I Feed You All

I Feed You All
Poster for the Granger Movement 1876 to 1886

Wednesday, August 26, 2015

The Stock Market - Derivatives

I have written pretty in depth for this forum about the Stock market and have addressed this issue. Of course the real investing that is done in the Stock Market "produce something", I have made that distinction clearly, but that us not what drives the stock market today, it is the derivative market and other similar instruments that have nothing to do with the Sticks that these hucksters are betting on. When you buy a Derivative of a stock, that money is not invested in company. It is a side bet on what that companies stock will be at a particular time and at that time profits and losses are taken, but the stock can be affected by the careless gambling on that stock. That is why they are called derivatives, its “value” is derived from a real stock. It is gambling pure and simple and that is what most of the trading in the market is about today. The Price of the stock can go up because people are betting that it will and that may or may not help or hurt the company none of that money goes to the company. This hurts the economy and does nothing but to transfer money from one hand to the other without making anything or producing anything. It is like betting on sports when you bet on a game odds are established so the "stock" of a team can rise or fall depending on the bet, but at the end of the day, the score on the board does not change because of the surrounding gambling. OF course in the Market that is not true because these derivatives can actually cause the rise or fall of stocks, which is bad. If you do not know or understand any of this you should not be in the market or you need to have a broker you can really trust.