What is the stock market?

Submitted ⁨⁨2⁩ ⁨months⁩ ago⁩ by ⁨j4k3@lemmy.world⁩ to ⁨[deleted]⁩

I’m looking for your deepest abstracted definition of the history and political nuance, the philosophical, the ethics, the evolved and historical meaning, and the meaningful impact it has had in evolving political structures and systems.

This is not ELI5, or a dumb question like “What is the stock market,” /s… It is a question of dumb contexts like: what is it really under the surface, or what is it in your opinion, or what is it in principal, or what is it used for as a justification for other parts of society?

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wrig9547@lemm.ee ⁨2⁩ ⁨months⁩ ago
To me the stock market was started as a way for individual business owners to raise capital to make a large purchase (open a factory, etc.). Then it became a novel way to speculate on the FUTURE performance of some business. It’s become a way to make money by playing on the emotions of other investors.

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- bobs_monkey@lemm.ee ⁨2⁩ ⁨months⁩ ago
  And now, it’s little more than a damn casino.
  
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  - Steve@startrek.website ⁨2⁩ ⁨months⁩ ago
    Its all of these things
    
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- shalafi@lemmy.world ⁨2⁩ ⁨months⁩ ago
  If I’m not betting on your future performance, why am I giving you money to open a factory?
  
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  - wrig9547@lemm.ee ⁨2⁩ ⁨months⁩ ago
    Good point, I suppose they are one and the same.
    
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db2@lemmy.world ⁨2⁩ ⁨months⁩ ago
Systemic gambling with a house that cheats constantly.

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- bobs_monkey@lemm.ee ⁨2⁩ ⁨months⁩ ago
  It’s worse than that: the whales are the ones counting cards and robbing regular people blind, and the house is turning a blind eye because they’re bought off (that whole revolving door between enforcement agencies and the companies they’re supposed to regulate).
  
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  - db2@lemmy.world ⁨2⁩ ⁨months⁩ ago
    I count them as part of the house in this analogy, but appreciate the clarification for those who don’t know.
    
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Sanctus@lemmy.world ⁨2⁩ ⁨months⁩ ago
Stocks are fancy notes that the owning class convinced pensioners are better than an actual pension. This amounted to a lot of elderly people not having adequate retirements. Its also a convenient method to exploit your labor by participating in stock buybacks, which inflate the wealth of the owning class, by not reinvesting money in your company’s work force. Its a triple pronged trident to fuck the poor and allow the rich to all become avatars of Mammon.

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geekwithsoul@lemm.ee ⁨2⁩ ⁨months⁩ ago
A capitalism casino that somehow rules the entire economy*

* or at least many people’s view of it

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- BakerBagel@midwest.social ⁨2⁩ ⁨months⁩ ago
  When it goes up, your boss buys a mew boat. When it goes down, you lose your job.
  
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PhlubbaDubba@lemm.ee ⁨2⁩ ⁨months⁩ ago
A stock is a piece of the deed or title or charter or whatever that is the essence of the company as a piece of property.

You can buy that piece of the property for a value which fluctuates based on the value of the company as a whole, your fractional piece is tied to the value of what it’s a piece of.

The stock market is the cumulative eco-system in which people are buying and selling stocks in different companies based on fluctuations in value of different companies at different times.

The name of the game is to basically always be selling just before a downturn and always be buying just before an upswing, so that the money you’ve bought the stocks with is always growing, because your bought stocks are always growing in value, until you decide to sell them.

There is a lot of other factors to it but that’s basically it. It’s a system in which you temporarily buy small pieces of companies for the purpose of selling them once they’re more valuable than they were when you bought them.

If you’re thinking that sounds a lot like crypto, you’re not wrong, but the difference is that stocks actually have a modicum of regulation that are meant to keep people from getting fucked over quite as hard as crypto has done. Doesn’t mean that premise is always lived up to, just look at 2008, but overall the stock market represents the safest form of investment you can make other than stuff like federal investments or buying a home that you intend to pass along to your kids.

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- Grumpydaddy@lemmy.world ⁨2⁩ ⁨months⁩ ago
  Stocks also represent a company’s net asset value. So, unlike crypto, a shareholder would be compensated by the sale of a company’s assets in the event of its liquidation. Crypto has no such safety net.
  
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- w3dd1e@lemm.ee ⁨2⁩ ⁨months⁩ ago
  This is a pretty solid explanation.
  
  To add some context, you used to be guaranteed a portion of profits in the company but that doesn’t happen now. Some stocks pay dividends but unless you own a lot of those, it won’t do you much good. Owning stocks now, does give you the right to participate in voting. Mark Zuckerberg owns voting control of Meta, meaning he can’t be removed from his position by shareholders because he owns enough votes (shares) that he can’t be overridden.
  
