Your Questions About Is The Stock Market A Ponzi Scheme

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Michael asks…

How is the stock market stocks not just a ponzi scheme themselves?

With executives and employees making huge salaries at the top and trending down. Stocks rise when purchases are up and fall when there is a fall off. When things slow up there is no money so they lay off people because money is slow to come in and stocks fall in price because no new money. Now that seems to me like a Ponzi scheme if i have ever seen one. As times get tough the money is tighter. So it seems to me that new investors are the new money coming in that pays these executives there huge salaries and the stocks are basically a worthless piece of promise paper just like you get in the ponzi scheme.
I think that is why the stock market is so complicated that even the experts can not explain how everything works because the truth would dessimate them. Just as the banks they do not have assets to cover what they owe to the stock holders if everyone wanted to be paid.
On another note i do not care who a person is but no one on this planet should be worth 1,10 or even 100 million dollars a year for running a company. Bull.
You are not getting the jest of the question. I worked for a company Hall…..n and like a ponzi, like like like a ponzi, the new money is investors and income. If any of the two drops the company goes bankrupt. If everyone tried to sell the stock would plummet so fast your head would spin around. So as i said the investors would and could wind up with little to nothing. Are you saying that is not possible by you short explanation.
You say the new investors money is not used to pay old investors. Right. But yet my explanation is the person running the company, an executive , is the one gaining from the initial investment of money from the investor. His salary is paid by the investment money and the overall net income of the company. As this persons compensation say is 100 million a year plus bonuses means the company must make that much alone in profit to pay this one mans salary. Whoa. Now that is profit not gross income. The investor receives a stock in the company. What assets do most companys keep. Cash no because they borrow day to day capital to operate. Buildings and some small office material , computers. inventory but that is not even close to the amount of stock that is issued to investors over the years. Seems pretty simple to see that things are flimsy at wall street liars.

Justin answers:

Because it does not fit the definition of a ponzi scheme, where the money from new investors is not used to increase the assets, but rather is used fraudulently and frivolously by the promoter for himself and to pay off on promises made to old investors. In the stock market the company gets no new money in, but it is an investor in a company who sells his investment to a new (or other) investor.

Http://en.wikipedia.org/wiki/Ponzi_scheme

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