Rocket Bomber - article - business - commentary - Out of Stock

Do you know what I hate most?
[this week, in this particular instance]

- Business press reporting the stock price of a company like it has anything to do with the business. Are you kidding me? – in a world where one well-placed skeevy slimeball can manipulate the generally-misplaced-but-widespread faith in ‘stocks’ to scam $65 Billion out of intelligent, conservative investors – OK, you tell me, is the stock market little more than a lottery? And a bet that’s fixed in favor of the house?

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Sure, if you want to invest in a company, invest. Please do so, our economy needs it.

But buying stock is not an investment. A share in a company is just a token, a marker: the actual investment was years ago, with the IPO (or before) and now you’re just paying someone else for their stake – you don’t actually put money into the company, you’re just covering someone else’s bet.

All of the gains made in stocks [capital gains which are for some reason not taxable as regular income — even though capital losses are fully deductable] are little more than lottery winnings, pure gravy – & do nothing for the economy (the money made exchanging stocks do not go back the companies represented by them)

— and smart investments, long term capital investments that build infrastructure and create jobs, take decades to pay off, so the so-called ‘capital gains’ exception is meaningless and only encourage short-term, short-sighted investment.

I don’t understand the ‘capital gains’ exemption. I really, really don’t — and not from a political position, I can’t wrap my brain around it logically. Indeed, investment is never taxed. If you take money and pour it into research and facilities and payroll and product development and efficiencies in manufacturing and the supply-chain: you won’t be taxed for a single dollar of money you put into the business. Indeed, if you lose money, your tax burden goes down

Investors and Businesess are only taxed when they take money out, instead of reinvesting it.

Profits are taxed, not investment.

Large portions of certain politcal arguments about taxation and the economy are based on false premises: if corporations re-invested and hired new staff and created new product lines and put large sums into research and development: there would be no profits to tax.

We only tax the money individuals and corporations attempt to take out of the economy. There are no laws or rules saying you can’t cash out – but after taking advantage of the system for years you can’t suddenly complain that there’s an exit fee when you want to stop playing the game.

You object to my characterization of business as a game?

So:

• Did you use dollars, or another globally accepted currency, in you business? The alternative is barter; theoretically possible buy unlikely. Money is a fiction.
• Were you incorporated? Corporations are a fiction, a handy fiction that provides legal cover for owners, investors, and employees alike. Corporations are not people, even though they are treated as such under the law [notably in a Supreme Court decision I hope gets overturned someday — someday soon]
• Did you sell stock? Are you publically traded? More fiction: there is no way for a stockholder to go to the company and get a payment. You can only sell your share to someone else in a predetermined, closed market. Your share is worthless, unless you can sell it on the same exchange where you bought it — an exchange which is privately owned and has no obligation to the public whatsoever. If Nasdaq or the NYSE folded tomorrow, then your stocks go with them. …Unless you hold an actual stock certificate. When was the last time you even saw a stock certificate, let alone owned one?

The stock market is no more legitimate than the keno game at a casino – valid so long as the house plays along, but not a bedrock on which we should found our economy. It’s not money that is invested, it’s the ghost of old money traded back and forth and back and forth for decades. It might seem important, but stocks and stock prices are the least important thing we could talk about when it comes to business

Stock prices are just an opinion poll – kind of like using the votes for homecoming king/queen as a means of determining GPA, or using the ‘most likely etc’ polls posted in a yearbook to determine college placement.

Serious analysis [and serious analysts] should ignore the stock price.

The company stands or fails on it’s own merits; the stock price is nice bit of trivia but has nothing to do with how the company is run, or what it’s actual profit potential might be.