No Stupid Questions

You're asking this question on Lemmy, on all of places!?!? It's not a stupid question, but I believed you're asking it at the wrong place. (I am not defending them, though.)

To me the stock market was started as a way for individual business owners to raise capital to make a large purchase (open a factory, etc.). Then it became a novel way to speculate on the FUTURE performance of some business. It’s become a way to make money by playing on the emotions of other investors.

Systemic gambling with a house that cheats constantly.

Stocks are fancy notes that the owning class convinced pensioners are better than an actual pension. This amounted to a lot of elderly people not having adequate retirements. Its also a convenient method to exploit your labor by participating in stock buybacks, which inflate the wealth of the owning class, by not reinvesting money in your company's work force. Its a triple pronged trident to fuck the poor and allow the rich to all become avatars of Mammon.

A capitalism casino that somehow rules the entire economy*

* or at least many people’s view of it

A stock is a piece of the deed or title or charter or whatever that is the essence of the company as a piece of property.

You can buy that piece of the property for a value which fluctuates based on the value of the company as a whole, your fractional piece is tied to the value of what it's a piece of.

The stock market is the cumulative eco-system in which people are buying and selling stocks in different companies based on fluctuations in value of different companies at different times.

The name of the game is to basically always be selling just before a downturn and always be buying just before an upswing, so that the money you've bought the stocks with is always growing, because your bought stocks are always growing in value, until you decide to sell them.

There is a lot of other factors to it but that's basically it. It's a system in which you temporarily buy small pieces of companies for the purpose of selling them once they're more valuable than they were when you bought them.

If you're thinking that sounds a lot like crypto, you're not wrong, but the difference is that stocks actually have a modicum of regulation that are meant to keep people from getting fucked over quite as hard as crypto has done. Doesn't mean that premise is always lived up to, just look at 2008, but overall the stock market represents the safest form of investment you can make other than stuff like federal investments or buying a home that you intend to pass along to your kids.

A graph of rich people's feelings

"Rich people's yacht money."

Just replace 99,9% of instances containing "the economy" and substitute. Makes a lot of things click.

I like the way you framed the request. Too bad the answers are either waaaaaay too long wall of texts, uninformative zingers or bitter jokes.

Here's my attempt.

1. A tool that allows a detached involvement with capitalistic production fueled by the individualistic drive for more wealth.

2. A way for entrepreneurs to chase the myth of permanent growth beyond the limitations of fisical assets.

3. A dangerous all compassing framework for our values that has no positive connection with the material condition of humankind.

Hot potato.

I'll take a shot from the hip at this question, but note that I won't add my customary citations or links.

The stock market is the paragon of property and trusts, contracts, corporations and law, and the capitalist socio-economic system. The very existence of the stock market implies a society that has some or most of these concepts.

For example, for shares to be traded, there generally must exist ownership rights upon the shares, distinct from the ownership rights that the company has of its own property. Or if not outright ownership of a share, then the benefit that a share provides (eg dividends). It also implies a legal system that will enforce these rights and the obligations of the company to its shareholders.

For a tradable company to exist, it must be organized/chartered as an entity distinct from any single person. This is different than the feudal days, when ventures would be undertaken "in right of the King" or some member of the nobility. The feudal method wouldn't work for modern companies, or else the King/Duke/Count/whatever could stiff the shareholders by just taking all the earnings. The company still needs to be created by legal means, either an Act of Parliament/Congress, by letter patent from the Monarch, or the modern administrative method of applying to the state Secretary of State (USA) or Companies House (UK) as examples.

Even the structure of a for-profit tradeable company -- when compared to a state-owned enterprise, a non-profit, a co-op, or an NGO or QUANGO -- is a representation of the values inherent to capitalism. A company is obliged to use the shareholders' funds -- which is held by the company but is owed to the shareholders -- to extract the greatest return. But this can come in many forms.

Short-term value from buying investments and quickly flipping them (eg corporate home buyers) is different than rent-seeking (eg corporate landlords) and is still different than long-term investments that actively work to build up the value (eg startup incubators, private wealth funds, Islamic banking, transit-owned adjacent property). If a for-profit company doesn't have a plan to extract a return... they're in hot water with the shareholders, with penalties like personal liability for malfeasance.