  Another thing you hear people talk about in relation to stocks is capital gains tax. Taxes on stock depend on how long you owned the stock. Less than a year, you get charged a higher tax rate on selling because you’re flipping it for profit; short-term vs long-term gains. Those taxes is only applied to the profits of the sale.
  
  Stocks are assets, however, and investors can borrow against it without selling in the same way you can get aa home equity loan against your house without selling your house. Since they aren’t actually selling the stock, they aren’t paying taxes on those profits.
  
  Thats why some politicians, like Kamala Harris, have suggested a tax on unrealized gains (profits on stocks that haven’t been sold yet). It would be a way to close the loop hole of billionaires not paying their fair share. It sounds kind of shitty to pay taxes on assets you don’t have in hand until you realize how stocks are used to avoid some taxes.
  
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- Kecessa@sh.itjust.works ⁨2⁩ ⁨months⁩ ago
  There’s at least one informed answer…
  
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- pimeys@lemmy.nauk.io ⁨2⁩ ⁨months⁩ ago
  The winning strategy for us who do not want to gamble but save some extra for our retirement is to stop looking at the daily values, and invest the same amount monthly to a low cost ETF, such as VUAA.
  
  Now, the S&P 500 has been coming up about seven percent yearly if you look into it for a longer period of time. Repeating the monthly investment until you retire is a good way to get enough to retire comfortably.
  
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OprahsedCreature@lemmy.ml ⁨2⁩ ⁨months⁩ ago
A graph of rich people’s feelings

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- FuglyDuck@lemmy.world ⁨2⁩ ⁨months⁩ ago
  It’s pegged to their yacht money.
  
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skullgiver@popplesburger.hilciferous.nl ⁨2⁩ ⁨months⁩ ago
[deleted]
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- shalafi@lemmy.world ⁨2⁩ ⁨months⁩ ago
  Finest write up I’ve seen on the subject.
  
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dwindling7373@feddit.it ⁨2⁩ ⁨months⁩ ago
I like the way you framed the request. Too bad the answers are either waaaaaay too long wall of texts, uninformative zingers or bitter jokes.

Here’s my attempt.

A tool that allow a detached involvement with capitalistic production fueled by the individualistic drive for more wealth.

A way for entremreneurs to chase the mith of permanent growth beyond the limitations of fisical assets.

A dangerous all compassing framework for our values that has no positive connection with the material condition of humankind.
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- j4k3@lemmy.world ⁨2⁩ ⁨months⁩ ago
  Thanks.
  
  Opinions of all types are welcome, as are the verbose. I read them all. Sometimes the question and subject are peripheral to the meta sociological information in the slice of those that are present and motivated to participate. I’m not doing science stuff, anything formal, or remotely nefarious. I’m curious how others abstract and the spectrum of sophistication present in the insights they provide.
  
  I still see many aspects of the market that are not mentioned or laid out yet, such as the way internet connection speeds and bots dominate, manipulate, and can even crash the entire market or create man in the middle attacks that alter the price of a stock as it is being purchased due to connection speeds.
  
  Then there is the impact on long term planning as a society and the monetization of unethical behavior. Quarterly priorities are like ADHD for business, and this has had a major impact on companies that could be real leaders in the world but are either defunct or irrelevant husks of what they once were because they were unable to invest in their long term hegemony against others in cultures that can plan long term by investing outside of the next four quarters, and with large enough amounts to affect relevant future progress. The only way American companies tend to hold on long term is through manipulation of a market to standardize stagnation and snuff out any competition using frivolous patents and abusing the legal system to out spend the competition into bankruptcy. It is a lose lose situation where game theory shows anyone on the outside that innovates for growth and plays tit for tat plus ten percent will out perform.
  
  Who knows, maybe I am wrong on this stuff. I see other aspects as well. Still I see much in all responses present here.
  
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  - flambonkscious@sh.itjust.works ⁨2⁩ ⁨months⁩ ago
    What a champ
    
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Kyrgizion@lemmy.world ⁨2⁩ ⁨months⁩ ago
“Rich people’s yacht money.”

Just replace 99,9% of instances containing “the economy” and substitute. Makes a lot of things click.

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halfapage@lemmy.world ⁨2⁩ ⁨months⁩ ago
[deleted]
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- Etterra@lemmy.world ⁨2⁩ ⁨months⁩ ago
  And if you are rich enough, There’s no actual gambling involved. You just get money for free.
  
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NaibofTabr@infosec.pub ⁨2⁩ ⁨months⁩ ago
Hot potato.

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Modern_medicine_isnt@lemmy.world ⁨2⁩ ⁨months⁩ ago
I think that a lot of people ascribe a lot of depth to how the stoke market works that is really just a farce. When it comes down to it, the stock market is a corporate popularity contest. The concept of stock was a way for someone to get a peice of the action without having to actually know or do anything. And it acted as a way for the wealthy to annoint people as worthy. Nowadays , due to growth in the number of people involved, popularity is really all that matters. People will claim it is about revenue and such, but it really is about will other people buy the stock for more.

