherwise, well, it's enough to have 01 consistent counter-example.…

You could argue that if the system naturally permits this kind of behavior (insider trading), that there is something fundamentally wrong with the system itself. Judicial band-aids are effective in their own way but they don't get to the heart of the issue.

Re: Redditors are right about the unfairness of the market

#67

Post by jimhefferon »

throwaway9870 wrote: post #41
kemiller2002 wrote: post #33

Earlier quoted context omitted.

Public service used to be thought of as a sacrifice for the good of all people. For many people it is. Teachers, social workers, public defenders, armed service people. All of these people make a pittance compared to what they could in the private sector. Saying a congressperson or a judge should be allowed to trade stocks simply because it affects their well being is an argument that appears rather frail. I would be…

> Teachers, social workers, public defenders, armed service people. I don't agree with that in all cases. I have a friend who is a teacher and admits teaching is a great job for him (2nd grade) and he doesn't know what he would do otherwise. Probably some type of physical work. He is a great guy, but just isn't that sharp. He is punctual and dependable, but not real good at thinking on his feet. He makes about $82k t…

There are something like 3.5 or 4 million teachers in the US, so for sure they are not all self-sacrificing saints and there will be a broad mix of motivations.

But FWIW my experience is not like yours. I am a college professor and have seen many students over the years go into teaching, either at the secondary or elementary level (specifically, math teaching). When I meet with them to discuss what they want to do, almost all express that when they think about careers, their interest in teaching is because it is a reasonable career with reasonable pay, yes, but just as important to them is the sense of doing good, of directly helping people. (I have less experience with people in the services but what experience I do have is in the same direction.)

Re: Redditors are right about the unfairness of the market

#68

Post by mental1896 »

agumonkey wrote: post #56
_wldu wrote: post #42

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that…

Can HNers gather for a poll ? A lot of people (including me) spent a lot of time reading, operating, spending time on investing. There are a few bits of value here, and some profits to make. But it seems to me that learning, crafting, sharing is way more beneficial long term. Even if you win, you're never shielded from inflation, being conned buying a car, a house... In a way wisdom and relationships appear more impo…

>you're never shielded from inflation

It seems to me that inflation is integral to success of the system. That is to say, without inflation, far fewer people would "win".

Re: Redditors are right about the unfairness of the market

#69

Post by fennecfoxen »

_wldu wrote: post #42

I've been down-voted for years for saying this, but I am right. The stock market is a scam. Just like casinos in Las Vegas. The house wins more often than we do. 'You need to diversify' simply means 'Give us more of your money'. Don't fall for it. It's just rich people and politicians taking money from less rich people. If you want to double your money, fold it over and put it in your pocket (and buy real things that…

How is it a scam? You buy stock. You own a share in a company, or in a company that owns more companies. The company makes money. It pays that out by dividends or share buybacks. You sell it decades later, hopefully for a profit.

That's the deal. That's what's for sale.

You want to blame HFTs or whatever? Bah. Worst case you're losing a fraction of a percent of your initial purchase. You've got absolutely nothing on the old-school commissions you'd pay twenty years ago.

Oh, wait. I know how it's a "scam". "Double your money", you say.

It's a "scam" because people went in thinking "buy sell buy sell momentum trade profit profit profit DOUBLE MY MONEY THEN AGAIN AND AGAIN FREE MONEY FREE MONEY" and it turns out there wasn't free money, that the money was in fact very expensive, that you had to assume Risk, that people who make money on it do a ton of Research to mitigate the risk, that you were competing with billion-dollar systems for doing research and managing risk and getting that money. Maybe you even went in thinking "TO THE MOON" and were surprised when your GME stopped trading because your broker was impaired by pre-existing contracts and couldn't make it happen and elected to use the options which they put in the fine-print they asked you to read and you didn't.

Well, boo hoo. Don't play games with your money, don't play games with your food, buy the product that's for sale like a normal responsible investor, and you'll be fine. Or play games, treat it like a casino, but then don't be surprised when you get the casino experience.

Re: Redditors are right about the unfairness of the market

#70

Post by DisjointedHunt »

If you haven't worked in Finance, here are a few items you might want to consider before commenting one way or the other on stories from the world of finance:

-There are regulations on paper only and VERY rarely is monitoring conducted because of the firms asserting "confidentiality" to not share data

-Regulators are fully aware of illegal practices such as literally creating fake shares from thin air which has been illegal for over a decade and yet, THERE IS NO WAY to know if this is happening or has happened in the past year. The data is not public[1]

-Even when such blatant illegal behavior amounting to billions of dollars , the penalties are mostly fines and no one goes to jail

-Court filings indicate suspicious sales of specific securities by insiders at Citadel before they restricted retail sales. Contrast this with you, as an employee of a FAANG tech firm, trade stock on inside information and you're looking at prison time.

[1] https://www.reddit.com/r/GME/comments/m9bfp0/naked_short_sel...

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