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Public Markets For Predicting Google's Market Cap
k2enemy writes "The Iowa Electronic Markets have created two markets where traders may buy and sell contracts based on beliefs of Google's market cap at the end of the first day of public trading. The first market, GOOGLE_LIN, trades contracts with liquidation values linearly dependent on the market cap. The second, GOOGLE_WTA, trades six unique and exhaustive contracts in a winner-takes-all market. The markets are currently suggesting a market cap around $30-35 billion. The IEM is also popular for its political markets, which have been very successful (more accurate than polls) at predicting political elections."
Anyone else notice the amount of FUD concerning the IPO? Google is the first to step in and help the little investor and, all of a sudden, the rich people are funding FUD campaigns so they can get in on the deal.
Life is the leading cause of death in America.
It seems like everybody will try to make a buck of Google. I just hope that Google won't bomb like so many other companies.
This is the sig that says NI (again)
Its not working though.
Google hasnt really budged on its position, and they still are not worried about the fatcats' FUD. Im not google, nor am I employed there, but I think they want their popularity, usability, and value speak for themselves.
that these people are pretty much "gambling" on the stock market, something that is pretty much gambling in and of itself.
It's like gambling on someone else playing the slot machine. o.O O.o What's the point?
It's an interesting idea of how to make predictions, because after all, like in real life, a lot of people will vote for someone/not at all because they think everyone else has.
/., with an uncapped mod limit, but there is a big change around the 2-3 area, but when you get to -1/5, each moderation becomes less of a change. Not really practical though. Wouldn't want to hurt /. servers.
Kind of like one of those equations in Neural nets. I can't remember it exactly, I think it was something like 1/(e^(-t)*log(t)) that causes more change when the votes are close, and less when it's near the extremes, since with a very high/low buying price, you change people's confidence in that decision.
I always thought it would be interesting to try it on
Disclaimers: My PhD advisor was a member of JASON and one of my girlfriends in college was there at the very beginning of the Iowa Electronic Market.
In early June, Bush enjoyed a commanding lead over Kerry. Since then, Bush's shares have dipped 7 percent, from 55 cents to 51 cents on Tuesday afternoon. Over the same period, Kerry's shares have appreciated 7 percent, from 45.5 cents to 49 cents.
So who has the controlling shares for each candidate?
There are some other electronic markets My favorite are tradesports.com and intrade.com, both of which trade a variety of political and econonomic futures contracts.
I'm currently wagering that the google IPO will not reach $105.
Amazing magic tricks
Hello people... this is not 1999. We're talking about a company whose only product is online advertising - subtle online advertising at that. You're talking about an Internet search engine having a larger market cap than a lot of Dow30 components who actually have shipping product. What makes google so valuable? What is google going to do for money (besides take it from investors) the next time the Internet advertising market evaporates? What dependencies has google created that will keep revenue flowing? How has google diversified to guard against volatility in the Internet markets?
It's time to start thinknig RATIONALLY about google. Everyone has become so enamored with google that they are overlooking the somewhat minor point that they have zero fundamentals.
Here a similar program is considered something that would never work.
Yet the messages on this topic consider it system for accuratly predicting how things will go.
Where on earth are getting "help the little investor"? Google isn't helping the little investor anymore than anyone else is. What you pay for those 5 minimum shares is the market price. That is the same damn price you will pay on etrade the next day. (where you can buy 1 share if you like). And the fact that lots of people share your belief only suggests to me that the price will be inflated because they think they will be "getting a deal." If they wanted to help the little guy (and not themselves) they would offer the shares at the price wall street would've normally paid for them to the investor with a maximum number of shares that can be purchased (like 50). But that is not what they are doing, they are helping themselves, but pocketing the profits wall street usually gets on the road from the IPO price to the market price (which is often, but not always, higher).
Laboratree - Scientific collaboration based on OpenSocial.
Not that they should. Nothing is known about the direction the stock will take post-IPO. It could easily drop 25-50% in the first few days. The market for technical issues is negative right now.
