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Technology Stocks : Intel Corporation (INTC)
INTC 33.62+0.3%Nov 20 3:59 PM EST
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To: Robert Douglas who wrote (77635)4/2/1999 11:53:00 AM
From: Paul Fiondella  Read Replies (2) of 186894
 
Trading Fido back and forth

That was a good example. Another is this --- productive vs speculative investment.

During the 19th Century and up until the New Deal, market economies were plagued by financial panics (some hints of which we've gotten again with the Asian crisis).

In these panics capital invested in the stock of companies collapsed and became worthless paper and with it the wealth of those individuals whose fortunes were based upon non-ownership of productive goods.

Thus the owner of the productive goods, say Bill Gates, remain in control of the productive asset, Microsoft, even during the most severe depression whereas the owners of shares in Microsoft lose the value of their shares. Microsoft still produces goods and Bill still owns MSFT in any financial collapse.

So now look in the mirror and ask yourself what happens to your net assets if your stock became worthless. (You can just define worthless as less than what you paid for it for some substantial period of time. In the case of the Great Depression took a generation for the value of the stock to recover.)

The truth of the matter is that those who own the means of production actually benefit from wiping out speculative capital from time to time. After the cleansing, new capital costs less and capital shifts to productive investments again.

Don't think Greenspan's investment in Treasuries and not stock in his portfolio doesn't mean something.

In any scenario in which the stock market substantially declines, the money in your pocket gets transferred to deeper pockets.

Anybody want to trade Fido.com? Intel pay enough of a dividend to live on?
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