People value the market by multiplying the stock spot price by all issued shares--and that's obviously wrong.

Well, it's actually obviously right. Everyone who owns that stock has the option of converting one unit into that amount of money. Why wouldn't they? Because they value that stock at >= the stock price. Otherwise they'd sell for that amount. I mean, sure, some investors are probably asleep at the wheel (and that can be fine as an individual) and have let the value drift above what they would value the stock at, but generally there's going to be enough active traders that the stock price matches what people think the stock is worth. If it was too low, more people would buy. And if it was too high, more people would sell. That's how markets work.

And why do people value things as they do? Clearly it's not coincidence that, say, Rogers Sugar stocks are valued what they are. Investors - in aggregate - figure that, for the amount of risk and potential Rogers Sugar represents, they expect about a 7% return on investment. So their stock ends up being priced such that that's the return you get - the price effectively seeks that value. Again, if people were willing to get less than 7% return from this company, they'd buy more and push the stock price up such that the return was lower. If investors, in aggregate, demanded more return, they'd sell the stock, the price would go down, and the return on investment would go up.

You can only get out exactly what was put in.

Companies grow and become more valuable because they earn more profit. As a shareholder you own a percentage of a company. As that company grows, the value of your investment increases.

So of course you can get out more than you put in.

and the company doesn't owe you anything for that

Well, actually it does. Public companies have obligations to serve the interests of shareholders. If they purposefully betray shareholder interests, shareholders can sue, and this happens reasonably often.

In practice for more day-to-day decisions, shareholders control companies via the board of directors (who shareholders can vote for) - who in turn can select executives. Again, in practice, the shareholders who actually exercise these voting rights are typically large, institutional investors. However, their interests - mainly increasing company profits - are generally aligned with those of smaller investors, so the fact that smaller investors don't normally get involved isn't terribly material.

The third level of control is "voting through investment". If you don't like the decisions of a board or an executive team, you value it lower (either by selling it or not buying it) - and those cumulative investor decisions are felt through changes in share price (which in turn controls who executives are and what they're paid).

Sometimes the connection gets tenuous, and sometimes companies make bad decisions. It's a risk. Some companies are effectively privately held despite being public (eg. Facebook is essentially only subject to Zuckerberg). Again, this is a risk that you consider when investing in these companies.

But shareholders are truly owners, and there are real, effective mechanisms by which they can exert control.

If your argument is "many stocks are overvalued", that's absolutely true. I think Apple is overvalued. So I don't buy it. They make a lot of money right now, but their valuation assumes they're going to make that kind of money long term. I think that's unlikely. Other people disagree. Or they think they can make money anyway, by pawning the stock off on some greater fool. That's not how I like to invest, but you can make money that way.

It does not, however, have the capability to liquidate its assets.

Liquidity is usually a function with parameters are "item type" and "amount", where liquidity tends to decrease as the amount rises. Selling a thousand dollars of Apple shares is unlikely to affect the price. Selling a billion dollars of Apple shares would definitely lower the unit price received. However, in terms of the amounts "normal" investors are dealing with, equities are generally seen as having good liquidity compared to other assets. But if you are investing a lot of money in a small stock, such that your trades are a good percentage of the overall volume, managing liquidity is certainly something you want to consider.

Definitely equities aren't perfectly liquid, but reasonable, non-"penny" stocks (especially on exchanges with professional market makers) are normally liquid enough that an individual investor doesn't have to worry too much about it. Again, it's normally seen as a positive property of stocks as compared to other investment types.

Running a store is different. When you run a store, you are buying product and selling it for a profit margin. Tangible goods and services. You staff people for a certain wage and provide services for a higher hourly surcharge.

Well.. you've clarified your misunderstanding at least.

Say I buy shares in Walmart. Say I buy all of them. I'm now, effectively, a store owner. I could (if the company weren't over statutory maximum size) just re-privatize the business and very little would change. Their costs on staff and stock are my costs. When someone buys a shoe, that's my money. I could shut the whole thing down, or do whatever I wanted. There's not a difference between owning a store and owning stock in a store because they're exactly the same bloody thing. Shares ARE ownership in the business. I wouldn't ever have to sell the company to make money - I'm making money by owning the company and thus receiving their profits.

