On Monday, April 27, 2009 at 10:29:21 (-0400) Max Sawicky writes: >OK, I'll play devil's advocate. The stock market provides a liquid >secondary market for stock issues, thereby facilitating the ability of >firms to raise capital for new investment, among other misadventures.
Ok, this was basically what I had in mind, but I'm still confused: if most capital for businesses is not raised through stock offerings, then this liquidity is not really valuable, except to the extent that when a person first invests in newly-floated stock, the prospect of a liquid market would make the person more likely to invest, I suppose. But, then, this sort of obscures the economic purpose (which I take to be actually producing and selling things), correct? If a person invests in a new stock, they have two options: sell the stock or get a slice of the profits the company generates. How many people actually do the latter? >I'd say it is also a machine for redistributing wealth from hapless >middle class savers to the very wealthy. You mean simply because the very wealthy are usually closely connected to the institutions and thus have better information and/or get sweetheart deals? Bill _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