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litchralee@sh.itjust.works ⁨2⁩ ⁨months⁩ ago
I’ll take a shot from the hip at this question, but note that I won’t add my customary citations or links.

The stock market is the paragon of property and trusts, contracts, corporations and law, and the capitalist socio-economic system. The very existence of the stock market implies a society that has some or most of these concepts.

For example, for shares to be traded, there generally must exist ownership rights upon the shares, distinct from the ownership rights that the company has of its own property. Or if not outright ownership of a share, then the benefit that a share provides (eg dividends). It also implies a legal system that will enforce these rights and the obligations of the company to its shareholders.

For a tradable company to exist, it must be organized/chartered as an entity distinct from any single person. This is different than the feudal days, when ventures would be undertaken “in right of the King” or some member of the nobility. It has to be this way, or else the King/Duke/Count/whatever could stiff the shareholders by just taking all the earnings. The company still needs to be created by legal means, either an Act of Parliament/Congress, by letter patent from the Monarch, or the modern administrative method of applying to the state Secretary of State (USA) or Companies House (UK) as examples.

Even the structure of a for-profit tradeable company – when to a state-owned enterprise, a non-profit, a co-op, an NGO or QUANGO – is a representation of the values inherent to capitalism. A company is obliged to use the shareholders’ funds – which is held by the company but is owed to the shareholders – to extract the greatest return. But this can come in many forms.

Short-term value from buying investments and quickly flipping them (eg corporate home buyers) is different than rent-seeking (eg corporate landlords) and is still different than long-term investments that actively work to build up the value (eg startup incubators, private wealth funds, Islamic banking, transit-owned adjacent property). If a for-profit company doesn’t have a plan to extract a return… they’re in hot water with the shareholders, with penalties like personal liability for malfeasance.

Another way of looking at the stock market is that if you have all the underlying components but don’t yet have a stock market, it would soon appear naturally. That is to say, if the public stock markets were banned overnight, shares would still trade but just under the table and without regulation. But if any critical part underpinning the markets stopped existing, then the market itself would collapse.

History shows numerous examples where breakdowns of the legal system resulted in market mayhem, or when corporate property is expropriated for the Monarch’s wars or personal use, or when funds invested into or paid out of companies is hampered by terrible monetary inflation.

As for what the stock market does, its greatest purpose is to organize investments into ventures. Historically, ventures were things like building a ship to sail to the New World and ~~steal~~ obtain goods to sell at home. Merchant ships were and are still very expensive, so few singular persons could afford it. And even if the could, the failure of the venture could be catastrophic for that person’s finances. Better to spread the risk and the reward amongst lots of people.

What was once the sole domain of the landed gentry and nobility, slowly opened to the nouveau riche during the Industrial Revolution(s), then in turn to everyday people… for better or worse. It’s now almost trivial to buy a share in any particular listed company, but just opening the stock market to everyone would have been chaotic at best. I think it’s NYSE that still has on-floor traders/brokers, but imagine if all shares in that market had to be traded in a single room. It’s already quite lively, now add all the online trades from middle class Americans on payday. It would be impossible.

Likewise, a pure capitalist stock market would permit awful things like bribing journalists to write fake stories to crash a stock, then buy it for cheap. Or pump and dump scams. And would have no “circuit breakers” that halt during so-called flash crashes.

I’m reminded of a scene from the ITV show Agatha Christie’s Poirot in the episode “Appointment With Death”, where a wealthy woman is not only murdered but her business empire collapses because the markets panicked and sold up. The relevant implications here is that despite her company not having changed its financial picture, it got cut up for scrap and thus lost most of its value, rendering the business worthless in the end.

Suffice it to say, the stock market is a lot of things. But I view it as a natural result of certain other prerequisites, meaning we can’t really get rid of it, so instead it should be appropriately regulated.

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- j4k3@lemmy.world ⁨2⁩ ⁨months⁩ ago
  So what of the stock market during WW1/2, or its relevance to the USSR? What about enterprise outside of the Western world in South America, Africa, and Asia by comparison. I’m quite naive on this subject. I figured it all started with dutch merchant shipping, but upon looking up the wiki, the first mentioned source was 12th century France.
  
  I’m not really seeing the difference in feudalism except a members only kind of participation with a crony pool of inbreds, not all that different than the billionaires of today.
  
  What are the idealist or futurist potential alternatives between the present and a future where wealth is no longer the primary means of complex social hierarchical display? My premise is that basing hierarchical display on the fundamental means of human survival is barbaric primitivism. I believe we already have systems of merit, reputation, and accolades that serve as prototypes in academia, sports, and entertainment. Wealth extraction neglects the responsibility of the environment and long term planning. I’m curious how humanity evolves in a distant post scarcity future but without becoming authoritarian or utopian/dystopian, but instead realistic, if you have any thoughts.
  
