Hi ray, Rubbish. You seem to be confusing investing with day trading. The way I understand it (corrections and clarifications are welcome) is like this: In its purest form, investing in stocks means supplying a company with capital in return for a share of the profits (dividends). This is a long-term strategy; when an investor buys shares, they expect to keep them for several years and achieve an income stream from dividends. Share price increases are considered to be a capital gain rather than income. Investing can also be a very moral and ethical activity, depending to some extent on the chosen companies. Trading, on the other hand, means seeking a profit by buying low and selling high. This is a short term strategy, with income realized primarily through share price gains rather than dividends. Day trading in particular is a very short term strategy. When a day trader buys shares, they are likely to sell them again on the same day. Now, two points follow: Firstly, while day trading may make up the vast majority of stock market transactions, this is clearly not a good indicator of the people who buy and sell shares, because each individual day trader will make hundreds or thousands of times more transactions than an individual investor. It may be the case (I suspect that it is) that the majority of individuals who own shares are in fact long term investors. People who inject capital into companies to enable them to produce goods and services, employ people, and maintain a functional economy. To summarise: A stock market day trader is a gambler like yourself, someone who wants to want to win money from anyone -- even senile, sweet old grandmas. A stock market investor is someone who wants to earn money from the production of goods and services by chosen companies. One last thought about morality: What are you contributing to the world and human society? What are you doing with your talents?
Pete -- Your scenario does indeed apply either to initial public offerings where the funds capitalize new companies directly, or to the later sales of treasury stocks by the companies themselves. The companies may also offer other varieties of investment opportunities such as corporate bonds. Such investments do indeed offer the opportunity to participate in the future and profits of the companies themselves as opposed to merely speculating on the third-party resale values of such securities. Such direct, long-term and medium-term investments might indeed be moral and prudent as you described. However, the speculative value of present-day securities has exceeded the simple business value of the underlying companies so overwhelmingly that many companies have completely omitted or drastically reduced dividend payments because they have so little to do with the speculation-driven prices. In other words, the dividends, if any, are so miniscule compared to the sale prices of the securities that the companies know that speculation is the true motive for their purchase and that no dividend, or only a miniscule dividend, need be offered. The tail now wags the dog. and who would be this dog if he or she were simply a moral and prudent investor in the companies at issue? I'll give that investor the moral right to speculate to a profit as a long-term strategy, but somebody has to win, and somebody has to lose. The skillful, the better informed, and the self-controlled will speculate to profits more readily than senile, sweet old grandmas, and it is fundamentally unfair that hard-working human beings will naively put their hopes for a decent retirement into long-term holdings of stocks that only maintain their value at the whim of the largest, wealthiest holders. Baby boomers make up the vast majority of our current population, and they will want to sell their holdings in their retirement years for income, but when they all reach those later years like a huge demographic balloon payment, there will be more sellers than buyers. Economics 101 will dictate the ugly outcome. No one has convinced me that the world will buy that oversupply of securities. If such were so, everything would be fine, but why should it be so? I don't know that it would not be so, but that's a huge bet with grandma's life savings -- perhaps even a reckless bet (one where the risks have not been reckoned). So, what am I doing for myself and society? I'm trying to learn skills and knowledge that will allow me to flexibly adapt to changing conditions and opportunities during difficult times. Gambling, as a study, both psychologically and strategically, is the most difficult challenge that I have ever set for my life. I sincerely call it "Yoga for the Mad." The payoff is not just money -- it requires personal transformation and massive, high-level skill sets: logic, mathematics, computer programming, physics, engineering, cheat-detection, martial arts, law, and psychology. Of those, law is accomplished. See, e.g., Pratt vs. Sumner, 807 F.2d 817 (9th Cir. 1987). I have an AAS-Legal Assistant degree with Honors from Pima Community College which has an ABA-approved curriculum. With my pro se litigation experience came a self-education and long use of categorical logic, but I want to go deeper into symbolic logic and other logics insofar as they may be useful. I am very poor and shallow in math, so I have studied and will continue to study mental math techniques so that the rest of the journey will go quicker and with less frustration and pain. I have some computer programming experience in Basic, Visual Basic 6, VBA, and Javascript (and HTML 4), but my goals there are modest: I merely want to model outcomes and create tools for my own use. Any salable programs that I might develop would just be icing on the cake. As to physics, I plug away at popular books that don't require the math skills that I lack, but I will obviously need more skills and understanding. As to engineering, it is utterly beyond me without higher math skills in place, but I will need it to understand physical machines like card shufflers, etc. As to cheat-detection, there are plenty of high-quality videos and books that teach what to look for. As to martial arts, I've boxed, done some Judo, been in riots, defended against shank attacks, etc., but I want to learn a high-level, internal martial art so that I can overcome casino goons if they try to ratpack me. A famous card-counter, Ken Uston, died a few weeks or months after such an attack. Finally, the massive hole, the sine qua non, is a complete psychological transformation to achieve peace, self-understanding, and complete self-control. To that end, I use and love "The Option Process," but I have to get better at it, and I'm studying other approaches, as well. The skills that I will have to learn along the way will be employable anywhere. Very Respectfully, Ray Donald Pratt