There are different approaches to timing entry into a stock. Technical analysis assumes that all information about a stock is factored into the price. Indicators based on prior price history are used to determine trend. Proponents of the method say the price movement is a manifestation of crowd behavior.
Fundamental analysts study the companies financials, such as trends in earnings, price to sales ratio, profit margin, return on equity, etc.
Another approach is to find companies that are likely to profit from long term major trends in technology and/or society.
As for the Google IPO, there is no stock history on which to base a technical analysis. One might argue whether the fundamentals make the investment worthwhile, and the third approach takes a very long term view, so there is no good reason to jump on board immediately.
Lastly, if you are considering buying this IPO in speculation of it going up significantly in the next few days, have the mental fortitude to set a stop loss below your entry point and get the hell out if it drops to that point, or you stand to lose a lot of money, fast. This is no market for amateurs.
Ask me about my vow of silence!
Someone buying 5 shares is not a speculator. That person would be an investor. Investors are intrested in the long term. Hoping that by lending a company a sum of money now that company can use that money to increase its business thereby increase profits and in the future repay the loan with a nice little interest (dividends). True investment is more like a loan that doesn't have to be paid back unless you make a profit.
Speculation is just hoping that someone else will want to buy your shares for more then you have bought them. It has no intrest in the future of the company.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
MIT Technology Review's futures trading marketplace, Innovation Futures, has a comparable Google IPO Watch, predicting when Google will go public, what its market cap will be, and how that will compare to Yahoo!'s market cap. Traders on Innovation Futures are also predicting a cap of $30-35B, but it is by no means a majority. A significant number are still holding on to $25-30B. The site also has a number of other markets dealing with VC and IPOs, Economy and Growth, and trends in technology
They are trying to sell a non-controlling 10% of their business for 3B$ while they have given away the same amount, AND 'FORGOT' THAT THEY DID.
Playing fast and loose with other peoples money is a recipe for disaster. Anyone buying GOOG shares should know that his money goes directly into unclean hands.
I'm wondering how many will get burned on this scam.
How much you may appreciate Google's search service now, this is a different ball game and as an outsider you have no idea how it's played. Stay away. My uninvested 2ct.
Flourescent (adj): smelling like ground wheat.
Shipping, storage, handling, packaging all costs heaps and heaps of money and there really are no more ways to save. But what if you don't need any of that? Google doesn't have to deal with dockworkers strikes, faulty ingredients, recalls, fluctuating material prices, outlawing of certain materials. Nothing. Just make a product and sell sell sell.
Airline companies are going bankrupt while doing real things as you would put it. A single accident killed the concorde, rising oilprices are making airline companies grown and victims of "accidents" are starting to demand massive damages as they learn the accidents happen because of cut downs in maintenance.
So where do you put your money? In clean simple google? Or one of the messy real industries?
The only problem with buying google shares is that is to late. Best time to invest is at the start. Not when the company is already long established.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
It's great that they're trying, but there is still a really big stretch of hurdles for the small investor. An AP reporter tried to do just this, and found out that most of the brokerage firms require a very large (~$50000) initial investment to open an account.
Here's the link.
So when someone places a large bet on the next terrorist attack (or terror alert level rising) is a background check required?
;)
A market liket that sounds like a good idea, but insider trading could become a widespread problem
Simple math, it doesn't take a professional. You seemed to have forgottej to mention that your "winner" person Y had to have someone brand new enter new REAL cash into the market in order for Y to "cash out". That real cash did not come from the market as it stood a second before the cashout, it had to come from outside the market and be introduced into it for the cashout to take place (very broadly speaking but it's true). You forgot that in your details. It's pyramidal, real cash has to be constantly pumped in to it above and beyond the tangible accumulated wealth produced by the goods represented by the actual corporations Service money is a dilution of wealth in the aggregate, hence the name "service". Wealth is a function of ownership of the land, what can be grown or extracted in some manner or form from the land, or what can be manufactured from any combination of the last two. Everything else is a dilution and constitutes wealth production re-arrangement, not wealth production.. If the market wasn't pyramidal, theoretically you could freeze the market one day, at whatever bid price was current,and everyone could do this "cashout" thing, and that's not possible, is it? In fact it might be *at best* a few pennies on the buck in reality, isn't it, right now?