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  - litchralee@sh.itjust.works ⁨2⁩ ⁨months⁩ ago
    For the historical questions, I don’t really have answers, especially where it involves departures from the Western world. I did, however, briefly touch up on Islamic banking, which I’ve always found intriguing as the Islamic faith does not permit charging interest on loans, viewing it as usurious. I’m informed that Christianity also had a similar prohibition on usury, but apparently it fell due to the need to fund the constant wars in Europe.
    
    I’m not really seeing the difference in feudalism except a members only kind of participation with a crony pool of inbreds, not all that different than the billionaires of today.
    
    I think the important distinction insofar as stock markets is that the crony pool of inbreds have access, so too does the commoner. Well, the middle-class commoner usually. And we’ve seen David-vs-Goliath cases where the commoners put up a decent fight against the inbreds’ institutions; the whole GameStonk fiasco comes to mind. An equivalent economic upset would have been wholly impossible at any point during any feudal period in history.
    
    What are the idealist or futurist potential alternatives between the present and a future where wealth is no longer the primary means of complex social hierarchical display? My premise is that basing hierarchical display on the fundamental means of human survival is barbaric primitivism.
    
    From conversations I’ve had previously, possible answers to that question are presented in the works of Paul Cockshott, author of Towards A New Socialism. I’ve not read it, but friends in Marxist-Leninist parties have mentioned it. The Wikipedia page, however, notes that it’s an economics book, which could be fairly technical and difficult to read. Sort of like how Das Kapital is more-or-less a textbook, in contrast with how Wage Labour And Capital was meant for mass consumption.
    
    Wealth extraction neglects the responsibility of the environment and long term planning.
    
    True. The cost to the environment is not “internalized”, to use the technical term. Hence, it doesn’t need to be paid for, and is thus “free real estate”. Solutions to internalize environmental harm include carbon taxes or cap-and-trade. But the latter is a lukewarm carbon tax because it only looks at the end-result emissions, rather than taxing at the oil well, so to speak.
    
    I’m curious how humanity evolves in a distant post scarcity future but without becoming authoritarian or utopian/dystopian
    
    Might I recommend The Three-Body Problem and the trilogy overall by Liu Cixin? This phenomenal hard scifi work describes a space-based future where the human species faces a common, external threat. After all, much of today’s progress was yesterday’s scifi. So why not look to scifi to see what tomorrow’s solutions might be. It’s no worse than my crystal ball, which is foggy and in need of repair.
    
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Randomgal@lemmy.ca ⁨2⁩ ⁨months⁩ ago
It’s gambling for rich people over poor people’s lives.

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bokherif@lemmy.world ⁨2⁩ ⁨months⁩ ago
It’s a game you play with people who has access to cheats, but your role in the game is so limited that just by playing it safe you also can win a little.

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FundMECFSResearch@lemmy.blahaj.zone ⁨2⁩ ⁨months⁩ ago
It’s a part of ownership of the means of production. Rich people buy a stake of the means of production there.

Buying there can take the form of gambling or more careful storage of money depending how it’s done. It’s a superficial structure that naturally evolves from capitalism.

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bear@lemmynsfw.com ⁨2⁩ ⁨months⁩ ago
Literally a pyramid scheme. Companies print their own money with extra steps, then compete with each other for your attention about it. Nothing creates value quite like conjuring it freely from the imagination. You can’t make money any faster, so you just give yours to the best money printers.

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bamfic@lemmy.world ⁨2⁩ ⁨months⁩ ago
Vegas

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foggy@lemmy.world ⁨2⁩ ⁨months⁩ ago
It is a living, breathing holograph of commerce. It speaks, it eats, it shits. It gets horny, sad, and angry. But it is a hologram. A projection of humanity.

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JackbyDev@programming.dev ⁨2⁩ ⁨months⁩ ago
People want to buy and sell portions of companies. Stock markets let them do that. Things like fractional shares and ETFs allow individual investors to invest more easily which is great, but it would be naive to think the big firms don’t have more of an advantage. People yap about the efficient market hypothesis a lot while forgetting that it’s a hypothesis. If someone can get an advantage they’ll do it. It’s still wide advice for newbies who think they r cracked the code lol but for reals big players can and do find opportunities to make money that other people don’t know about.

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BreadOven@lemmy.world ⁨2⁩ ⁨months⁩ ago
Stonks.

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P4ulin_Kbana@lemmy.eco.br ⁨2⁩ ⁨months⁩ ago
You’re asking this question on Lemmy, on all of places!?!? It’s not a stupid question, but I believed you’re asking it at the wrong place. (I am not defending them, though.)

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