Originally posted by no1marauderI agree that’s its reactive, but I would say that the financial markets can affect indirectly real capital markets (e.g. affecting the costs of investing in real capital as opposed to trading ownership shares in existing real capital assets). Sometimes, cash rich firms find it more attractive to invest in the stock market (and the debt market) than in real capital, for example—and if they think the stock market has bottomed, while capacity utilization is down, and expectations for demand are at best uncertain, they may after this bleed-off. Also, high and increasing market capitalizations can make it easier for firms to borrow money, or float new shares, to finance real capital expenditures (if they do not do so out of retained earnings).
In the good ole days maybe. Now the market has very little impact on the economy as a whole. It's reactive not proactive.
I no more think that the financial markets are efficient, than I think the real markets are generally efficient. “Fears and rumors of fears”—to twist the saying—drive stock market reactivity and volatility as much as underlying real economics. I think it was Schiller who argued that financial market volatility was in excess of anything that was in accord with the “efficient market hypothesis” (need to check that).
Nevertheless, I agree that the stock market is reactive—just that its reactions have “feedback” loops into real-economy behavior.
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However, I’m recently revisiting my Keynes, so maybe this post reflects that I am in the “good ole days”.
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Originally posted by sh76That used to be true, but I remember that big crash in the 1980s and it didn't really have that big of an impact on the rest of us. And in 2009 the stock market soared while nearly everyone else languished. I think the stock market as an indicator has divorced itself from many other economic realities in recent years.
Stock market crashes cause recessions and/or depressions.
BooHoo for us.
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Originally posted by savage4731Buffett taught me this. He bought trains with stocks and cash.
ohhh... so the comment about Buffett was just a mistake or something?
Berkshire Hathaway, the investment vehicle of Warren E. Buffett, said on Tuesday that it planned to buy the 77.4 percent of Burlington Northern Santa Fe it did not already own for $26 billion in cash and stock, in the largest deal in Berkshire history.
http://dealbook.nytimes.com/2009/11/03/berkshire-to-buy-rest-of-burlington-northern-for-44-billion/
Originally posted by AThousandYoungBuying a share of a company IS buying stock. What do you think stocks are?
Buffett taught me this. He bought trains with stocks and cash.
Berkshire Hathaway, the investment vehicle of Warren E. Buffett, said on Tuesday that it planned to buy the 77.4 percent of Burlington Northern Santa Fe it did not already own for $26 billion in cash and stock, in the largest deal in Berkshire history.
http://dealbook.nytimes.com/2009/11/03/berkshire-to-buy-rest-of-burlington-northern-for-44-billion/
Besides that was nearly 2 years ago. We were talking about today. August 8, 2011.
Originally posted by savage4731Buying controlling interest in a company is a bit different from simply "buying stock". You can't do it on a stock exchange or through your Etrade account.
Buying a share of a company IS buying stock. What do you think stocks are?
Besides that was nearly 2 years ago. We were talking about today. August 8, 2011.
Originally posted by AThousandYoungWell actually HE didn't buy it, Berkshire Hathaway did. All of the Bershire investors woud be pretty ticked if Buffett tried to claim he himself owned it.
Not "a share".
He bought ALL of them. He owns that company and all it's equipment, not a piece of it.
And according to your own article it was 77.4% not the entire company. The way those shares are divided is by stock.
The distinction that your making is entirely your own. You say because you own a piece of something that that means you dont own anything? That's just flat out not true. If a company goes bankrupt the shareholders are entitled to the value of the assets (after debts etc. )
And again, that was two years ago. We were talking about today.