If what you said was true, the crash of 29-34 would have resulted in "all winners", there wouldn't have been a crash at all, we would have had a perpetual boom cycle. We didn't,did we?
Here's the proof. When I was a kid, you could literally go into the five and dime (a lot of people have never even seen such a store, I think they are rare now) and buy a nice bundle of real old great depression era stocks as a novelty for one dime, less than a penny apiece. Very pretty, all curleycue scrolled edges, very impressive looking. They probably represented quite a lot of lost money for a lot of investors. They actually did gamble and lose, millions of them, there were only a few big winners.
No, I won't repeat what you said,because it's not true, I'll say it's an elaborate ponzi scheme that only exists by inducing new suckers into it every friday afternoon. It's not much different from a huge MLM where you have to get people "under you" to actually support you so you don't have to actually produce any true wealth, with the difference being there are much less real products involved than most MLMs which are scussy enough as they are. Theoretical paper contracts as in the article are not much in the way of a real tangible product, they do nothing to help the over all economy, all they do is re-arrange what wealth exists, they produce *nothing*, and the only what it is possible is by shilling newsuckers into it all the time.
Originally how it was set up it was much closer to being a real "investment", with more at least semi honest quantifiable risk data to use for your assessment if you should invest or not. It is not that way now, or are you forgetting the recent dot bomb phenomenon?
I humbly beg to disagree :
/.er knows about their technology and business. We believe that Google has a solid business that will continue to grow profitably. Great! Even if we're right on this, will Google grow enough to justify the 30Bn valuation? The answer is : we don't have a clue.
products (or services) are generated as a direct result of investors buying stock
This is only true at the IPO or when any newly created stock is issued on the market. After the stock is issued, the company doesn't see a dime on transactions between investors. I'm too lazy to search for it but it once read that the money actually raised on stock market represented a tiny fraction of the transactions volume (far less than 1%). In other words, when 1 billion is exchanged on the market, only less than 10 millions actually go to companies. Of course, these exchanges are supposed to provide the liquidity that the initial investors relied on when they made their initial investment (still with me). Yet, this is debatable and saying that products are developped as a direct result of investors buying stock is abusive.
and more importantly, it is not a zero sum game
I call logical fallacy here. You're considering the stock transaction together with the company's value creation to determine the sum of the game. The stock transaction itself is in effect a zero-sum game (actually a negative-sum game because of brokers' fees and other transactions costs). In your exemple, the fact that person Y makes a profit has nothing to do with the transaction itself. If the transaction had not taken place, that profit would still had been there, but for person X, the original owner of the stock. The transaction has only transferred value from person X to person Y, no value has been created by the transaction.
There's also one very important thing you did not mention in your post. That is information asymmetry. In most cases, an individual investor knows far less than banks professionals about what makes the value of a given stock. Taking Google for example, any
Repeat after me: the stock market is *not* gambling.
How do you define gambling? For me, it's a money transaction which is useless, random and zero-sum. I have explained why I think buying on the stock market is 99%+ useless and it's also very close to random for an individual investor. If you take into account the transactions fees, it looks very similar to slot machines with their 95% redistribution rates. But you also have to consider the information asymmetry.
The bottom line is: for an individual investor, buying on the stock market is VERY similar to playing a rigged slot machine.
It would be nice to be sure of anything the way some people are of everything.
Ladbroke's sportsbook. (I always hit this one and ignore the Gallup/Roper bullcrap!)
JMR
Try e-gold - (contact me). I'm NOT e-
But, by "adding a level of indirection", as you might say, you're "gambling" on people's reaction to how the stock will perform.
Gambling on the random roll of a die or on the semi-predictable reaction of people is still gambling. As long as there is a random element, it's gambling. Take boxing, in which years of preparation of a very accessible human precede the fight, which is far less random than racing horses for example. Yet, nobody is likely to argue that betting on the outcome of a boxing match is not gambling.
