Is Jeff Bezos (Amazon - WashingtonPoo blog) a charlatan?

[Dane_in_LA]

Originally Posted by James Bond 007

Well technically, I suppose you're right, I should have added a #4 to my second-to-last paragraph. Something like, 4) people making/losing money off of selling mature company's stock.

That's actually by far the major part of the stock transactions happening.

But the results of that are the same as what I described in the last paragraph - that is, "selling the stock at a profit ... In many cases they undoubtedly just roll the profits back into more stock. But other times they actually use the money to buy stuff - a new car, a new sofa, pay off debts, etc. All of those are good for the economy."

Those are two very different situations. Selling stock at a profit and purchasing other stock with the proceeds does very little to the economy. It's just figures moving from column A to column B. Nothing of actual value is added. Nobody gets employed until the money leaves the stock exchange.

Buying a new sofa, on the other hand, employs a sofa supply and delivery chain who take less-valuable sofa components and create a more-valuable sofa. That's tangible economy growth.

Performance helps shape expectations. If a company is performing really bad, investors aren't going to have very good expectations for it.

Well... The first thing you're told when buying stock is that the market can stay irrational longer than you can stay solvent. Look at Uber - they're burning investor money at a fantastic rate, they own practically nothing, yet they're (over)valued at $70 billion.

The actual market - goods and services - is increasingly being decoupled from the expectations market. Particularly as executives are now being compensated by stock and stock options. They have a logical interest in pumping up the stock price, whether it's based on sound fundamentals or good salesmanship.

Oh, and obviously just mentioning the IPO was wrong. IPO and follow-on offerings.

[James Bond 007]

That's actually by far the major part of the stock transactions happening.

Agreed and understood. I was just describing the mechanics of types of stock purchases.

Those are two very different situations. Selling stock at a profit and purchasing other stock with the proceeds does very little to the economy.

Again, yes. Perhaps I should have written, "In most cases they undoubtedly just roll the profits back into more stock." That said, even if only 1% of stock sales are cashed in and used to buy new stuff and contribute to the economy, given the huge volumes in the market, that 1% is still a big chunk of change. Also, the whole point of (wanting to see) rising stock values is to eventually cash it in and spend it. All that money in the market for people's 401K's and pensions is there so that retirees will have money to spend on food, vacations, etc., when they retire, for example, and that's a large % of the market.