Forum Archive Index - December 2000

["Jeremy" <jeremy@electrosilk.net>]

> I don't think that the function of a stockmarket is to allocate capital at
> all, it is just a marketplace, a place of exchange. It is the individuals
> participating in the marketplace (like myself) who decide where to
allocate
> their capital.

In my opinion the function of a stockmarket is to

1. Provide income to brokers in return for them joining buyers and sellers
together in a transaction
2. Provide income to stockbrokers by sale of information - "private client
advice"
3. Make it easier for the bad guys to make money by concentrating all the
punters into one location so market manipulation is easier.

The idea that a stockmarket provides a fully informed market and hence the
fairest value on a share appears to be crap.

All you have got today is a market flooded with so much information that it
is impossible to react rationally because no-one can understand it.  Even if
you could understand the market, it wouldn't help because no-one else can
and so the price of shares surges with total unpredictability on most short
and medium term time-scales

It appears that investing in sound companies that are actually creating
value is a good idea.  But clearly this has nothing to do with the
stock-market and the information or misinformation it provides.

Jeremy



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