In any event, it's all immaterial. The key observation here is that this gambling or non-gambling results in very large financial gains for people who are not contributing to the material wealth of the nation in any way whatsoever, except as consumers. The normal term for organisms that do that is "parasite", and that's what these gamblers or speculators are.
Admittedly, 5% or so of market trading actually loosens up capital which productive companies use to underpin their manufacturing and generate real wealth, and that's good. But the other 95% is purely parasitic.
It would be quite easy to justify even the role of pure unadulterated parasitism by requiring a percentage of trading profits to automatically enter the coffers of the company being traded. That would be anathema though to the traders. The idea that to make money you should actually create something lost its hold in America a long time ago.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
Repeat after me: the stock market is *not* gambling.
The outcome is unpredictable in part, like in boxing, and you are betting on the outcome. That's called gambling.
So after the company and all the money invested in it goes down the drain they'll rename the company "Gurgle"...
Its sort of old school commie style rhetoric, isn't it? Just replace "The State" with "the Market"
That's a lot of ooos.
When someone smarter then you is making very obvious mistakes, then its likely that that person is trying to trick you.
Google is pretty darn smart.
I don't think there will be the next internet bust, but I agree with you that they're very vulnerable.
I'd say these are most likely:
1) Drop in ad revenue (caused by search engine spammers and ad fraud)
2) A new search technology superior to Google's
3) New clustering technology (that can search more pages or store a more current Web cache)
My feeling is that Google share price will drop to US$80 within a month.
The other day I saw this new search engine (it was written about at news.com) that had great search results. I don't find Google's search results very smart - it's just that they store a lot of them on their cluster file system.
For volatile stocks, market specialists see stop loss orders as an easy way to clean out investors. Drop the price a little, pick up some easy stock, bring the price back up.
Just last night I was browsing the Foresight Exchange, one of the oldest trading floors for betting fake money on real world events. They've nothing related to Google right now, but you can speculate on claims from the year of the first human Mars landing to the likelihood of fangs and tails becoming fashionable body modifications by 2010.
They provide an incentive for people to buy stock in a company initially. Face it, very few people are going to buy stock in a company (and give that company working capital to grow/expand) if the people are going to be perpetually stuck with a stock certificate that they can't do anything with.
While you're right that the stock market doesn't produce any tangible goods, it provides the very important function of providing an "aftermarket" for stocks after the company initially sells them. Without such an aftermarket, nobody would buy stocks and companies would not be able to raise money from investors and company growth would be limited. Limited company growth leads to limited growth in the economy.
The stock market does effect the economy in very real ways.
...google has to deal with shipping and dockworker strikes and the price of oil (45$ and one major mideast wildcard incident away from 100$) and various other factors that tangible industries have to deal with, because when you get down to it, these places that directly are affected are the ones either buying ads on google or buying search technology from google. It's only one or two steps away in the vast majority of cases, which is pretty darn close. Two steps away are service industries who in turn are dependent on tangible industries which are the one step away part of the mix. Every single penny they make is dependent on the "other" econonmy, even investor money once they start selling shares. It's connected, there's no such thing as just an "ad" that isn't anything more than a reference to a tangible product or a reference to a service for a tangible product, if you follow the economic links around. And those tangible products now are v-e-r-y iffy, mostly because of grossly over inflated various international fiat currencies, and the threats of much more widespread war and what might happen to oil in general, which next to water is the most important commodity we have that fuels the world.
Where to put the money? Directly into real stuff that represent necessities, things that people just can-not do without. And warstuffs unfortunately, war is always a growth industry given human nature and greed and mass stupidity..
The GOOGLE_LIN and GOOGLE_WTA markets show why efficient markets need to allow inventors to go short, not just long. The two futures in the GOOGLE_LIN market are complementary: On March 31, 2005, it is certain that IPO_DN + IPO_UP = 1. So if IPO_DN + IPO_UP < 1, you can make guaranteed money by buying equal numbers of shares of both futures. But right now IPO_DN + IPO_UP = 1.15, so you could make guaranteed money by shorting equal numbers of shares of the two futures. Shorting isn't allowed, unfortunately. All we know is that the fools outnumber the wise, but we don't know who is which.
