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Author Topic: New generation of investors?  (Read 1122 times)
wobber
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February 05, 2014, 11:49:06 PM
 #1

There is an old saying that for better understand other people, one should look at himself.

It's interesting and if you do it, you have nothing but to gain. Here's what:

I have no formal education in economics but I am very interested in it, although I'm a bit lefty and have some things that I don't understand. I also don't understand stocks and other modern investments.

I would never buy state bonds, paper silver or gold or stocks in companies. My view on the world is rather simplistic and paradoxically, it seems old. I tend to see good investments in physical precious metals, land, houses, real estate (only for what I call habitable homes, not 100-rooms mansions that cost $5000/mo to clean up). I would do investments in agriculture and energy.

I run like hell from stocks in all companies as I do not feel anything owning 0.0001% of Coca-Cola. I would be in for 33-100% in any other small company. Also it's my personal view that stocks destroy companies.

Now, what I want to ask: Is it just me, or more and more people run away from stocks, bonds and all? Am I just an ignorant economic illiterate or what?

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dontbugme
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February 06, 2014, 02:24:31 AM
 #2

I run like hell from stocks in all companies as I do not feel anything owning 0.0001% of Coca-Cola. I would be in for 33-100% in any other small company. Also it's my personal view that stocks destroy companies.

Now, what I want to ask: Is it just me, or more and more people run away from stocks, bonds and all? Am I just an ignorant economic illiterate or what?

Knowing bit about economics and business myself I can say stocks do not hurt a company. Let me give you some knowledge and reasons why. When a company wants to go public they do so via an IPO (something you likely know). The IPO is critical for the business to raise new funds so that they can expand. Before going public a firm must file a registration statement with the SEC. This includes key finance statements and info on its properties, competition and how the company plans on using the funds it raises.
Now once the IPO is sold on the primary market via best effort or firm-commitment from a investment bank that is the only time the company will get any more money. Once on the secondary market, one where you and I can buy or sell, trades can buy or sell. The company won't see any money from secondary market sells, but the initial funds it raised will go a long way to help expand the business.
Furthermore, there are many benefits to owning a common stock in a company. While you share may be small you do get voting rights, rights to dividends and even rights to residual claim on assets if the company goes under. Granted that after all other claims have been satisfied; think taxes, wages to workers and debts owed to creditors.

If you want to own 25% of a small business, you would be a venture capitalist because of the large stake you have in the company, go right ahead. Yet, you do have to known the risks that come with a small business like when economic downturns occur small businesses may have a harder time staying in business. Also, assuming that the stake you bought in the company is a startup you have to worry about the risk of the company falling through.

As for bonds and people running from them I don't think many are. Institutional investors and individuals may buy bonds since they carry less risk than other securities. Yet, still have a higher return than the safe-to-play CD or savings accounts.

TL;DR. IPO can help raise much needed funds to expand business. Many benefits to owning stock in a company; no matter what percentage you own. Bonds are still safe and should be part of any diversified portfolio. As for if the USD is going under is entirely different discussion.
shawshankinmate37927
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February 06, 2014, 02:40:31 AM
 #3

Now, what I want to ask: Is it just me, or more and more people run away from stocks, bonds and all? Am I just an ignorant economic illiterate or what?

I think government bonds are a bad idea because you're most likely just loaning your money to a bunch of incompetent bureaucrats that are incapable of balancing or managing a budget.  Corporate bonds are unlikely to outperform rising prices that result from money supply expansion, and are more geared for those that are risk averse.  I also think the stock market is overvalued thanks to all of the quantitative easing that's been going on the past few years and my outlook for the US economy is rather bleak.

In the past, people have felt the need to "invest" rather than "save" in order to stay ahead of the expanding money supply.  With Bitcoin, now we can each choose to return to a sound monetary system and have the option of just saving without feeling the need to gamble/invest in the stock and bond markets.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."   - Henry Ford
johnyj
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February 06, 2014, 02:55:11 AM
 #4

I had years of education in economics and I think it is a total waste of time. All the economy phenomenon to its root is only two scams: produce money and borrow money, you don't need to learn more of those scams  Cheesy

countryfree
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February 06, 2014, 06:59:04 PM
 #5

This isn't about a new generation of investors, but a return to the past. Millions are wary of stocks because they have less and less control over the market, with trading bots and the sheer number of transactions happening each day.

So fewer and fewer people will buy and sell stocks themselves. If you want to invest, you get an agent who will manage your portfolio, with a team working 24/7 buying and selling on your behalf. Some people don't want to do that, so they go back to the old way of investing, with stuff you buy and sell yourself. That's gold or real estate, the same things people were investing in before there were stock markets.

You may also consider horses.

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better avoid Poloniex, as it socializes losses.
Learn more about it on this topic.
miketonic
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February 06, 2014, 08:43:45 PM
 #6

I'm 21-year-old business student and I have most of my money in stocks. I don't think movements from one asset class to another have anything to do with generations and I don't think there actually is any movement from stocks etc. Actually I think it's becoming more and more popular. Some people prefer stocks, some physical gold, but those preferences are individual.
BitChick
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February 06, 2014, 09:06:36 PM
 #7

I agree that I have never really been that interested in stocks.  Sure there is some money to be made trading or even holding stocks but by the time a stock goes public the amazing growth has already been achieved and it will be the Venture Capitalist or the owners of the company that profit the most.  This was highlighted in one part of this article I read the other day: http://www.marketwatch.com/story/10-things-billionaires-wont-tell-you-2013-11-15?pagenumber=7  On page 7 The article says that most billionaires made their money with start-ups.

The interesting thing about Bitcoin is that we all can have a small piece of what works like a start-up.  Sure it is not really a stock but Bitcoin still has some of the attributes that a new start-up has.  By the time Bitcoin is mainstream there will be less volitility in the price and it will essentially "go public" at that point. There may still be some money made in the very small fluctuations that happen in the price but it will become much more difficult to ever get the returns that we are getting now.


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hellscabane
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February 06, 2014, 11:46:11 PM
 #8

Some people would say that running away from stocks is economically ignorant. And honestly, there is truth in that. But only to a degree.

The "system" is built so that economies inflate. Because of that, if the amount of money you have is stagnant (i.e. you hide it under your mattress), you really are losing money as your spending power deflates. One of the best ways to mitigate that is by investing in something that either meets or exceeds the rate of inflation. And as it stands, one of the "safest" ways to mitigate that is by investing in stocks (however, investing in just one stock bring a lot of risk; so either having a portfolio, or using some sort of mutual fund or something mitigates a lot of that risks).

That being said, if you have an equivalent asset or contract that functions the same way, then you're not falling behind the curve. And I feel that Bitcoin serves as something that is equivalent.
glendall
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February 07, 2014, 05:09:10 AM
 #9

I think a lot of it has to do with the difficulty and cost of 'going to go buy some stocks'.  For securities and related, investing in BTC stocks is a piece of cake and costs little (in fees).

For day-trader types, another really big thing: the vast majority of 'real life' trading is done by computer algorithms in transactions that take less than a second to calculate. Correct me if I'm wrong (not an expert) but I believe trading alt-coins on currencies is much more closer to the fun and past idea of stock trading as an activity than is done by humans, for day traders. As in, you can see the bid and call board, and react to changes. You can't really do this if you are not in the finance industry and don't have a lot of capital to work with (as I know).  And the volatility helps as well.

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