08 Jul 10
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Originally posted by uzlessOnly if you are easily misled by the use of words with emotional connotations. You obviously attach a negative meaning to the word "speculator" and a positive on to the word "investor". Things are obviously not that simple.
Language makes all the difference. It can obfuscate the truth and make people think things are worse, or better than they really are. "Right-sizing" instead of layoffs for example.
By calling anyone who owns stock an "investor" it sounds better than "speculator" Would anyone care if a "speculator" lost money? Would we be insisting on bail-outs for "spe e issues. So, call this group of people what they really are.
SPECULATORS.
For example, without any speculation trading, investment would be lower because stocks would be less liquid. People are more willing to buy stock at an IPO if they know they can sell it later if they need the cash. If you forbid them to sell (i.e. remove speculation by your definition), then people are more likely to deposit that money rather than invest it. Same goes for banks who receive those deposits.
08 Jul 10
Originally posted by uzlessAs I said before, investing and speculating are not mutually exclusive. You are of course free to only use the term speculating, but to try and redefine the term 'investing' to only apply when shares are bought at creation is an obvious propaganda attempt, certainly no better than always only using the term 'investing' to describe speculative investments.
Language makes all the difference. It can obfuscate the truth and make people think things are worse, or better than they really are. "Right-sizing" instead of layoffs for example.
By calling anyone who owns stock an "investor" it sounds better than "speculator" Would anyone care if a "speculator" lost money? Would we be insisting on bail-outs for "spe ...[text shortened]... e issues. So, call this group of people what they really are.
SPECULATORS.
08 Jul 10
Originally posted by BartsNot only are they not mutually exclusive, the vast majority of the time an investment IS speculation.
As I said before, investing and speculating are not mutually exclusive. You are of course free to only use the term speculating, but to try and redefine the term 'investing' to only apply when shares are bought at creation is an obvious propaganda attempt, certainly no better than always only using the term 'investing' to describe speculative investments.
- Real Estate
- Rare Coins
- Comic Books
- Stocks (*including* IPOs)
- Precious metals
- Venture Capital
- Bonds
- Commodity Futures
- Sports Memorabilia
Just to name a few.... ALL have the potential to lose money and could turn out to be "bad" investments. But they are investments nonetheless.
09 Jul 10
Originally posted by MelanerpesYour seem to believe that unless you are Labron James or Michael Jordan that you can't be a basketball player.
Because no one wants to shatter john doe's fragile self-esteem by telling him that buying two shares of Exxon stock does not make him equal to Warren Buffett.
Its sort of like a person who spends an hour playing basketball with a couple of friends and declares himself to be an "athlete".
Investing is always speculative, but that doesn't make it less of an investment. There is always a possible upside gain, to be weighed against a possible downside loss. That is the same if it's two shares of Berkshire Hathaway, Exxon Mobil, or buying a lawnmower, edger and blower to start a landscaping business. There are plenty of individual "fortunes" which support current retirees far below the status of Buffet, but these folks are investors.
I question why it is important to you and certain others to denigrate investment?
09 Jul 10
Originally posted by no1marauderWhat is it that is exchanged for the machinery, plants, and buildings? What pays the wages of the production workers?
Investment is the value of machinery, plants, and buildings that are bought by firms for production purposes.
Financial investments in shares, obligations and other financial instruments are not considered as "investment" in a macroeconomic sense nor in national accountancy.
http://www.economicswebinstitute.org/glossary/invest.htm
09 Jul 10
Originally posted by uzlessInteresting? You argue that since the money goes not to the company but to the previous "investor" this is not an investment. Of course the original "investment" was just as speculative, if not more so. The later buyer has the track record of the company to date as a rationale for his speculation and investment.
Mon Dieux. Re-read the OP.
The only time you are "Investing" in a company is when they issue their initial IPO (or subsequent share releases).
Why is this an investment and not speculation? Simple, it's because the money you spend on the stock during an IPO GOES TO THE COMPANY. The company uses your money to expand operations, upgrade processing capa ...[text shortened]... the company, in the second case you are just speculating on the company.
Plain and simple.
Furthermore, without the market for the sale of stocks, speculating on them as you put it, there would be little or no incentive for the original "investor" to buy into the company.
Just out of curiosity, what about bond holders? Are they investors?
09 Jul 10
Originally posted by uzlessNow, the truth finally comes out. Some words tend to lend themselves to perjorative use. In a politically correct and envious world of leftists, the speculator is evil, but the union pension fund is good. Both trade stocks.
Language makes all the difference. It can obfuscate the truth and make people think things are worse, or better than they really are. "Right-sizing" instead of layoffs for example.