Likewise the GOOGLE_WTA market is designed so that IPO_0-20 + IPO_20-25 + IPO_25-30 + IP0_30-35 + IPO_35-40 + IPO_40-45 + IPO_45-50 + IPO_g50 = 1 on March 31, 2005. At present the sum is 1.242, so again the market on the whole is over bought. (Which, come to think of it, is likely to be the fate of the Google shares themselves.)
30 - 35 Billion for Google. In my opinion that's insane, but I still think it will pop even after the auction has ended. Consider it this way, it seems pretty clear that google has technology superior to Yahoo. Yahoo gets credit for being the first hugely successful portal (i know there have been others, but yahoo's pretty much the last one at the party). Google, while a little late to the game, has definitely proved to be the master of search thus far (again, other search technologies are in production, but nothing can currently match googles breadth of coverage). Yahoo is currently trading as something ridiculous like 105 p/e. That's a crazy price and it won't last forever, but that doesn't mean that google's market pricing won't be equally or more irrational than yahoo's. Google is the 'it' company right now and no one is going to argue that they don't have a boat-load of talent and brains in their company. Their approach is much more scientific and well thought out than any of the other internet players and that superiority will be rewarded by the market giving the company an even loftier p/e than yahoo currently enjoys. Despite their recent troubles with this over publicized IPO, their technology has still been successful enough to reach the masses. In addition, the market needs a wakeup call. It needs something to bring some positive sentiment back to the public's eye. I think google will do this. Oh, and they're profitable, something that all of the big internet companies were not when they first when public. AMZN, YHOO, EBAY, how much money did they chew through before they were in the black. This isn't 1999 anymore, but that doesn't mean we've all learned our lessons.
Game theory, heh ?
Every competitor they have or used to have either has great technology and horrible marketing, or great marketing and horrible technology.
There has to be somebody somewhere in the world that can put both great marketing AND great technology together to give Google a run for their money. Then people might start to see them in a reasonable light.
Predictive markets is actually a pretty interesting passtime. Take a look at Newsfutures, which is currently indicating that Google has a 27% chance of being worth at least $25 billion It's a great game, and doesn't use real money. (and for them, it's a great market research tool)
...there are obvious exceptions to the rule. If we can accept that, I'll give you this. You are correct in that "new and improved" companies need the initial startup capital. after that, they don't get much more. People nowadays buy stocks in the expectation of selling them primarily to make money, not to get steady decent dividends from a company that makes money. That's why the market is so volatile and over valued right now. Even with the corrections after 99 and 2000 and 2001, it is still over valued to a tremendous degree, if you compare what current ask bid and ask prices are compared to what the company is actually worth. Like I said, do an extrapolation, theoretically freeze it right this second. Now how much of the total todays average exactly between bid and ask of all the stocks in existence could be "cashed out", really turned into cash without just running printing presses day and night? Personally I doubt it would come close to cracking medium single digits percentage wise, although I admit there's very little hard numbers that aare reliable to look at.
Stocks no longer primarily represent a companys worth, or even come close to what it might be actually worth even years from now, and it's because it's run as a shilled pyramid scheme. And people primarily buy stock hopong someone else will buy them from them, based on the principle the new buyer tends to think someone else will buy them from them even higher, ad absurdium.
It is irrational and illogical and doesn't come close to giving a true estimation of any economies real worth. You cannot make an economy grow merely buy selling and reselling and re-re-re-selling the same goods up and up and up,which is how the market is run now, economies only get better by producers actually producing new wealth, not be rearranging or by re selling old wealth over and over and over again. If that was possible, two people could sit in a room and sell each other the same widget or widget service back and forth all night, each step of the way adding ten percent say, and by morning be multi trillionaires. It obviously doesn't and can't work on a micro scale like that, so NO WAY will it ever work on a macro scale, with a maco scale merely being a huge amalgamation of miulions of micro scale examples. The advanced market shills and skimmers go to great lengths to maintain the illusion that it's possible, and it's this illusion, that plays on greed and the something for nothing attitude that induce into people that sucks in the new cash that is the only way all the non producers can keep taking profits.