What of companies that do pay good dividends? Who loses? Your assertion was that all investing in the stockmarket is necessarily gambling. Pointing out specific cases of gambling is irrelevant, if you ignore the investments that are win-win. Secondly, long-term capital gain investments can also be win-win, even without dividends. You buy a share from me today for $10, and sell it to me in five years for $15. If we are both prudent investors, the value of the share in both transactions is a good reflection of the true value of the company. Who loses? Short term fluctuations in stocks can indeed be driven by speculation. But long term trends are driven by the production of actual good.
Perhaps what you are missing is the golden rule. You list many things you do for yourself... but what of others? What are you contributing to the world and human society? What are you doing with your talents?
Pete --- The overall stock market is driven by speculation, and the availability of a stock that pays dividends is not win-win ipso facto because of the dividends. It is only win-win if both parties to the transaction win and no one loses. Obviously, if the speculations of the buyer fail to materialize, the buyer loses; and, if the speculations of the buyer do materialize, the seller loses. And, the same could be said in reverse that if the speculations of the seller are correct, the buyer loses; and, if the seller is wrong, the buyer wins. Let's call the results of bets in the stock market between willing participants with diseven information to be moral, or let's call all imperfect results to be immoral, but let's not pretend that anything in the stock market is pure win-win. As to dividend-paying stocks, I challenge you to find a stock listed on a major exchange and that pays regular dividends that are even 1% of its sale price. I have not looked, and the stock market is huge. Find one. I am currently a taxi driver, and I have a large personal customer base among students at the University of Arizona. The reason that I have a large customer base, especially among the sorority members, is that I always get the customers home safe with all their belongings, so far as it is in my power to do so. My customers know that they can trust me to treat them with respect regardless of their condition. They all feel safe riding with me alone, no matter what their condition. Other taxi drivers are referred to as "sketch" and "T-Locs" (Tucson Locals with a predilection for criminal behaviour and values) or, alternatively, as "T-Lugs." For example, if I find a purse, a wallet, a phone, or a camera, I will do everything in my power to find out who it belongs to and get it to them intact, with all their monies and cards, if any. I was a landscaper here in Tucson for 6 years -- two years part-time self-employed and four years full-time self-employed. I grew my business by about $8,000 a year until I took employment with Intuit, Inc. as a salesperson (for 1 & 1/2 years). In all the time that I was self-employed, no one ever failed to pay my bill, and I worked almost exclusively by the hour at $25 per manhour plus materials and fees. Everyone paid my bill because virtually all my customers were successful business owners and they knew from watching me work and from my bills that I was completely honest in all my billings and that I would not charge for any of my mistakes and that I would pay for anything that I broke. Let me emphasize that in six years of business I never had a customer fail to pay my bill. Not one of the corporations that you would buy stock in is that honest or that respected -- not even one. When you submit insurance claims, it's a miracle if they pay what's due without requiring you to get a lawyer. When you get your cell phone bill as a new customer, it's a miracle if they have not billed you for hundreds of dollars of services that you never requested. When you submit a workman's compensation claim, it's a miracle if you don't have to hire an attorney, even when dealing with the government. We could go on forever. Maybe I need to get off my high horse, but at least I have one. Gambling within the rules against offered games is not evil simply because I make a rational effort to win. Winning money that someone else has legally lost is not evil if I have done nothing evil to make them lose that money. Very Respectfully, Ray Donald Pratt
In the short term only. Over a period of years, it is driven by the creation of real products and services. Well, I just looked at the first company (alphabetically) on the Dow Industrials. 3M Company is a major component of the S&P 500 and Dow Industrials indexes. The company is also a dividend aristocrat, which has been consistently increasing its dividends for 51 consecutive years. From the end of 1998 up until December 2008 this dividend growth stock has delivered an annual average total return of 7.30% to its shareholders. (From iStockAnalyst) Here's a list of 800 high yield stocks: the Big Dividend Stock List. They range from about 2.5% to about 20%. You could also check out S&P's Dividend Aristocrats, a list of companies who have consistently increased their dividends over 25 years (through good times and bad). Good for you! You might be right (although I doubt that you've actually checked, and it would not surprise me if you were wrong), but so what? The standard you describe is a high one. Simple bad luck would place it out of reach of even most small organisations, those who actually provide people with employment. I think that in practice, you will find that you are wasting your time. Craps is a game of chance, and in the unlikely circumstance that you manage to win highly and consistently by skill, you'll find that either the rules change to restore the status quo, or you'll find yourself unwelcome at any casino. In the meantime, you could be spending your time more productively, which some would argue implies more morally.
