Daily Speculations

Spec Forum:  Are Stocks Frauds, and Does It Matter?

October 2003

 From time to time, Daily Speculations publishes exchanges among speculators pertinent to trading, natural philosophy or barbecue. if you are of a scientific bent and wish to share your opinions on a topic of market philosophy with other readers of our Web site, e-mail us at gbuch@bloomberg.net. Specify if you require anonymity. 

A flurry of bearish ripostes pooh-poohing the latest government unemployment report as an overoptimistic fraud  prompted one speculator to write: “The bears are right about their observations.  But prices pay no attention to fundamentals, they go their own way. No one cares whether the market goes down or up.  Stocks may go up more than 1 million percent a century, but counters play this game for the short term.  Stocks are a fraud, like counterfeit money.  I would not hold counterfeit money for the long term; I would unload it as soon as I found a sucker.”

To which trader James Lackey responded: "Oh my, you get the joke, almost.  Yes short term all this is BS.  However, long term, equity ownership in growing businesses is one of the best things in the world.  It provides funds for a growing business.  It allows people to profit over the growth of the business.  It provides society with new ideas, services, products for the betterment of mankind.  Even in this bear market since 2000, there are many fine businesses built and grown right here in America.  

"Do not become a pessimist by the fraud of a few fools. Do not be fooled by government officials spitting propaganda to ensure their own security in their own protected jobs.  Do not become depressed by a media that can only sell a paper by reporting disasters.

"Those who gravitate towards short-term trading do it for the edge. The joke is one must take profits to get paid.  The reality is due to taxes, fees, vigorish and commissions it is foolish to sell, unless the business fails to grow.

"Remember, bad government, a few frauds, money supply, consumer debt ratios and mortgage rates cannot have a long-term effect on the drive, the need, human nature, the American spirit and the desire to succeed and provide a better life for our children.  All the bears, all the pessimists all have one thing in common. What they cite for their negativity is all temporary criteria.  They are all things like overvaluations or some metric. Nowhere, do they state that basically Americans are lazy, sickly, weak, ill-suited to make and build businesses in the future. 

"Building new businesses, new technology, new ideas new ways is the way to profit. So many play the game for short term profits or just to gamble.  Whether it is a trader a CEO or a board member playing those games, never forget, it is the game that provides capital to the entrepreneur. It is all the people that make and sell and buy the products that make the difference.  It is not king or country that makes the world go around.  It is the people.  That is what this country was founded on.

"From time to time we forget that.  The country is founded by the people for the people.  The world is a better place for that.  We will be much better off, emotionally and financially, if we always remember, it is the American way. It is the American way to innovate, build and profit by self"...LACK

The speculator replies: "Those who might venture risk are afraid they do not know what they are doing.  I believe their education was deficient. They ought to have an education in risk rather than be educated to a false hope in certainty. I have found it difficult to acquire such an education in trading. One can get instruction to become a medical doctor, to become an engineer, an actor, an architect, a plumber, a carpenter, a gigolo even. But one cannot go to school to learn trading, can't buy a book on trading that isn't hype, can't get an honest trader as a mentor.  So the real spirit of risk is to try to learn on one's own."

"An intense mood of risk aversion has reshaped both the financial markets and how they are perceived.  This fear of risk taking represents a real threat to humanity rather than the lack of sufficient regulation which is normally seen as the problem."  Daniel Ben-Ami, Cowardly Capitalism