Thursday, July 10, 2014

The Stock Markets Are Just a Casino

This report from Yahoo Finance shows just how Vegas like the financial markets have become.  They are no longer about investing in something, they are no longer about owning a part of a company that builds things, they are about moving money and making short-term profits – in other words, gambling Texas Hold’em style.

The company profiled in the article is called CYNK Technology.  It claims to be some sort of social media company and its stock price has climbed nearly 25,000 percent in the past three and a half weeks.

You are reading that correctly, twenty-five thousand percent

That growth, as of the writing of this post, gave the company a market cap of around 5 BILLION dollars.  According to the filings on the company, they have no assets and at last reporting an operating loss of 1.5 million dollars.

But here’s the thing, no one can even prove that that the company exists.  It has never turned a profit, it has only one known employee, and the location of the company is uncertain.

Given that, how is that kind of growth in price even possible?

Because investors no longer care what a company makes, they just want to know if they are going to make money. They don’t buy the stock for the dividend or the long-term prospects of the company.

They buy it for the change in price.  It is buy low, sell high on steroids.

This is one of the reasons our infrastructure in America is crumbling.  Investing in infrastructure is a long-term investment and investors are looking to the next quarter, to the next trade, not years down the road.

From ten cents a share to over four dollars a share in a month…based on absolutely nothing.

If this doesn’t make the case for more regulation in the financial markets, if this doesn’t illustrate what is wrong with the ever growing investment side of our economy, then I don’t know what to tell you.

Something has to be done before we find ourselves in another recession built on the ponzi-scheme like greed of the financial players in our investor class.  Like Veruca Salt of Willy Wonka fame, they want it all and they certainly don’t care what it takes to get it.  And that includes screwing the economy into the ground and leaving the American people to pick up the tab…again.


Anonymous said...

Just went to a book signing last week for Bob Ivry's book "The Seven Sins of Wall Street" an investigative reporter for Bloomberg. A Must Read and exactly the point that you are making. Big banks have gotten worse, Wall Street has found a way to buy their loopholes from politicians so there is no accountability. Elizabeth Warren for President. just sayin

The T-Dude said...

They begged for a bail out and are back to their greedy ways.