Pete -- I stand corrected -- I had no idea that any stocks would be paying dividends anywhwere near that high. As to my physics question -- if you are not interested, that's fine. Very Respectfully, Ray Donald Pratt
Good Sir, Although the rules require that the dice fly through the air as opposed to being rolled entirely on the felt from beginning to end, the dice can and usually do hit the table before they hit the back wall. The back wall is composed of even rows of small rubber pyramids which are intended to randomize the dice. Hitting the pyramids first, straight on, would not only randomize the dice but would often cause one or both dice to bounce out of the table. My goal is to hit the underside angle of a row of pyramids after bouncing up from the table, but not straight into them. I want to reflect off of each surface that the dice hit, not smack straight into any surface. (An exception is possible on a hard, inelastic table with a roll straight into the bottom flat rubber edge where there are no pyramids, but the vertical vector of the throw needs needs sufficient distance from the back wall to dampen into a flat roll or the dice will randomize. This throw will fail on a springy table because the vertical vector will not easily dampen with a hard, fast throw.). You were correct in assuming that hard hits into the felt are usually bad, but I believe from the hard, fast rolls into the bottom rubber on hard tables that the problem is that the composite vectors of an arc throw need to have a clear overriding vector or anything is possible -- that is what I believe "random" means: equa-possible. Here's what I know about backspin: If I throw the dice high into the air and just a short distance in front of me with extremely high backspin, the dice will often stick to the felt right where they land. Backspin can negate both the vertical and horizontal vectors of an arc throw. And, I learned the hard way on the short, minature craps tables called "tubs" that I have to let the dice fall into a roll with little backspin because the forward distance is too short to create an overriding vector if normal backspin is added. It is very, very difficult to let dice fall into a roll evenly from your moving hand. What I don't know is what the effect of backspin is when either or both the vertical or horizontal vectors are not negated. Would the dice jump high? Would the angle of reflection be lower than the angle of hit? Could it go either way depending on the balance of forces? What exactly does backspin do to the horizontal and vertical vectors of an arc throw? How? I need to be able to separate the effects of all my vectors from what I see the dice do on any given table. This beast called angular momentum is a confusion to me. Any thoughts or guesses would be very much appreciated. Yes, you are allowed to pinch the dice together, and various grip styles do indeed hold the dice together, but nothing keeps them together upon release except a perfect throw. Very Respectfully, Ray Donald Pratt
RayDPratt ... I apologize for coming to this thread late, but I enjoyed the conversation and wanted to add a little reality to the theory. I am a CPA before taking a sabbatical to live in Las Vegas for 4 years - the last 2 years on the Strip where I could roll out of bed and go downstairs to play Craps ... I did so for an average of 6 days a week over these 4 years. I become a student of the game and a dice influencer (influence rather than control the dice) to support my lifestyle. When you discuss normal probabilities according to the literature (and none of it is casino approved literature), it is based purely on theory of fair balanced dice being employed by the casinos. In reality the casinos in Las Vegas often use unbalanced biased dice to increase their house edge from a little over 1% to more than 10% in some cases and even as high as 30% on some bets. What makes me interested in your expertise is how the physics of the unbalanced biased dice increases the House edge. For more on our Biased Dice research, see some brief explanations on our website Craps Advantage Players. Any insight you could add would be most appreciated !!
