I guess what I was wondering is.........to whom was the loan made ?

Things may nor may not settle down in the next 10 years. I think this nation as we know it has come to an end for good. What we are seeing now is just the beginning.

Non oxy scooter fuel will be untouchable

I figured they had a way of buying them off.

No they soak their bubble yum in it...better than crank man

Snowy- we stayed in the market thru two downturns, my wife's monopoly money profit sharing account lost over 200 grand...twice. And it all came back and surpassed previous highs. If your young enough to accept the downturn and patient enough to wait for the recovery, you are on the right track.
Of course we were in our forties and in 08 we were in our early fifties. now that we're pulling money out of the monopoly money pile we locked it down.
11/2 years of income in cash, 1/2 leftover pile in stable bonds etc, and the other 1/2 left in equities but not as aggressive as we were in our younger years.
The interesting caveat to this theory is we are used to working with capitalist economy and all of our experiences and nuances are based on that. In the future we may have a more socialistic economy, and nobody in the financial planning industry that I have talked with is quite sure what that holds.

The initial "loan" was made to the company issuing the stock. That's the iPO in most cases. Though for most of us, we aren't giving the company money, we're buying the "loan" from the original or subsequent owners.

But even in the ipo the underwriters are receiving something of value for the value they exchange for the stock. The value they receive may be nowhere near the amount they pay for it and that is why they lay off those shares as soon as the IPO starts trading. They are counting on that first day initial pop to make their profits.

The true loans are the funds provided by those who buy the company bonds.......if any.


I could agree if it was looked at as owning a piece of the company for an indefinite time period, for a fixed price up front, and at the same time renting the price action in the shares

Stock market levels reflect optimism, or lack of it, by big money managers - mutual funds, pension funds, etc., not small investors. Stock averages are high as a kite right now based on expectation of $2k stimulus checks, expectation of decreasing virus lockdowns, and fact that bond yields are in 1% yield or lower range. Looks dangerous to me. It could go higher but if it begins sliding enough to make big money managers nervous a crash will occur.

Bob... I've seen a couple people TRY to eat a bunker, on a dare, drunk, or both... never seen anyone finish one.

I can see the point of the post regarding buying stocks or securities as a unsecured loan, especially the stocks. This is mostly from the firms aspect in my opinion. When we buy shares we actually loan money to the firm and they don't need to go to the bank to borrow those funds. We are actually funding the business and are hopeful that they manage well and succeed. One of the major differences is that we can call the loan ( or sell off our stock) when ever we want to but it does not mean the firm loses the funds as that means someone else now owns your former stock. Sure those stocks can and do lose monies and that impacts a firms liquidity and business management. The other difference is that a 3rd party is involved for a fee to buy and sell our stock or loan and they make money even if the other two parties do not.

Bryce

I bought oil stock in March of 2019. When everything was tanking. They hit rock bottom on my stock options in July and August. I continued to buy up until Oct. Started selling Oil stock a few weeks ago. Hanging on to 50 percent. Started investing into private prison stock in Oct of 2019. My portfolio is well rounded. Stocks, bonds, mutual funds. ETFs. I don’t care about politics or anything else. This new administration is interested in different venues then the last administration. Use that to your advantage. History proves staying invested will put you ahead in the long run. A lot has to do with where you are at in your live. What you are willing to risk. I wish everyone financial freedom.

We have been in a bull market for a long time. Several stock market dives have been short lived. Not sure what will cause a continued decline. The US is still a safe haven for most of the world. There is a demand for our bonds, which pay a better yield than those in European nations, many of which have negative. Interest rates. This completion for our US debt is keeping rates down, which is good for corporate stocks. The competition for our bonds is what I watch as an investor.

Well, you maybe be right or maybe wrong. Times have been changing since God was boy and doesn't mean the markets will good or bad. I look at the positive side to things and I believe in there will be bear markets and bull markets and live for another day. I beleive the longest recession was just under 4 years long and the last 3 been around one year and under. Times go bad times get better the way of life.

last year I put my yearly ROTH contribution in on March 20......call it lucky or good, I nailed it, for now, I'm waiting again.....could be a correction coming about the same time

The last 4 years have been very good for my investments. Avg 22% and 32% the last 2 years and well above 15% before that (can't remember). It is a very nice feeling when your investments make more money than I bring home in a year.

I am dumping more money into a HSA (health savings) as I see it as the only method of putting money in tax free....also the growth is also tax free in future for health uses.

^ market timing! That is like playing Russian Roulette.

I'm confused here Bryce. You say that...." When we buy shares we actually loan money to the firm and they don't need to go to the bank to borrow those funds".

I'm pretty sure you know that when a retail trader/investor buys 100 shares of stock, the company is not a party to that transaction and never sees one dime from it. In fact the company doesn't even know we exist.

Our transactions are between two counter parties who have no idea who is on the other end of the trade.

Companies may BUY their own shares in the open market but in order to sell shares they must get prior approval from the SEC and announce a secondary offering. Even then, those shares are bought by the underwriting banks . Those banks give the money to the company and then make those shares available to the public at a price higher than the one they paid the bank. At no time is a retail trader dealing directly with the company.

Would you still view it as a loan when you know up front that you may never get as much back as you put in ? I don't know anyone who would consider that a loan.


Now if you are involved in a DSP program that's a different story. But it also comes with additional fees and restrictions on timing of sales and purchases.

I think a good policy is to put a regular amount into the market over a long period of time. If you have the cash to also build a cash account and can afford to invest more on all 10 percent pull backs and all 20 percent pull backs you can capitalize on the pull backs without gambling the long term benefits of regular investing.