What’s the purpose of currency?
After watching Facebook’s IPO (initial public offering) of its stock fail and having many of its early investors lose shitload of money, I started thinking about the nature of money and what it really means.
The stock market is literally how the organized world puts value to money. Paper money by itself has no value. Not even the number printed on a bill. Say I have a one dollar bill. Ideally, the value of that bill is equal to one whatever. It represents the least amount of value in paper form. But the stock market can define the value of that bill. If they deem so, assuming there’s some actual data crunching going on, then the stock market can now say that one dollar bill is actually worth two dollars. So, you only have one paper bill, but it’s worth two now. Therefore, that number printed on the paper bill is rendered moot. See, the intangible value of the currency is what’s important. (And tearing the bill in two will definitely not be the equivalent, I know some are thinking it)
That is why it’s called the money market. Imagine that. You can make up money and set its value.
I’m not someone who gambles. I’ll admit it, I just don’t take those kinds of risks. And frankly, I don’t have a deep understanding of it all. But I’d like to know how one can make something valuable, make it important, especially when there is no tangible way of representing it. You can’t just change numbers, can you?
$1 = $2
So, I can buy some chicken McNuggets (4 pieces) if I had a dollar, now I can buy two (4 x 2 = 8 pieces)? It’s all so abstract. We can play with these imaginary numbers until it gets really real. That’s what makes it incredibly risky and dangerous.
Those who know how to make money in the stock market have to invest big money to make a big return. But they can also lost exponential amounts of money. Once you go below zero, the stock market doesn’t let you reset your funds like a video game. It’s the stock market, it defines the value of money. If your shares equal or go below zero, you’re done for. At least with a bank, you might get some kind of guaranteed protection. $200 = $200, no matter what the stock market’s sorcery.
If I had the money to gamble, I’d have to learn up on it thoroughly before I roll the dice. That’s that instant millionaire stuff right there. You need to invest at least $100,000 to see any kind of big return. You can open a trading account with as little as $1,000 and if you’re good, you’ll make like $10-20. That’s not a big return, especially if that goes toward trading fees, which is the most likely case. Then you don’t even make a return at all.
There’s all sorts of trading strategies. I haven’t read too deeply into them. It really is all chance. Anyone who can make a guaranteed profit with the stock market has to be an insider and their game is rigged. It’s like if no one is going to the store to buy its products, but the store owner just paid himself double his salary. Where did he pull that additional money from? See, my logic says in that case it’s rigged.
In summary, making money through the stock market is risky unless you really, really know what you’re doing or are a high roller. There’s no safety net. Once the value of your shares tank, it’s gone forever. At least most banks have the FDIC and will guarantee your money is still yours, even if the bank goes out of business.
So, Facebook, I wish I had the money to gamble with you guys, but what have you done lately? What new gimmicky, catchy product are you going to roll out next? Are you seriously going to jump on the smart phone train? Why bother?
When was the last time Facebook made me any money? I rarely sign-in there.
Ah, tie-in. Now you’re getting it.
Tags: bull market, cash, facebook, finance, flow, funds, get rich quick, hedgefund, howto, insider, invest, ipo, money, morgan stanley, portfolio, rich, shares, stock market, tips, trading, tricks, trust fund, tutorial