I can't imagine how this could be any clearer. If I buy a part of Walmart, I'm buying a part of their profit for the period I own that stock. Sometimes I'll obtain this money directly through dividends, other times I'll receive this value through the increase of the real value of the company which I own. Again, we're not just trading baseball cards. Shares have value independent of what they're worth to other investors (that's just what gives them liquidity).

The stock market is like running a store where you sell iPads, but nobody opens and uses the iPads.

You really just don't get this do you? There's two things going on: people are buying and selling ownership of companies.. but people are also buying companies and holding them over time so that they gain the amount of profit the business is making during that period. This is absolutely crystal clear in the case of low growth, dividend bearing stocks, but not that hard to comprehend for other stocks either.

Again... I just don't see how this could be clearer.

Wow that was a bizarre rambling comment.

If Domino Sugar starts flooding the Canadian market with cheap sugar, your little nest egg will suddenly shrink, and you might take a loss or just break even.

I didn't say it was no risk, I said it was low risk. And you agree, I think, in a lot of words. Certainly there's good reason to not have all your eggs in one basket. You buy a little of a lot of things, maybe some with more risks than others. There's no guarantee you won't still crap out somehow, but historically this strategy has done very well, consistently, and it's backed on a very real thing: companies are profitable.

The dividends come from profitability; the stock price is a spot price on the exchange, which is based on public sentiment. You could hold a worthless company taking heavy losses and the stock price is soaring

Well, yeah, there's higher risk options too. Sometimes you might make money by hoping there's a greater fool later on. I'm not claiming the opposite of any of this. You can certainly make money trading stocks day-to-day, though this is largely a zero-sum game where you rely on outthinking the people you're playing against.

However, and this is my point (I have no idea what your point in all this is) you can also make money investing in profitable companies with reasonable valuations, and this is "new money" to the game - you're getting your share of their profit.

That's not money coming from somewhere; it's the ability to access money. The correct term for this is "solvency", and if you yank out the full actual dollars on hand then the bank (or stock market) becomes "insolvent". It's when you have less money being demanded than is actually there, even if there's much more money on paper than in reality

Liquidity is, in general, the ability to turn an asset into cash. If you can't take your asset (the bank account) and turn it into cash, it's not liquid. It doesn't matter why. Maybe the bank is insolvent, maybe the only open once a year, maybe they only let people withdraw 1% of their money a day; I'm talking about the property of liquidity, not why or how the item is liquid or not. Your original point was about how stocks require a buyer to be liquid. My point was that lots of assets have limits on liquidity, and that liquidity isn't usually a problem with stock investment.

So you aren't just being pedantic here, you're really missing the point.

Except dividends are money from outside being put into the market, increasing the money in the market.

Yes.. The money is coming from people paying money to the company to do its productive activities. They're buying iPads and cars and stuff, and you're getting some of that money because you own part of Apple or Honda or whatever.

This is called a zero-sum game. Every stock that's brought in is put there from the outside. Every dollar that's brought in is put there from the outside.

So running a store is also a zero sum game. Because for some reason we're also including money "from the outside" in the sum.

Oh wait, that's really stupid.

When people play poker as a zero sum game, the only money coming in is from the people that are playing. You add up the wins and losses of the players, and it's zero. If you play in Vegas and the house rakes every pot, you're playing a less-than-zero-sum game. If you're playing for a prize on TV, then you're playing a more-than-zero-sum game.

Similarly, when you trade stocks, you're playing a more-than-zero-sum game, because there's an inflow of profit money that's not coming from the "players".

OK, just on the off chance, I'll try explaining stocks to you like I would a child. Maybe nobody has ever done this, and you actually will pay attention. I really doubt it.. but whatever. Worth the shot, I figure.