It's just advanced magic beans or the cow. An old fairy tale meant to tell a lesson in basic reality. The illusion can last for a certain term, and the skimmers can surely get a lot of cows transferred to them for their magic beans, but in the end it crashes, they have to wait a bit to restart up the scam again. Really big ones take two generations for the huge crash, it takes that long for societal memory to evaporate and get replaced with the famous "irrational exuberance", which is just another way of saying "wow, these magic beans are worth so much more than my cow, I think I'll swap!".
Define rational please....
For instance, is it rational to buy a share of google for $300, if there is a 90% chance that it will be going for $400 tomorrow? I'd say yes, regardless of their fundamentals.
is the market price."
Wrong! What you pay for those 5 minimum shares is what the underwriters decide to offer them for. They can take a hint from the "pre auction" but can price it at whatever they want to.
"That is the same damn price you will pay on etrade the next day." This is the time you can buy at "market price" (at that given time & quanity). If anyone KNEW (market price) we wouldn't need a market! My guess is we see it tank upon close.
09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
The price will go up, insiders will dump their stock; the price will go down. Then in about six months there will be a half-dozen more ex-dot-com'ers on World Poker Tour. Six months after that, three new B&B's will be opened up in the New England area by some more ex-Google employees. Oh and Aerosmith will play at one of their birthday parties. A year from now, nobody will care and the stock will be at $11.
Let's recall the concept of the market. Shareholders buy stock issued from the company, and own a piece of the company, representing its value. The cash earned from the sale is used within the business in the meantime. If the company performs well, the share value rises over a period of years. Minute-to-minute and month-to-month fluctuations are a result of speculative activity, and are useful only at point-of-sale; if you want the best price, you buy slightly undervalued, and sell slightly overvalued. That you can buy the shares of a publically held company at any time reflects this fact of speculation; however, once the shares are issued the company does not further benefit from stock activity. The only thing that changes is its value as the total of all shares. Buybacks and dividends are goodwill on the part of large, mature companies, and help them to maintain their value in the long-term, which in turn helps them to cut costs by having a good credit rating to refinance with.
The market is little different now from 50 or 100 years ago. People will irrationally bid stocks up to P/E ratios of 10 or 50 or 100 if the stock is deemed "hot." This means, as an individual investor, that you should ignore it. That is the work of speculation, again, and it is the reason WHY markets crash. They crash because too many stocks get "hot" and get dumped. At the peak, some MORON decides to buy overvalued shares, and he loses his money. That doesn't mean that the concept of investing in the market, however, is bunk. There are many, many stocks which do not get swept up in such a madness. The key is to ignore the market itself and focus on the business; this is how Warren Buffett and others, such as my dad, have managed to consistently beat the indexes year after year.
My cat's breath smells like cat-food.
I'm no longer dealing with Acs who hit and run and start a reply with an insult. I'll give you one short reply, that's it.
Basically, you are giving the theory of stock markets,not the bulk of todays practice, and also completely ignoring all the paper products based on it that have little to do with investing in a company, things that are totally pure gambling, like the original topic of the article. Unless you consider hedges and derivatives to be actual products of any societal value beyond institutionalised fiscal irresponsibility.
There's a difference between scamming money and producing wealth, and if you think I approve of scamming money, you're wrong, I think it's abhorrent, no matter the scale. I know some folks think it's an admirable trait, to be able to scam tons of loot, I think it's no different from sticking up a package store.
Most of the stock market is a rip, you'll never hear a broker advise anything but buying or selling a stock, even when it's not in the clients best interest to advise otherwise.
Get an account if you want to continue, I'm going back to one reply per Ac only, hit and runs are of no interest to me.
