Banks and the stock market
If there's anything that should highlight the problems with the stock market it's the result of President Obama speech about curbing banks. Down went their share price and with it the stock market. Nothing's been done yet and chances are nothing's going to ever happen; yet still they tumble.
As far as I can tell there are a couple of reasons for this.
Canny stockbrokers realise the amateurs will hear this and pull out of bank shares thus lowering the prices; as this is going to happen it's in their own interests to get in there first before they fall too much.
Secondly knowing that stock prices will tumble it's in their own interests to sell now and buy back later when the prices have dropped knowing that once the initial panic is over the prices will rise again.
Remember all this is based on absolutely no actions taken by anyone at all right now. Speculation - the cornerstone of our economy.
4 comments:
Proof if proof were needed that a company's share price is in no way related to how well the company is performing, how much profit they make, or anything else. It's just an arbitrary number magiced out of thin air.
When we took on our interrim CEO (who's still here, BTW), he said that one of his main objectives was to raise our share price again.
Except that, as I just pointed out, share price has nothing to do with anything. It changes at random, and there's nothing you can do to make it increase or decrease. It would be like trying to make sun-spots appear…
"We've just made $3bn in profit!"
"Yeah, but we think you'll only make $2.5bn next quarter so we're going to sell your shares"
or
"We've just made $2.5bn in profit!"
"Yeah, but you made $3bn last quarter looks like your business model is failing so we're going to sell your shares"
It's past a joke.
Heh, reminds me of that anti-piracy website. It says “music sales are down 20% from last year”, but makes no attempt to demonstrate that this is actually because of piracy. It just assumes this. (I mean, let's face it, it can't be because the music industry only churns out generic, mass-produced crap that nobody wants to buy anymore, right?)
Don't blame piracy blame Global Warming it's about as relevant heh.
Post a Comment