The Stock Market

@Arkie69 (2156)
United States
December 31, 2008 11:28am CST
I don't know a lot about the stock market but I do know this. It is dirt stupid to have anything in the United States that cost so many people so much money in such a short time. Personally I think we would be a lot better off without the stock market. Investors could simply put their money in banks. That would give them a good steady increase and if the accounts were covered by FDIC there would be no chance of loosing a cent. That would put plenty of money in the banks the companies could borrow for expansion or cover their operating costs. I know there is a lot more to the stock market but this is basically the main danger of it. This would make our economy a lot more stable and we wouldn't keep having these crashes every few years.
2 people like this
6 responses
@bestboy19 (5481)
• United States
3 Jan 09
Considering the rate of return the banks are paying, you're not going to make much money by putting everything into banks. Where do you think the banks get their money? How do you think they can give us any interest on our savings? They can't do it with what we put in. Paying to one from what someone else gives is called a pyramid or a ponzi scheme and can get the banks into real trouble. The banks make their money mostly through investments in the stock market. They do make some money through interest paid on loans, but that alone wouldn't get their assets up to where they need to be to give all their customers a good return of their savings. Also, the bank has to have enough money to make loans. The first 10 years of working, I was able to save around seven thousand dollars. The first ten years in the stock market, I had around 40 thousand dollars. The stock market is a risky business, but banks can also be risky. There is no guarantee that either is totally secure. If you want to put your money only in banks, that's all right, but investing in the stock market is what keeps our economy running and always has. Even though it sometimes goes down, it never stays down.
@Arkie69 (2156)
• United States
3 Jan 09
Banks simply pay less on deposits than they get on loans. Very simple system but it works. I'm not talking about investment banks. I'm talking about the local bank where we have our checking and savings account. Investment banks taking hi risk gambles and loosing is a lot of our problem now. It's no pyramid or ponzi scheme. Banks are simply a retail business that buys money and sells it. They pay less than they sell it for. No different than any other retail business. Again I'm talking about your local banks. People try to talk a bunch into this that just isn't there. Our economy does not depend on the stock market. It's the other way around, the stock market depends on our economy. From October the 5th to closing yesterday the Dow had lost 1,280 points. This has nothing to do with the mess our economy is in. Our economy is crashing for the simple reason the average family had been forced to cut back on their spending. They no longer can afford all the junk they were buying. If you will look close you will see the ones that are going out of business or hurting the most are the ones that were dealing in the things we wanted but didn't really need. This trend is going to continue and get a lot worse before it starts getting any better. Art
@bestboy19 (5481)
• United States
4 Jan 09
And most of those people who can no longer pay for the junk they were buying, were paying for it with credit cards that the banks issued them. I still don't see that banks (even if they are savings and loans) are going to save us. You would have to get the majority of people to participate and you know that's not going to happen.
@guybrush (4660)
• Australia
31 Dec 08
I think playing the stock market is for very brave (stupid?) people, Arkie. All that panic and frantic running around, living with a computer welded to you so you can be checking every little minute ... it's definitely not for me. Maybe stuffing our worldly wealth in the mattress is the way to go in the future? Nothing wrong with good, old fashioned methods of saving, eh?
@Arkie69 (2156)
• United States
1 Jan 09
Boy you have that right. I wouldn't put up with that stuff for the money. I have never had a problem with using cash I have saved up when I go buy something. Very few things I have ever had to have "Right Now". We would all be a lot better off if we used the good old fashion methods of saving and paying cash. The way I see it if you can't afford to pay cash for something then you can't afford it.
1 person likes this
@guybrush (4660)
• Australia
1 Jan 09
Totally agree! There was no credit in 'my' day, so we saved up for the things we wanted. I think you appreciate them more when you've waited for them - and hooray - no interest payments!
@stealthy (8188)
• United States
31 Dec 08
The stock market allows individuals to own part of a company and has been one of the greatest wealth building "institutions" for the average person in the US and the world. The present crash was actually caused by the missguided idea expressed mostly by liberals that everyone should own a house whether they could afford one or not. This led the the subprime mortgage market where people were getting loans with no down payment, no job, etc. Eventually this caught up to the companies that had been persuaded to buy these loans and to the greedy ones who made them and sold the loans to more reputable companies. There were people with no jobs being allowed to buy over $300,000 houses with nothing down and with an adjustable rate that would increse soon and then these people couldn't understand why they couldn't make the payments, after all the liberals had told them it was there right to own a home whether they could afford it or not. This has hurt many responsible people who lived within their means, saved to buy a home and to invest and now have seen much of their saving wiped out by the market being dragged down by the subprime mortgage mess.
@Arkie69 (2156)
• United States
31 Dec 08
Your words; "Wiped out by the market". This is my point exactly. We don't need a market that will wipe out the wealth of the responsible people that lived withing their means. If you gamble and win everything is fine but if you loose not only you loose. A lot of others are hurt by your loss.
@stealthy (8188)
• United States
1 Jan 09
I said much of their savings wiped out not all and in many cases they still have a significantly larger amount than if they had just put it in a bank and drawn interest. I know this is true for me. I have been unemployed for almost 20 years and because I saved and invested when I was employed and after I became unemployed and lived off the dividends and interesf from my investments in the stock market which was much higher than I would have gotten from any bank interest, even after the recent downturn (witch mostly is still just paper losses that I expect to come back), my networth is several times that of the average person in the U.S.
@mariposaman (2967)
• Canada
31 Dec 08
You have a strange idea about how money works. Money is not backed by gold anymore, it is backed by economic activity, mostly the stock market. The stock market allows for distributed ownership of companies that you talk about. The ownership of a company is always a risk so people have to weigh risks against gain. Usually if you want a small return you put it in the bank. If you want a large return you can invest it in stocks and bonds, and with the chance of rewards there comes chance of loss. The latest recession happened because President Clinton required the banks to lend to minorities that normally would not have got a mortgage. These no assets, no job mortgage loans were also inflated beyond the value of the house. The old rules worked well but the new ones did not as it required so much load for so little house.