I own shares of Rogers Sugar (symbol RSI.TO). They make sugar. Rogers Sugar hasn't changed a lot over time - they have a sugar processing plant near my old home town, and they sell sugar. In bags. To people. They make a small but reliable profit in this operation - last year, they made about $30 million.

I own 700 of their 93 million shares (currently this is worth $3,300 Canadian - I like to own a little of a lot of stocks). Since Rogers isn't really growing or changing, they tend to just pay out their earnings to share holders. So this year, assuming their profit stays about the same, I'll get a dividend of 700 * 30 million / 93 million = $225. That's just a little under a 7% return on my investment. Not exciting, but also quite low risk. And in good years, if the company is run well and the farms around my home town produce well, the return will be better. I could, if I wanted, try to influence these decisions (because I own a small part of the company, the factory, and trucks, and whatever), but I'm happy with their current direction (and unlikely to weild much influence with my 700 shares anyway).

I could have done all this before there was a stock market or tickers or a public stock price. All those things just make it easier to buy and sell portions of companies. In any market, you can speculate, and attempt to make money off buying low and selling high (which is the zero sum game). But that isn't how long term investors make money off stocks; rather they make money just like I do off Rogers Sugar - they own parts of companies that are profitable.

Now many companies don't just pay out dividends like Rogers does. Some distribute in other ways, like buybacks. And many companies are growing (or trying to) and instead of paying out profits directly, they invest in themselves by buying assets. It's hard to see at first, but this isn't that different. Those assets that the company accumulates belong to the shareholders just as much as cash in their pocket would. If Rogers decides to buy a new truck instead of paying me money, I own 700/93 millions of that truck - and I'm happy to own that little piece of truck, because it'll be out there making me money.

That's what it means to buy stocks.

Except when the big correction comes and you lose 90% of it, and 10 years later still have not recovered. I know quite a few people who have taken to working in old age because their 401(k) funds became worthless. That's a black swan event, but it happens. The market was simply overbought.

Over the last 60 years, stocks have returned an 8% compound return - through all the dips and bumps and whatever. There is no subperiod you could be talking about (longer than 10 years) where stocks wouldn't have done well. So either your anecdote people weren't in for long enough (and only saw a dip) or were actively/narrowly trading and swerving to avoid profit.

There's a lot more money on paper than there is actual, accessible money; and for you to get your money on paper, somebody has to give you their actual, real, physical dollars.

We could say this about any non-cash asset. We could say this about your bank account - the bank doesn't have nearly enough money to pay out everyone's accounts if everyone wanted their money out. Liquidity is not an all or none thing. Stocks, over a long time, have proven to be very liquid. And the core of their valuation - the ability of a company to create value - is more stable than most other asset classes.

We can change this dynamic by bringing more dollars into the game: Jake or Tim pony up more money in the bidding war

There's plenty of other ways money effectively enters the market. Companies pay dividends to investors. They buy back shares. Public companies are bought or liquidated. The reason stocks are worth money is because companies create value; they did that, and were worth money, before there were stock markets. Owning part of a company isn't just trading baseball cards for companies you like, it's owning a productive asset - and that's why companies are largely evaluated by their price/earnings.

Nobody who has any understanding of economics thinks it's a zero sum game.

If I had $500,000 right now, in cash, I could simply retire.

In your ridiculous fantasy, how much interest are you getting back over inflation? How much are you spending a year? There's no way it adds up to anything like "luxury".

Oh my god are you KIDDING ME?! This again?!

So yeah... actually, don't answer those questions, because you've obviously already tuned out. I know you're proud of your sad, average financial achievements, but you don't understand any of this (really, honestly, this is very clear) and don't seem keen on learning. I mean, from your comment there, clearly people have tried to explain this to you before. And you can see, in thousands of ways all around you, that reality disagrees with your views on this.

But you've decided that you've got this all sorted out better than people who have more experience, money, and understanding. One day perhaps you'll figure some stuff out, but I don't think it'll be through someone's rational explanation - so I give up.

401(k) is a place to play the market, which is a lot like playing poker: it's not the cards and the luck that make you win or lose, but rather the other players shaking your inexperienced ass down so you make bad decisions and lose all your cash.

