I've been thinking about the share market

[Jeremy]

Sorry, p. I don't think you've been comprehending my point. What you've just described is gambling not investing. Its even the analogy you used!

My contention has been that simply trading shares does none of this! I've even asked people to dispute this position, but I don't recall seeing a convincing argument to the contrary.

In the absence of such we've simply got to stop repeating this mantra. I believe we need to differentiate between investing (productive money for a productive purpose, which, yes, does involve a form of speculation) and just "investing" by buying some shares in the hope that the dividends/capital gains provides a worthwhile return.

There's no difference between investing and gambling. Whether you're buying government bonds, putting your money in the bank, buying shares, starting up your own company, placing it on the horses or just on a coin flip. All the same thing. It's all just risk/return.

[Clockwork]

That's entirely my point. There is a difference, its just does not seem to be not recognized in our language. If only because we seem to be unable agree on words that that differentiate the two.

Or do you really think there is no difference between spending $100,000. to make something that is (hopefully) worth more than that to someone else, in the hope that from the profits of sale you can make another and another etc... Or going out and putting your $100,000 on red or black, odd or even.

[oneofsix]

That's entirely my point. There is a difference, its just does not seem to be not recognized in our language. If only because we seem to be unable agree on words that that differentiate the two.

Or do you really think there is no difference between spending $100,000. to make something that is (hopefully) worth more than that to someone else, in the hope that from the profits of sale you can make another and another etc... Or going out and putting your $100,000 on red or black, odd or even.

the difference is the degree of risk. Putting your money on red or black etc you are more likely to lose, or are you? w4ell if you go to the casino or the races you know the odds are against you. Producing something you hope (which is a gamble in itself) the odds are for you. Investing is just a spin word for a different type of gamble, there is no guaranteed win so its a gamble.

[avgas]

the difference is the degree of risk. Putting your money on red or black etc you are more likely to lose, or are you? w4ell if you go to the casino or the races you know the odds are against you. Producing something you hope (which is a gamble in itself) the odds are for you. Investing is just a spin word for a different type of gamble, there is no guaranteed win so its a gamble.

Remember it is not in the markets favor to collapse. Where it is in the casino's favor to not offer you a return.
When people don't get return on their stocks..... the rest of the market runs from that co.
When people don't get returns from gambling, everyone expects a jackpot and come a running

[Clockwork]

But one of these propositions has enriched the world, it has at least produced something of worth and at the same time generated the funds needed to create the next one (two, etc) ..... the other hasn't

It's like the difference between "Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime."

[oneofsix]

But one of these propositions has enriched the world, it has at least produced something of worth and at the same time generated the funds needed to create the next one (two, etc) ..... the other hasn't

It's like the difference between "Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime."

doesn't stop it begin a gamble and has it enriched the world? wasn't that your initial question?
If I gamble at the casino it has enriched the world as it has provided employment and enjoyment.

[Clockwork]

So what you're saying then is that gambling at least is more productive than share dealing. It is a service industry that employs people and consumes. Fair enough.

If I buy a share for $1.00 and sell it for $2.00 where did the extra $1 come from?. Or worse, if I buy for $2.00 and sell for $1.00 where did it go?

[oneofsix]

So what you're saying then is that gambling at least is more productive than share dealing. It is a service industry that employs people and consumes. Fair enough.

If I buy a share for $1.00 and sell it for $2.00 where did the extra $1 come from?. Or if I buy for $2.00 and sell for $1.00 where did it go?

Perceived value.
Why are 250cc bike so dear and people expecting them to drop in price when the power to weight rule comes in? the value isn't in the bike. Another why to put it is "what the market will bear" (bet I pick the wrong spelling of bare)
So if the market now thinks a share in the company is worth a $ more then someone pays it. How does the company benefit? It doesn't benefit directly, the money goes to the seller and the brokerage fees etc but because the company is now considered to be worth 100% more any shares the company itself still holds are also worth 100% more so the company can use those as assets to borrow money to expand. (And that is the closest I've come to understanding the mess they call a share market).

[Clockwork]

This gets even better.... so I'm a dollar poorer (this is real money that was in my bank account) and yet no one is a dollar richer?

Great system.

[oneofsix]

This gets even better.... so I'm a dollar poorer (this is real money that was in my bank account) and yet no one is a dollar richer?

Great system.

no one is a $ richer but the seller and broker got part of the dollar, say the broker gets $0.1 and the other $0.9 goes to the seller. Don't you wish you could have just loaned the money to the guy that has the company making widgets for bikes?

[avgas]

Quick question Clockwork,
How much do you get paid?

Why doesn't you employer pay you the amount of money it costs you live on bare minimum?

Now have a think of what a company is worth? Speculation is in more than the stock market. I know when I negotiated my last salary there was a figure I wanted for the job, and my employer would have been very happy to pay me less. What made them think I was worth what I asked?

[Clockwork]

Some times I look at what I'm paid and in all honesty I think to myself. "I don't see how I can be worth that!"

Then I learn what they are paying for other services and people and suddenly I don't feel so guilty. Truly, value is in the eye of the beholder. (Or perhaps in the case of the share market, the non-owner)

But I still don't see how any of this answers the question about why we, as a society (or economic units) should be encouraged to trade shares. Why that is deemed to be generating wealth and a worthy use of our money.

[oneofsix]

Some times I look at what I'm paid and in all honesty I think to myself. "I don't see how I can be worth that!"

Then I learn what they are paying for other services and people and suddenly I don't feel so guilty. Truly, value is in the eye of the beholder. (Or perhaps in the case of the share market, the non-owner)

But I still don't see how any of this answers the question about why we, as a society (or economic units) should be encouraged to trade shares. Why that is deemed to be generating wealth and a worthy use of our money.

I see your issue, you are trying to look at this from what might you call a society view, what is best for the larger group. nah the money boys just want your money.

[avgas]

But I still don't see how any of this answers the question about why we, as a society (or economic units) should be encouraged to trade shares. Why that is deemed to be generating wealth and a worthy use of our money.

The more people invest in something. The more they believe it to be a good thing.

This applies to all things in life, not just the stock market.

[Clockwork]

So we are back to the old "supply and demand" thing again; the more people jump in, the more the share values will increase, the better for the dealers and those players already in the market. But if/when the new money runs out, the last ones in will be the ones carrying the losses. Just like a pyramid selling scheme. Or musical chairs.