@Arkie69 (2156)
• United States
31 Dec 08
The stock market is nothing more than a high risk gamble put together by a bunch of greedy rich people hoping to make a huge profit. They could not care less about what it does to the working people. Inflation is what controls the value of our money. The prices, which translates into inflation is dropping and the dollar in gaining ground pretty fast. Gold never did back our money. What backed our money was cheap prices. The more goods your dollar will buy the greater the value of your dollar.
@Arkie69 (2156)
• United States
31 Dec 08
mariposaman You said, "If you want a large return you can invest in stocks and bonds,and with the chance of rewards there comes chance of loss". I don't know how others feel but I think future of this nation and the people is much too important to take any chances with it. That is exactly what these people are doing when they sell a bunch of stock or get the huge loans to expand their business that already isn't making enough profit for them. If I go out here and start a small business and I want to expand it I have no choice but use cash to expand it. The first thing a bank would tell me is it's not a good risk. If that applies to me then it should also apply to everyone else. People taking chances and loosing has put a lot of working people out of jobs in the past few months. It isn't right for them to gamble with the future of the people that way.
@spalladino (17922)
• United States
31 Dec 08
Taking a company public...selling shares in the open market...makes the shareholders part owners of the company and is a better financial choice than a loan because the company does not have to make monthly loan payments. Instead, the shareholders are paid yearly dividends out of any profit the company earns. If there are no profits, there are no dividends. The stock market is necessary for the buying and selling of these shares. The system is set up so that stocks can be bought and sold easily and quickly. While there is risk involved the benefits can be great if you buy a stock at a low price and the company does very well, increasing the price of the stock to interested buyers and increasing the value of the stock that you own. Putting your money in the bank is by all means the safest way to go but, if the stock market ceased to exist, millions of companies around the world would fail because they would be unable to raise needed funds. Despite what you may think now, the stock market does not crash every few years. It has ups and downs...and right now we are in a very down cycle...but our current problems didn't start with the stock market. It started with inflated property values in the real estate market and lending institutions that wrote adjustable loans to people who would not be able to repay them when the interest rates increased.
@spalladino (17922)
• United States
1 Jan 09
Going public and selling stock isn't just about expansion...sometimes it's about survival of the business due to financial stress or it's about staying competitive in a changing market. As far as credit goes, it's a necessary byproduct of inflation. With the high price of even used vehicles these days, no, I wouldn't want to wait until I've saved enough to buy one for cash once the loan for my truck is paid off. My husband and I use our credit cards sparingly...one is rarely used and is designated for emergency hurricane evacuations. I don't really agree that the availability of credit has lead to a huge inflation rate...I lean more towards the real estate boom and the fluctuations in the price of oil. I'm glad that what you have is yours. This is the last mortgage my husband and I will have because our plan was to retire in Florida and that's where we are. If it hadn't been for that real estate boom we wouldn't have been able to make the profit we did on the house we sold in Maryland which made it possible for us to have a small mortgage on our two homes here and to put some money in CDs. We didn't even consider the stock market...we're not into risks.
@vjayrao06 (107)
• India
2 Jan 09
Arkie69, you have brought forth a very useful issue for discussion.I do agree with some of your ideas, but pls don't blame the stockmarket altogether. Companies float shares so that you and I may become a partner in that company.It is a good idea to own shares in good companies.There is scope to earn more than what you earn by putting your money in a bank.of course you must chose sound companies.The trouble is not there. It is when I become greedy.I want to become rich quick.I buy today and wait for the share price to rise so that I can sell it and make profit.There are people who deal in shares on daily basis. One can study a company or an industry or trade and understand its future prospects and decide to buy shares for certain length of period.That generally does good.But speculation is what does the most harm.The many forecasts and studies of stockmarkets are mostly fallacious.People lose their money depending on these erroneous speculations. Another point I would like to add here is that the govenments in most cases are supportive of this speculation and the share market.The rise in the price of oil is caused mainly by speculation internationally.The rise in the essential commodities like rice,wheat,edible oils etc. are mostly due to speculators only. The govts can stop it but they don't and will not. There is an ubholy relationship between this big speculators and the ministers and Party leaders who run the govt.We in India have seen it and are still suffering the result of this unholy alliance. The number of people who deal in shares in our country, or for that matter in any country, is very small compared to the population.But the govt. and the newspapers---which too are owned by the big money---give undue importance to the sharemarket.You might have noticed how the govt reacts when there is a sharp fall in the share-market. They --- the ministers--- behave as if the heavens are falling.They dont care when the prices of essential goods show a sharp rise and make the commonman suffer.
@Arkie69 (2156)
• United States
2 Jan 09
Everyone I have ever met is at least a little greedy and want to get rich. It's the separating the good companies from the bad ones that's a lot of the problem. The reason oil went up so high is because OPEC has been raising their prices for a few years now trying to find the max people are willing to pay. At about $4 a gallon for gasoline they found it but what they didn't count on is the fact gasoline went so high people had to cut back on other things to be able to pay for fuel to get to work and back. This started a domino effect that made a complete circle right back to the oil companies. Everything else keeps going up and is keeping people from buying gasoline even at the cheaper price. When someone can get up on national TV and say a few words and the stock market takes a dive just because of what was said then the stock market is something we don't need. I know people that are involved in the stock market are quick to point out it's good features and defend it. However what they call a good profit from the sale of stock I call inflation and that is exactly what causes the crashes of our economy. The poor man is always the one to be hurt the most by this and I for one am sick and tired of. Art