How the Stock Market Fails those who need it most.

Have you noticed how mega companies being listed on a stock exchange is always huge news? 

IPO (Initial Public Offering [of shares]) Jack Ma listed his billion-dollar company a few months ago, DIDI the same.

But wait. What is the primary (traditional) purpose of the stock exchange?  Any business student, even those taking high school business will tell you that share sales are to 'raise funds for the business'. Often to start up - or expand the business.

But when a company is worth billions, and the CEO is the richest man in China something doesn't smell right.

The truth is that the stock markets are fraudulent gambling dens for the rich to become richer.  

Let's look at the unintended (possibly) consequences of some of the changes put into the stock markets.

Short selling - is how stock/share prices are manipulated.  What the big banks and brokers do is wait for the number of orders in the systems to get to a certain price and then set a massive bet against that price, creating a panic sell or buy, short selling enables the fraud to work both ways.

I just said that the brokers wait for a 'certain number of orders' and this takes me to the second fraud.  These brokers 'know what is in the system'.  The 'order books' are open so they have a great advantage over retail traders.

Now, the poor retail trader is a lamb to slaughter. Not having access to the order books puts them at a great disadvantage too. Not to mention that they have to pay extra Fees simply for holding the shares if they are in a leveraged position.  on average 70-80% of retail traders lose money on the markets and foreign exchange. This number has to be published by the retail broker so is easily available on Broker comparison sites.

So what is wrong?  Well, apart from the massive international fraud rings that run the exchanges and brokerages.

Would you be surprised to hear me say that they are not smallism? 

The Smallism vision of a stock exchange is (unsurprisingly) local. Imagine this scenario:

 Your friend wants to start hairdressers but needs to raise capital. She would then register her company and her shares and then place those shares with a local stock exchange, for local people and businesses.  She then goes to all her friends and asks them to 'chip in a few quid' to help her get started.  Once her IPO is finished she has raised the capital and starts her hairdressers.

Of course, not just her friends, some of the shares are available over-the-counter (OTC) at the share shop, and how much people are willing to put into this investment will be a balance of what she has promised to pay back in dividends and the resale expectations of the investor.

Additionally, those local people who have invested are more likely to use that salon to ensure their investment is working well, to see it operate and maybe suggest improvements. Also, they will recommend their friends to use it. 

This leads us very nicely into the article  Where Marx Went Wrong, and how for a stable economic community to operate optimally the customer must also be the owner.  Read more about that here.

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