can we ban common stocks?

[mizzou]

I like the idea of the stock market, but i dont like the idea of it being a lynchpin to guage economic prosperity. In theory it shouldnt, but it seems consumer attitude and perception to stock activity is closely related.

What if we just banned stockholding and only allowed bond activity? I.e., consumers only being able to lend $ to a company and hope the company pays back that loan with risk based interest.

I guess im sick of seeing companies nickle and dime you just to increase their shareholders wealth, when in the end it may be futile or illogical behavior.

If companies only goal is to pay back loans and isnt influenced by shareholder opiniom, maybe they could take that $ and use it in a more helpful manner like expansion or R&D.

If you dont like the stock market, then fine dont invest you dont have to, but just curious what others would say if we just didnt flat out have shareowner options anymore.

Im obviously a professor of economics

 

[Beev]

How dare you suggest anything that could eat into a company's profits. HOW DARE YOU.

 

[mizzou]

How dare you suggest anything that could eat into a company's profits. HOW DARE YOU.

 

[Capt Caveman]

I'm guessing you've never received stock equity as an employee at a company either from stock options, rewards, restricted, etc...

Nor understand why, a company would make a stock offering over issuing bonds? Or the difference between stocks and bonds in ownership, control, taxes, etc...?

 

[DaveSimmons]

My feet would get cold

If there is no open market to sell your shares in, it would be difficult for a company to get needed funding unless it offered loan shark interest rates for your hypothetical bonds. Issuing stock gives the company a better way to share the risks and rewards when raising money.

Also. employees of the company would have no way to sell any of their shares.

 

[Blackjack200]

 

[mizzou]

I'm guessing you've never received stock equity as an employee at a company either from stock options, rewards, restricted, etc...

Nor understand why, a company would make a stock offering over issuing bonds? Or the difference between stocks and bonds in ownership, control, etc...?

Most of my investments are in municipal bonds. Low return, but a relatively safe place to put your $ where it doesnt accrue 0% as in savings accounts.

It is risk involved, but considerably less than stock ownership. Overall, my bonds have beat out my mutual funds which is basically reinforcing my cautious investment approach.

 

[Macamus Prime]

Common stocks are dogs.

Your real money makers are alternative investments and vulture capitalism - go go America, wow!!!

 

[ichy]

My Phillip Morris stock has done quite well over the past few years, and it pays a sweet dividend

 

[Specop 007]

Im obviously a professor of economics

Clearly.

 

[mizzou]

My Phillip Morris stock has done quite well over the past few years, and it pays a sweet dividend

Yeah, im not saying stocks are all bad, its the only way to really share the success of a company other then actually working there. Just curious what would happen if our investment market was a bit more dull

 

[brianmanahan]

if you want dull, just pump your money into a blend of domestic, international and bond index funds. keep doing that for 30 years, balancing as you go, and you will do fine.

 

[FoBoT]

what are you, a commie?
oh wait

 

[sactoking]

I like the idea of the stock market, but i dont like the idea of it being a lynchpin to guage economic prosperity. In theory it shouldnt, but it seems consumer attitude and perception to stock activity is closely related.

What if we just banned stockholding and only allowed bond activity? I.e., consumers only being able to lend $ to a company and hope the company pays back that loan with risk based interest.

I guess im sick of seeing companies nickle and dime you just to increase their shareholders wealth, when in the end it may be futile or illogical behavior.

If companies only goal is to pay back loans and isnt influenced by shareholder opiniom, maybe they could take that $ and use it in a more helpful manner like expansion or R&D.

If you dont like the stock market, then fine dont invest you dont have to, but just curious what others would say if we just didnt flat out have shareowner options anymore.

Im obviously a professor of economics

It sounds like you take umbrage with the common tenet that "corporations exist to make money for the stockholders" and want to find a way to make their motives less shareholder-profit driven and more stakeholder-benefit driven. The problem is that "eliminating common stocks" won't do that.

The main advantage to the corporate business structure is limited personal liability for business owners. Unless the owners make one of a few errors the most an individual owner can be held liable for is their investment in the company. This single facet of law has led to the success of American business. Limited personal liability encourages investment: if you know that the worst that can happen is you lose your $1,000 you're much more likely to invest that money than if the $1,000 investment could make you personally liable for $10,000,000,000 in lawsuits. That's why there are not many uber-successful proprietorships and partnerships in the country.

Now, common stock is just a unit of measurement of ownership in a corporation. But there are other limited liability business structures that do not have common stock, LLCs for instance. LLCs do have other ownership limitations but these are artificially created- they could be changed by law at any time. But, what is the inherent difference between a corporation's common stock and an LLCs ownership allocation? There isn't a difference other than form. In other words, the driving force behind common stock ownership (making a profit for shareholders) is the same driving force behind LLC membership (making a profit for members). In fact, it's the same driving force behind all forms of business (making a profit for proprietors/partners). "Eliminating common stock" would be an absolutely pointless endeavor then as it would not affect change in the underlying motive.

 

[the DRIZZLE]

If you finance everything with debt than the most junior debt would start to look a lot like equity. Current high yield debt (junk bonds) already behaves a lot like equity.

 

[mizzou]

if you want dull, just pump your money into a blend of domestic, international and bond index funds. keep doing that for 30 years, balancing as you go, and you will do fine.

Im already a dull investor, i was just curious what would happen if , eveyone, had no choice but to make dull investments with low risk

 

[FoBoT]

Im already a dull investor, i was just curious what would happen if , eveyone, had no choice but to make dull investments with low risk

we'd probably all be living in caves and eating dirt

innovation and technological advances are surely tied to some extent on economic growth
?
perhaps?

 

[mizzou]

It sounds like you take umbrage with the common tenet that "corporations exist to make money for the stockholders" and want to find a way to make their motives less shareholder-profit driven and more stakeholder-benefit driven. The problem is that "eliminating common stocks" won't do that.

The main advantage to the corporate business structure is limited personal liability for business owners. Unless the owners make one of a few errors the most an individual owner can be held liable for is their investment in the company. This single facet of law has led to the success of American business. Limited personal liability encourages investment: if you know that the worst that can happen is you lose your $1,000 you're much more likely to invest that money than if the $1,000 investment could make you personally liable for $10,000,000,000 in lawsuits. That's why there are not many uber-successful proprietorships and partnerships in the country.

Now, common stock is just a unit of measurement of ownership in a corporation. But there are other limited liability business structures that do not have common stock, LLCs for instance. LLCs do have other ownership limitations but these are artificially created- they could be changed by law at any time. But, what is the inherent difference between a corporation's common stock and an LLCs ownership allocation? There isn't a difference other than form. In other words, the driving force behind common stock ownership (making a profit for shareholders) is the same driving force behind LLC membership (making a profit for members). In fact, it's the same driving force behind all forms of business (making a profit for proprietors/partners). "Eliminating common stock" would be an absolutely pointless endeavor then as it would not affect change in the underlying motive.

Nice :thumbsup:

 

[manly]

Yeah, im not saying stocks are all bad, its the only way to really share the success of a company other then actually working there. Just curious what would happen if our investment market was a bit more dull

it can already be dull; unfortunately business media hypes stock markets excessively and many average persons have somewhat bought into the trader's mentality of tracking daily movements.

 

[CPA]

I've yet to come across a company, public or not, that won't gauge you for every penny they can, otherwise all services would free.