Were things 12% better, or different, 1 month ago? I’m dubious.
I’ve a confession to make… the stock market makes no sense to me.
Why? Let me flip the questions… why would it make sense?
I buy “shares” in a company. I’m now an “owner”. Except I have no control. Other people, inside and outside the company, have more information than I do. I can vote, but my vote is meaningless, as compared to, say some large pension fund that bought a big hunk.
The “value” of my holding is dependent on what other people think of the company. But what they think is based on what they think other people will think. And the weird self-dependent circle continues on and on.
Our nation has made serious financial mistakes. These are known numbers, and have been known for ages. So on Monday, after a ratings agency finally says “uh oh” the market tanks. Then it bounces up and down in wild swings, when essentially the macro picture hasn’t changed a lick. It makes no SENSE!
It’s uninformed speculation on what other people, the mob, will think.
How would I change it? I’d have stock value be mathematically tied to the book value of the company. Book value being derived from assets, cash on hand, and likely receivables and other measurable, unmanipulatible values.
I would still permit speculation, but I would tax it heavily. Ownership above, I probably wouldn’t tax at all. Nor would I tax the accumulation of value, and the sharing of value (dividends) at all.
You would still have to guess about company performance, but you wouldn’t be guessing what other people would think of it.
Speculation always ends badly.