It's not really much like poker, because it's not a zero sum game. Stock value has gone up fairly steadily over a century. Sure you can find ways to lose money if you're trading actively and poorly, but passive stock investment has outperformed other investment options consistently for a long time.

To be clear, I'm kind of "you in the future". I paid off my first house when I was 28 or so; I also started investing in stocks. The money in stocks did a lot better than the money that paid down my mortgage (you can measure this easily; interest is interest - and when mortgage interest rates are as low as they are, they're not hard to beat). It's riskier too, but when you're young is the right time to be taking that kind of risk (assuming you have your basic obligations covered); over time, stocks will win out, so they're the right choice for long term investment even if they may entail short term setbacks.

I mean, say 5 years ago today you had put $50,000 into a vanilla ETF (we'll say QQQ). You'd currently have $128,860. I didn't cherry pick that or something, I just picked a round number time frame and an extremely common ETF. In the same time as you gained $78,000 on stocks, you could have, instead, saved $10,000 of interest on a 4% mortgage.

That's not to say that there isn't other things worth doing. Maybe you want more education or windows or who knows what. Lots of things can make sense. But eventually, you'll almost certainly want money in the stock market if you're ever going to retire.

I agree she was probably well meaning to start - but she was also dangerously irresponsible.

And now I think she understands she was at least partly wrong - but instead of coming out and saying "Hey, I got some stuff wrong about vaccines and autism and autism treatment", which I think could really help sway some people in a positive way, she's equivocating.

In terms of "how should we talk to people who don't want to vaccinate", I'd agree villainizing McCarthy is probably not helpful. But, personally, I think she did something ethically wrong by staking so many people's health on her own little anecdote. I mean, she didn't just make a personal call on some health decision, she evangelized this idea as hard as she could.

And I think she's choosing now to downplay all that to avoid embarassment, or maybe to avoid feeling like she betrayed people - instead of owning up to mistakes and potentially doing a lot of good.

I agree that this does harm, but it's mainly because there are real anti-vaxxers who don't get any vaccines, primarily out of religious belief.

There's lots of people who don't get vaccines because they think it'll give their kids autism. Which they think because people, including Jenny McCarthy, told them it did. She held onto this belief, virulently, in the face of a lot of evidence - supporting Dr. What's his name long after it made any sense.

Yeah... Uh, go back to 2008 and listen to her talk, in fairly certain terms, about how vaccines (and fungus and who the hell knows what else) cause autism and mental regression in children. This was when this wave of anti-vaccination scare was just getting going, and she played a big part in popularizing it.

http://www.youtube.com/watch?v...

I don't know if it's in that video, but I remember her saying, pretty much "Would you rather your child have measles, or autism?"

At the same time, she was supporting very dangerous crap like chelation as an autism treatment (with the idea that you could remove the mercury from the vaccinations, and then the autism would go away or something) - pretty much telling parents with autistic children to "try everything", so they could be cured like she believed her son was (there's a good chance her son didn't actually have autism to begin with.. but that's another story).

Again, the fact that she's now moderated some of these views doesn't mean she didn't do real harm.

Uhh.. The point of the article is that her op-ed is disingenuous and doesn't correspond to what she has said over the years. Quoting from that op-ed to argue that the article writer isn't giving her true position... well, that's not really grasping the chain of argument here.

The reality is that she's been virulently anti-vaccine over a long period, has played a real part in convincing others to forego vaccination, and is now trying to sell us on something like "she didn't really mean it that way", and pretending she's always held some more moderate position. I mean, go read stuff she wrote years ago.

Lots of people have always got attached to their first language or IDE or whatever, but the core skills learned are transferable. What's being talked about isn't vocational training; it's introducing, for example, programming to patrons at a library.

I think a Chromebook has some very good properties for a public library. They're not just cheap, they're simple and maintainable. If they couldn't support learning how to program at all, I think that would be an important disadvantage. But I think in the context of a library, having online tools and sites available to learn programming is perfectly reasonable, and "ticks that box" so to speak.