Yes, that is what I was saying. Tabloid press does have a societal value, it provides entertainment to its readers.
bogle on speculation vs investing
- Thread starter alphav6O3q
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Yes, that is what I was saying. Tabloid press does have a societal value, it provides entertainment to its readers.
You must also remember that "gambling" which is also an opportunity to speculate is highly regulated(illegal in many scenarios) and is not that big a drain on the US economy.
Pot/cocaine/drug industry also has a value- provide delusions..But why is that not legal?
The term that may be important here is "social" value. Oppurtunity to speculate may have some value to an individual, but to the society in large, there is no value. Most people will loose.
The term that may be important here is "social" value. Oppurtunity to speculate may have some value to an individual, but to the society in large, there is no value. Most people will loose.
I love this argument, always presented without any proof. Plenty of traders take the other side of the trade when the average-joe investors are panicking, therefore these traders are actually reducing volatility.
Successful investors are still successful just like 50 years ago, there might be more price spikes but as investors, only the long term view should count. People like to have someone to blame.
There is a huge difference between investing and trading. One cannot survive without the other. Who are all the investors going to sell to when the market becomes fairly valued? Investing is for people with jobs. Trading is a job. Hold time has nothing to do with anything. If an investor buys at a pe of 13 with the idea that the fair price should be pe 20 and that happens in one day, what is he supposed to do? Hold on to it? If a trader buys gold because it is going up and it keeps going up for years must he sell it because he's "just a trader"?
No investor that I ever heard of consistently beat the market. Traders do it all the time.
The difference is, the investor owns McDonalds, the trader owns a hamburger stand.
What kind of central planning bullshit are you preaching now? That we should shut down all hamburger stands because a lot of them are fly by night operations, and everybody should just buy McDonalds hamburgers because that would make the world a more stable place?
Where do you kids come up with this crap? Thank God I was educated before they invented the Department of Education.
No investor that I ever heard of consistently beat the market. Traders do it all the time.
The difference is, the investor owns McDonalds, the trader owns a hamburger stand.
What kind of central planning bullshit are you preaching now? That we should shut down all hamburger stands because a lot of them are fly by night operations, and everybody should just buy McDonalds hamburgers because that would make the world a more stable place?
Where do you kids come up with this crap? Thank God I was educated before they invented the Department of Education.
didn't John Bogle invent the mutual funds? it makes sense he's defending his turf for all the fees Vanguard has collected all these years. ETF's are eating away his lunch I think.
trading isn't a drain, but too much trading is
When all NYC becomes a big casino whose only income is skimming money from productive producers, and there are no productive producers left, then we have too much trading.
No matter how you slice it, trading does not produce anything, it just divies up what has already been produced and redistributes it.
It may be a condition, but I don't really think it's a problem. I mean it's not like you will have to shut traders down because there's no more money to be made.
But it's a big problem when the little guy has to fork over too much of his money to the Federal Government to save the traders.
So to retierate, when the banks become nothing better than scum sucking traders then it would be like living in a world governed by ET.
a)trading/investing as a whole industry at present in my opinion doesnt produce any "societal value". Read previous post by "sle". "Oppurtunity to speculate" is a not a societal value. So a lot of very smart/motivated people are essentially working in an area which is not producing any societal value. If these people were not trying to outrun each other(as in the current scenario) they may have been gainfully employed in other industries which would have produced "societal value" and would have thus improved the economy. Think of it something like an oppurtunity cost. An economy improves when there is more circulation of money. Circulation of money increases when the "net" societal value produced by the individuals in an economy increases. ["societal value" I guess is a term I created intuitively. I am not sure it exists in any textbook, but I hope you understand what I mean by it]
b)short term trading is emotional. When there is growth in the economy, the stock market would usually increase more than is justified by the growth in the economy. Similarly when the growth is stunted/there are political problems, short term trading decrease the stock market value by more than is justified by the information available. If short term trading were banned, these wide oscillations in the stock market index or any other index would be much lower. In other words volatility would be lower. More the volatility lower the number of investors willing to put their money at risk. So short term trading causes a decrease in the amount of money that would be otherwise invested. Lower the amount of money invested in the right places, lower is the growth in the economy. This is also something like an opportunity cost.
c)short term trading as a whole and its associated accessories extracts fees from its clients without providing any value in return. So clients have less money to spend in other activities. Because typically the number of people who are extracting fees from their clients is small, their wealth grows immensely. This results in a concentration of money in the hands of a few. Because wealthy people will generally save a larger fraction of their wealth than people with lesser wealth, there will be less circulation of money.
As always this is just a discussion. I am not trying to write a scientific paper. I dont have evidence for what I speak. Most of these are intuitive arguments deriving from what I have read elsewhere.