Good deal for your dad, he understands the difference between long term investing in a company and speculative trading. I am against speculative trading as it does nothing but suck in innocent folks money and gives it to people who do little work for a lot of other peoples cash. The shills and snakeoil salespeople fall into that category, which is most of them in the newsletters and in broadcast. I think they are parasites more than businessmen, and I'd put the big brokerage houses in the same description, and I make no bones over my contempt for them and their advanced scammery. What you call morons are people who have been induced into it for the most part, promised magic beans for their cow, just in a slick sophisticated manner. Advanced buncoism is stillbuncosim, the scale doesn't matter, although many will try to justifyu it, they cannot change the facts. They get advised to speculate, although it's always called "investing"., same as millions get encouraged to get credit way beyond their means until it becomes a driving societal force, even encouraged by our central bank and their subsidieries in every neighborhood. They don't teach or encourage economic rationality or the differences between money and wealth anymore, they teach snakeoil trading and credit and discourage honest production in favor of middleman skimming.
I think it *sucks*. We need wall street reform badly, it's broken and out of control and will lead to something worse than '29 to '45.
You may not have read it here first, but you read it again anyway. Hope you enjoy eating your valuable stocks some time.
Ever heard of dividends, Mr. "simple math"? Companies do make profits, and distribute them to shareholders in the form of cold, hard cash.
This makes the stock market far from the pyramid scheme you describe. In the example above, person Y might buy the security for less than the price that X paid, and X might still be perfectly happy, because X earned a tidy dividend stream while owning the stock over the years. The opportunity to participate in profit-making through dividends is the real, tangible value of stock. It's why stock isn't just a piece of pretty paper. For companies that don't currently pay dividends, the promise of future dividends underlies the current stocks' prices.
Squirreling away a small amount of money, frequently, in a market-weighted group of common stocks over the course of a lifetime has been the surest way to wealth during the twentieth century. While some caution is in order, the fact that people taking massive risks occasionally get massively burned is no reason to keep your money in your mattress. Even cash is risky; inflation eats it over time much more surely than the stock market.
So will this go down along with http://www.redlined.org.uk/images/temp/missing_goo gle_event2.jpg as another day in the google history :)
Repeat after me: the stock market REALLY is gambling.
You bet that you have better information than other people, but you can never be sure. Folks betting on hors races also think they know better then the other betting guys.
Even so-called safe instruments can make an investor loose money. How? Buy government bonds which give 4% yield today. If the government rises the rate next month to 5%, your bonds just LOST THEIR VALUE.
Fight Frist Psoting!
Browse Slashdot with 'Newest First'!
of course I have heard of dividends. And, being careful to point out I was generally speaking, most people buy stocks in the expectation of re selling them for a higher price to someone who in turn wants to sell them for a higher price, and so on, which requires ever increasing amounts of new cash being introduced for the same stock, well above and beyond any rational expectations of the true earning of your average company. And by far most trading is centered around that activity, and that leads to a perpetual artifically created boom/bust cycle, rather than steady growth, which could theoretically have a more dividends scenario for people.
Now you can dispute these two points, but I think P and Es prove otherwise taken as both an aggregate and as an average in the market in general. I would wish that it was the opposite, that stocks were way more bought for the long haul and for dividend income, but I just don't think that's the case, most trading is done for speculative purposes, not for accruing long term ownership leading to dividends. And don't get me wrong. I am not totally against the stock market in it's theory or entirety, I just think it needs a lot of reform.
Much as this is interesting, it seems like a loophole in the anti-gambling laws.
Could someone start a market that trades contracts on who will win the next football game?
lets just say i have sources: but think tivo and linksys: google is stealing opensource software because they use it in the search appliance and give no source to it.
GPL theft, and a day 1 market cap of 27BN, bigger than Sun, bigger than General Motors, Bigger than AT&T. HAHAHAHAHAH.
HAHAHAHAHAH.
anyone who in vests in a GPL violating arrogant company that sell adverts (and bans ammo and gun makers from advertising but allows PORN) is not thinking.