Welcome to the Traders Laboratory Forums.
Beginners Forum Interested in trading but don't know where to start? Post any questions you may have here.

Reply
Old 02-24-2008, 12:06 PM   #1

Join Date: Feb 2008
Posts: 1
Ignore this user

Thanks: 0
Thanked 0 Times in 0 Posts

Why do we stake our society's financial

well-being on stock markets, a system that involves risk? Why do we allow money to be created or destroyed?
Martin is offline  
Reply With Quote
Old 02-24-2008, 12:13 PM   #2

Join Date: Feb 2008
Posts: 1
Ignore this user

Thanks: 0
Thanked 0 Times in 0 Posts

Stocks were created originally to make it easier to pool large amounts of capital to finance expensive ventures. Before the invention of stock, such ventures were possible only for very wealthy individuals, families or governments. However, the nature of large, expensive ventures is that they are risky and can result in financial loss. Society benefits from the stock markets though, because without them, the range of possible endeavors that a society can take on is far more limited. It can be argued that many of the advances humanity has made through commercial activity would not have been possible without the risks taken as part of stock investment.

en.wikipedia.org
Tony Q is offline  
Reply With Quote
Old 02-24-2008, 02:58 PM   #3

Join Date: Feb 2008
Posts: 1
Ignore this user

Thanks: 0
Thanked 0 Times in 0 Posts

Society's well-being is vastly more exposed to the debt, credit, and commodity markets, you just don't see it and corporate, municipal, state, and federal bonds just don't have the excitement of stocks. We engage in the equity markets because of the belief that the risk will be balanced with greater return. As yourself the question, if you had $1000 to invest, would you put it in a 4.5% CD for a future purchase of a house (or 2nd house or whatever) or would you instead put it into GLD or YHOO to capture possible capital appreciation.
teraflop is offline  
Reply With Quote
Old 02-24-2008, 03:31 PM   #4

BlowFish's Avatar

Join Date: Mar 2007
Location: In Da House
Posts: 3,292
Ignore this user

Thanks: 129
Thanked 1,054 Times in 702 Posts

Re: Why do we stake our society's financial

Quote:
Originally Posted by Martin »
well-being on stock markets, a system that involves risk? Why do we allow money to be created or destroyed?
Darthtrader mentions a Documentary called the trap on the movies thread http://www.traderslaboratory.com/for...ad-2952-2.html
I have only watched parts one and two so far (its 3 parts) but Im really enjoying it. Funnily enough it provides credible (to me) answers to that question in great depth. I think you might enjoy it too.

Wiki:-
http://en.wikipedia.org/wiki/The_Tra...mentary_series)

3 film parts
http://video.google.co.uk/videoplay?...arch&plindex=0
http://video.google.co.uk/videoplay?...arch&plindex=0
http://video.google.co.uk/videoplay?...arch&plindex=5
BlowFish is offline  
Reply With Quote
Old 02-24-2008, 05:58 PM   #5

Join Date: Feb 2008
Posts: 1
Ignore this user

Thanks: 0
Thanked 0 Times in 0 Posts

How do we finance "risky" endeavors? What is the alternative? If you are considering a system where there is a centrally planned authority, then that system also has risk, and it's harder for the central unit to get all the information, direct the "needs", it's more susceptible to corruption, etc.When information is distributed throughout a system (say in a market, the internet, or power grids) the risk of total failure is smaller, the information is spread more efficiently, etc.
patsup is offline  
Reply With Quote

Reply

Thread Tools
Display Modes Help Others By Rating This Thread
Help Others By Rating This Thread:


Similar Threads
Thread Thread Starter Forum Replies Last Post
Trade Your Way To Financial Freedom by Van K. Tharp Soultrader Books 6 06-19-2010 04:50 PM
Upcoming Financial Data Soultrader Market Analysis 0 09-03-2007 07:29 AM
Candles and Financial Stocks james_gsx The Candlestick Corner 3 08-28-2007 04:13 AM
The Interpretation of Financial Statements by Benjamin Graham Soultrader Books 0 09-23-2006 06:47 AM
Information on Financial News and Media Keys Beginners Forum 5 08-27-2006 09:35 PM

All times are GMT -4. The time now is 03:55 PM.
Copyright ©2000 - 2012, Jelsoft Enterprises Ltd.
CS to VB integration by DeskLancer
©2006-2011 Traders Laboratory, All Rights Reserved.