[permaculture] permaculture investing & stock markets

Kelly Finigan kfinigan at spots.ca
Sun Jan 4 19:32:00 EST 2004


On Sun, 4 Jan 2004 10:45:10 -0600, Chuck & Linda wrote


> Well maybe but I am doubtful as all the companies 
> which participate in the stock market are subject to the pressures 
> to post short term gains and all their operating decisions are 
> geared accordingly. 

I wholeheartedly agree and add: 


When "investing" in the stock market, 99% of the time, no investment is 
ACTUALLY made in any company - you simply pay the current owner of the stock 
and you (in theory) get the stock certificate. The PREVIOUS owner makes all 
the money (i.e. you are actually investing in him/her). The exception (about 
1% of stock trade values) is an Initial Public Offering - when the company 
first issues a set of shares/stocks. In this rare case, you can 
actually "invest" in the company, giving it seed capital for some work you 
hopefully believe in / are excited about.

AT ALL TIMES, you are buying something that must be sold to somebody else 
(occasionally the company) to obtain value yourself (a few companies issue 
dividends these days, but these are usually small). HENCE, to get 
your "investment" back, someone must be convinced to buy your investment at 
a (hopefully) higher rate. Your profit comes after clearing all charges for 
commissions, management fees and capital gains taxes.

Mutual funds are the same, except of course, they are a collection of stocks 
(and sometimes bonds, GICS, cash and T-Bills). Still no real "investment" in 
any company. Management fees are typically 1-2% - even if the "fund" loses 
capital value (this differs from a stock, in which case you don't HAVE 
TO "lock in" your losses by sellling a stock that is worth less than you 
paid). Management fees also increase if fund managers flip invesments a lot 
(they have to pay for brokerage fees etc) in an attempt to increase profits.

On the whole, the stock markets today boil down to Vegas-style speculation. 
Investing in PRIVATELY held organizations is different (although still 
potentially risky) in that you ACTUALLY invest in the company.

ciao,
Kelly


--
Kelly Finigan, M.Sc. P.Eng. Permaculture Designer
~ Sustainability consultant & ecological designer ~ 

744 - 4 Street NW
Calgary, Alberta T2N 1P2
phone 1-403-283-7270




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