this post was submitted on 08 Jun 2024
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I mean... It would be true if there were no derivatives. When you start betting money on whether the line goes up or down, the stock price cases being reflective of the stock's value.
In my understanding, derivatives amplify the problems and risks. Underlying that are the money people who push on these systems as hard as they can and exploit every angle. Along the lines of pushing the boundaries, the practice of brokers "loaning" shares seems like another place that's bound to cause issues at its limits. I really wish the govt would step in and impose much stricter regulation. I'd like to trust that buying stock is investing in a company rather than feeling like the stock market is a school of small fish swimming with sharks who cheat as much as they believe they can get away with. If the focus was on dividends vs growth, I think we'd be better off. Maybe I am wrong but that's how I see it.
I think of it like network security. Anything you do not explicitly disallow will be used, tried, and used in ways you probably didn't think of. It isn't a matter of expecting people to do the right (or legal) thing, most will but it's a surety that some will not. That's normal and why security is a process and systems have to adapt over time in response.