Hi ztect,
I detect of whiff of old fashioned righteousness to your note.
I probably cannot and will not speak for the author of the post you address your questions to. But in a general sense I feel I have some understanding of what it is that you feel has run amok in this market.
Providing the capitalization for worhty companies is something that is covered in spades in this county. In 1999 alone, the amount of money flowing into firms from venture capital is expected to be north of $20Billion. The research budget of Microsoft alone will be $3Billion, in addition to the likely $8-10Billion that M$ will invest in other ventures. ($5Billion to T alone, so that M$ can piggyback on the cable modem/ broadband bandwagon.) This is just the tip of the iceberg.This is just onecompanies investment in the future. So what possible difference can it make what one individual could invest.
Let's think a bit about what the Grandmaster is contributing to the betterment of us all. On the face of it, daytrading appears to be a case of economic parasitism. But let's look a little deeper. In order to be engaged in his "play" activities he (or she, as the case may be) would have to rent a seat at a SOES or other facility or set up a trade desk at his own location. In doing so, he will be paying a vendor who in turn will most likely be putting money into the real economy by paying rent for office space, by leasing or buying equipment, paying a telecom vendor and paying for a staff. All legitimate and worthwhile economic activities. If the I.G. is really good, he is supporting autoworkers when he buys his new Lexus. And hires restaurant workers when he goes out to celebrate his successes. Hires domestic help to run his household. So, ztect, I.G. and his compatriots seem to be doing quite a lot for the betterment of us all.
But, wait a minute you say, he is not producing anything of merit. Well, he may not be producing anything that you can physically hold in your hand, but then neither is a bureaucrat or a lawyer or an entertainer and yet each of those categories of folks are linchpins in the modern US economy. And they are all important components of our overall welfare.
But when you invest in a company, you're INVESTING in more than paper.. No, ztect, he is investing, from a physical point of view, in less than paper. He is investing in bits. Ephemeral electronic/photonic signals that exist only in an ethersphere until a paper confirmation needs to be delivered, a mandate from the SEC that is actually quite archaic and should be put to rest, saving the forests for the next vaction that our indefatigable I.G. wants to take in the countryside. Where he'll contribute yet more to the welfare of B&B owners, ski resort owners and workers, gas station attendants,park rangers, highway patrol officers (not just fast on the keyboard) and dishwashers.
So, on balance, while I.G. and his bretheren are reducing the future welfare of those who put money in the market only to lose a portion or all of it by investing in the wrong "pony" or by panicking, or by buying mutual funds that dissipate earnings power, or by just plain dumb trades, the daytraders are boosting the welfare of the staffs of CNBC, Bloomberg, the WSJ, Barron's and the whole business media complex as well as the on-line world, simply by giving us something to talk about. Isn't that enough?
Ry
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