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#1
10-10-2007, 02:50 PM
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some weird moral questions...
Real basic but I'm in a rush...
Say you sell a stock, now what happens when you sell a stock it means that someone else is actually buying it right? It's an exchange. Now say you're stock is losing value and through some homework you learn that chances are if you hold onto in you're going to lose $$. If you're right, and you sell it, chances are whoever is buying it is going to lose $$. The situation above is similar to poker. Now the thing that's been bothering me about playing is that I am taking $$ from other people, that's it. I'm basing my income on the losses of others. The better they play, the worse for me, and vice versa. Now how is trading different? You're investing yea, but you are buying and selling peices of stock to other people. The whole point of selling is that you believe you have a losing stock and you want to sell it to somebody else before you lose any more money. You're gain, their loss. This is a pretty ridiculous post I know but I'd like to get some thoughts and elaborations. 
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#2
10-10-2007, 03:38 PM
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Re: some weird moral questions...
not true because unlike poker its not a zero sum game (or negative sum game). There are many reasons to sell other than you think the stock will drop. You could need the money for whatever reason, you could have different investment choices ect. Plus you could be wrong in your analysis. Even if you wernt wrong it doesnt really matter as the market works to allocate money where it is most needed in the conomy. You selling puts downward pressur eon the stock and though tin,y means less fudnign will go to that sector of the econmy in the future (hope thats rght).
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#3
10-10-2007, 06:45 PM
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Re: some weird moral questions...
[ QUOTE ]
You selling puts downward pressur eon the stock and though tin,y means less fudnign will go to that sector of the econmy in the future (hope thats rght). [/ QUOTE ] Not 100% sure what you mean by this but I'm pretty sure that your wrong. In general,the company doesn't care whether you sell their stock or not. They already made their money in the IPO, and you selling the stock at $50 or you selling the stock at $150 has no influence on the company what-so-ever. They have their money already made, you are just trading on the secondary market.
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#4
10-10-2007, 10:26 PM
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Re: some weird moral questions...
[ QUOTE ]
[ QUOTE ] You selling puts downward pressur eon the stock and though tin,y means less fudnign will go to that sector of the econmy in the future (hope thats rght). [/ QUOTE ] Not 100% sure what you mean by this but I'm pretty sure that your wrong. In general,the company doesn't care whether you sell their stock or not. They already made their money in the IPO, and you selling the stock at $50 or you selling the stock at $150 has no influence on the company what-so-ever. They have their money already made, you are just trading on the secondary market. [/ QUOTE ] I'm pretty sure that's not what he was getting at. But I wanted to point out that what you say is not entirely true either, there are lots of reasons for the company to care about their stock price even though there is no direct revenue link once its in a secondary market.
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#5
10-11-2007, 04:36 PM
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Re: some weird moral questions...
In poker, once the hand is played, you take a pot and move on.
The hand is gone forever. maybe you learn something, but otherwise, it has no relevance. In the market, the stock stays on the market for a long time. Perhaps you reasoned that the stock will be a loser in the next quarter, or next year, but whoever buys it doesn't care about the next year and thinks that in a longer time frame it will be a winner. You could both be right in this case, and both of you could profit if you are both right.
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#6
10-12-2007, 12:16 PM
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Re: some weird moral questions...
[ QUOTE ]
But I wanted to point out that what you say is not entirely true either, there are lots of reasons for the company to care about their stock price even though there is no direct revenue link once its in a secondary market. [/ QUOTE ] More specifically, companies are generally always issuing new shares in the form of equity compensation. Higher stock prices can therefore directly help companies' bottom line in the form of either lower cash outlay for compensation or less share dilution. On the other hand, cash-rich companies may sometimes prefer that their shares be undervalued, so that they can buy back shares and reduce their cost of capital.
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