Another way of looking at the stock market is that if you have all the underlying components but don't yet have a stock market, it would soon appear naturally. That is to say, if the public stock markets were banned overnight, shares would still trade but just under the table and without regulation. But if any critical part underpinning the markets stopped existing, then the market itself would collapse.

History shows numerous examples where breakdowns of the legal system resulted in market mayhem, or when corporate property is expropriated for the Monarch's wars or personal use, or when funds invested into or paid out of companies is hampered by terrible monetary inflation.

As for what the stock market does, its greatest purpose is to organize investments into ventures. Historically, ventures were things like building a ship to sail to the New World and ~~steal~~ obtain goods to sell at home. Merchant ships were and are still very expensive, so few singular persons could afford it. And even if the could, the failure of the venture could be catastrophic for that person's finances. Better to spread the risk and the reward amongst lots of people.

What was once the sole domain of the landed gentry and nobility, slowly opened to the nouveau riche during the Industrial Revolution(s), then in turn to everyday people... for better or worse. It's now almost trivial to buy a share in any particular listed company, but just opening the stock market to everyone would have been chaotic at best. I think it's NYSE that still has on-floor traders/brokers, but imagine if all shares in that market had to be traded in a single room, with no digital trading. It's already quite lively on the trading floor today, now add all the trades from middle class Americans on payday. It would become physically impossible.

Likewise, a pure capitalist stock market would permit awful things like bribing journalists to write fake stories to crash a stock, then buy it for cheap. Or pump and dump scams. And would have no "circuit breakers" that halt a share during so-called flash crashes.

I'm reminded of a scene from the ITV show Agatha Christie's Poirot in the episode "Appointment With Death", where a wealthy woman is not only murdered but her business empire collapses because the murderer also spooks the markets as a double whammy, causing investors to panic and sell up. The relevant implications here is that despite her company not having changed its financial picture, it got cut up for scrap and thus lost most of its value, rendering the business worthless in the end. Companies are usually valued more as a going-concern, above what all its property put together would amount to. Where does that additional value come from? It's the prospect of a return from this particular assemblage of resources.

Suffice it to say, the stock market is a lot of things. But I view it as a natural result of certain other prerequisites, meaning we can't really get rid of it, so instead it should be appropriately regulated.

It's gambling for rich people over poor people's lives.

I think that a lot of people ascribe a lot of depth to how the stoke market works that is really just a farce. When it comes down to it, the stock market is a corporate popularity contest. The concept of stock was a way for someone to get a peice of the action without having to actually know or do anything. And it acted as a way for the wealthy to annoint people as worthy. Nowadays , due to growth in the number of people involved, popularity is really all that matters. People will claim it is about revenue and such, but it really is about will other people buy the stock for more.

It’s a game you play with people who has access to cheats, but your role in the game is so limited that just by playing it safe you also can win a little.

It’s a part of ownership of the means of production. Rich people buy a stake of the means of production there.

Buying there can take the form of gambling or more careful storage of money depending how it’s done. It’s a superficial structure that naturally evolves from capitalism.

Vegas

People want to buy and sell portions of companies. Stock markets let them do that. Things like fractional shares and ETFs allow individual investors to invest more easily which is great, but it would be naive to think the big firms don't have more of an advantage. People yap about the efficient market hypothesis a lot while forgetting that it's a hypothesis. If someone can get an advantage they'll do it. It's still wide advice for newbies who think they r cracked the code lol but for reals big players can and do find opportunities to make money that other people don't know about.

It is a living, breathing holograph of commerce. It speaks, it eats, it shits. It gets horny, sad, and angry. But it is a hologram. A projection of humanity.

Stonks.

Literally a pyramid scheme. Companies print their own money with extra steps, then compete with each other for your attention about it. Nothing creates value quite like conjuring it freely from the imagination. You can't make money any faster, so you just give yours to the best money printers.