By calling anyone who owns stock an "investor" it sounds better than "speculator" Would anyone care if a "speculator" lost money? Would we be insisting on bail-outs for "spe ...[text shortened]... e issues. So, call this group of people what they really are.
SPECULATORS.
Unfortunately, it has been precisely the most speculative of investors that we have bailed out. We allow even investing to be demonized or held as less valuable than the labor of production workers, who for the most part would not have jobs without the investing and speculating class.
Pray tell us what it is that is illegitimate about speculation? Or how that makes and investment not and investment. Yes language is important, but it is also important that we don't subscribe to notions just because of words being used in an accusatory manner.
09 Jul 10
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Originally posted by normbenignHow does speculation - other than being a necessary outcome of the possibility of easy investment - create jobs?
Now, the truth finally comes out. Some words tend to lend themselves to perjorative use. In a politically correct and envious world of leftists, the speculator is evil, but the union pension fund is good. Both trade stocks.
Unfortunately, it has been precisely the most speculative of investors that we have bailed out. We allow even investing to be ...[text shortened]... nt that we don't subscribe to notions just because of words being used in an accusatory manner.
Let's take the most extreme example: day trading. How does day trading create jobs?
09 Jul 10
Originally posted by KazetNagorraIt provides liquidity to the markets (see my post above for details about its importance).
How does speculation - other than being a necessary outcome of the possibility of easy investment - create jobs?
Let's take the most extreme example: day trading. How does day trading create jobs?
That said, I agree that it's value added to society is much lower than the income it generates (which can be scandalous). So there's good economic reason to tax heavily this activity (not really to abolish/outlaw it). However, this requires international coordination as financial assets are very mobile and so can easily avoid taxation if countries do it unilaterally.
Of course, the platforms that have enough influence to push this globally, like the G20, are the ones most reviled by those with the most interest in seeing them work.
09 Jul 10
Originally posted by PalynkaYes, you may be right. As far as your latter point, I think we are agreed.
It provides liquidity to the markets (see my post above for details about its importance).
That said, I agree that it's value added to society is much lower than the income it generates (which can be scandalous). So there's good economic reason to tax heavily this activity (not really to abolish/outlaw it). However, this requires international coordinati ...[text shortened]... , like the G20, are the ones most reviled by those with the most interest in seeing them work.
12 Jul 10
Originally posted by uzlessThey are investors . They invest in their own vested interests. They invest in themselves and their own profit. Then when it all goes wrong they come to the taxpayer expecting us to help them out. We then help them out but our governments are so in debt that they have to make cuts - the the bloke on the street loses out again.
Why does the media insist on calling anyone that owns stock or mutual funds "investors"?
Unless you buy a stock at the IPO, you are just buying stock from someone who is selling stock they already own. The money you pay for the stock does not go to the company, it goes to the guy you bought it from! You are just hoping that the stock goes up in price ...[text shortened]... nment regulatory regime, just remember, they aren't investors...they are just speculators!!
13 Jul 10
Originally posted by normbenignMy main issue is that the term "investment" is thrown about so loosely.
Your seem to believe that unless you are Labron James or Michael Jordan that you can't be a basketball player.
Investing is always speculative, but that doesn't make it less of an investment. There is always a possible upside gain, to be weighed against a possible downside loss. That is the same if it's two shares of Berkshire Hathaway, Exxon Mobil, ...[text shortened]... stors.
I question why it is important to you and certain others to denigrate investment?
There are those who I call "primary investors" -- these are the people who make the actual decisions regarding how the company is built and run. They're in it for the long haul. To them, the business is something that's very real, it's their life, and they put a lot of time into making sure it becomes a quality operation.
With a large corporation, a "primary investor" would be someone who buys a significant stake in the company and thus has a significant say in who gets elected to the board of directors and ultimately who becomes the CEO. Such investors are going to be extremely knowledgeable about how the company is being run, will regularly attend shareholder meetings and voice a highly influential opinion. And most importantly, if things go badly, they will in some way be held accountable for the bad decisions made by the CEO or the board.
This differs greatly from the "secondary investor" who is just trading pieces of paper - who often have no idea how the company is being run and who play no active role in making any of the decisions. In many cases, such investors merely buy a stock because its price happens to be rising, or because Jim Cramer mentioned it on his program as being "hot", and these same investors will sell the moment that stock "goes out of fashion".
This is not to say that the secondary investors don't play a role in increasing liquidity -- just like there's some value in having people play pickup games on the local playground. But they're not Michael Jordan. They're not even close to being the 12th guy on the bench of the worst team in the NBA.