Some dudes know what's going on "under the hood," and are thereby capable of judging what it's reasonable to pay for a certain fraction of the use value of an enterprise.
Other dudes haven't the first clue, nor the time, energy or inclination to get it. They need an instrument that pays out a fixed amount of value every month, and is collateralised by some real, tangible assets, with a reasonably easy to assess value.
And then you have all the possible configurations in-between.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Most traders seem to be chartists and statisticians who try to pull value out of noise, completely detached from fundamentals. If you don't mind the odd pratfall, even a very simple strategy like momentum investing will put you ahead of the market average.
Knowing about widgets is largely unnecessary. And that's very much the problem - one corporation becomes much like another, and functionally interchangeable. Every so often there will be some noise about a market sector being unusually good or unusually bad, but in principle trading is based on the fact that not only are inputs and outputs irrelevant, but that a tiny collection of abstracted numbers defines the value and health of the company.
Social costs and social value don't figure. Future prospects don't figure unless analysts comment on them. Specifics figure even less.
There's a fundamental fracture line there between the real economy and investment/speculation.
Seriously, though, they can play these games because they're gambling with other people's money - Joe Schmoe does not have enough money to reasonably diversify his holdings in order to pull profit from noise. In a reasonably run economy, that kind of wealth concentrations would be broken up, because they are hazardous to democracy. So in a reasonably run economy, you can't run hedge funds.
Sure.
You can be inside the box, sharing revenues; outside the box on a fixed amount, or both.
It's entirely configurable, because in an "Open Corporate" LLP you start with a blank sheet of paper. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Creditary Economics
where the Gang8 analysis is pretty good in many ways. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
