Friday, May 8, 2020

Capitalism is Sick 2



The stock market is not the economy, lather, rinse, repeat. The market has optimism based on plans to reopen the economy, but there is no guarantee that business will take off because many people are a) broke and/or b) concerned for their health going back to work in a potentially unsafe environment. There won't be a "normal" anytime soon.


2 comments:

Formerly Amherst said...

Hi Vixen, actually mixed economies are sick. There are no capitalistic societies in the world today. However, you could also say that socialism is sick, communism is sick, plutocracies are sick.

And what they are all suffering from is a sickness called the corona virus.

I have been staying away from politics lately, because politics is loopy at the best of times, and now that we are all in lock down mode it is downright certifiable. The idea that people would be trying to make political points when everyone is forced to stay at home and over 20 million people have lost their jobs is almost the definition of disassociation.

For what it's worth, stock futures, like all futures markets, is a very quick changing index. And people play these indexes by going both long and short. During the great depression a lot of people got rich by placing puts on various stocks. (Think of it as put down, call up.)

A put is designed to increase in value as the market goes down, and a call is the designed to increase in value as the market goes up. Many people protect their stock market positions by buying a put of a call (which costs money) to make money if the market goes against their positions.

The stock market itself (with its many indexes) is also an economic indicator that suggests the strength of the economy. The futures market on index is not. They change too quickly to mean anything.

If you invest in, say, the grocery store that your family works in you actually have ownership and participation in the company. The futures market is like having a position of red on a roulette wheel. What you own is a small piece of geography for a limited period of time.

So if you invest in the grocery store you actually own something. If the stock goes down you have less asset value, but you haven't lost everything. In the futures market like the roulette wheel, when you lose, you lose everything.

In fact I'm going to be giving a small course on such matters in the not too distant future.

Vixen Strangely said...

As always, you make interesting points. The futures index is kind of a weird indicator to me because it feels a little like fortune-telling, and seems to be based on algorithms, hunches, dowsing rods, and "this guy I know" stuff as much as anything else. One of my grouses about investment as an indicator regular folks pay attention to is that not a lot of them have enough excess capital to buy into the game, so for them, real value isn't experienced in dividends, but in paychecks.

As a person who has worked retail and been retail-adjacent for years, one of the shocking things I've found is that thriving, or at least, solidly performing, businesses, had been taken over by vulture capitalists. They expand, they merge, they update stores' looks, then they start getting raided for how they can be more profitable, in ways that quite neglect what they were started for: to sell goods. One of the dim bulb things failing retailers do is cut back staff because they see employees as expenses--not as positive assets. I've been a store manager watching people leave on a busy day because there was not money in the budget to have enough registers open to make it worth my customers' time to stay. I watched money go out the door and local management have their hands tied when we knew ways to get loyal customers that corporate had no interest in.

I put part of my paycheck into the stock program. It didn't pay back what it could've. My ownership was really my paycheck. While I was working there, I wanted to be great at store cleanliness, accessibility, helpfulness, because if we did well, we could give my good employees more hours. There were some good people. When business was light, I was personally affected: part-timers with few hours would walk off. Couldn't staff weekends. Obviously we weren't hiring anybody.

So, the way I view coronavirus and business is from that management lens: is it worth it to open relative to the business walking in, and what is the harm to the employees? Customers and staff are literally the future of my (theoretical) business--so first, I don't want to harm them. Opening is not without costs in terms of product (I have no way of estimating my foot traffic or real demand) and staffing. So if I open before my particular area is safe to be open, with protocols in place like distancing (6-ft taped-off line at registers, cutting off # of people inside) hygiene (hand sanitizer pumps/sanitizing wipes), and barriers to prevent contact (plastic dividers at registers between cashier and guest) and put my best frontline staff out--can I risk employees being infected anyway, still having light foot traffic, having to shut down again, and being out the outlay for any shelf stock I put out? (Not all at once, just...any combo of the above?)

Real investment is the day to day operations like that--the shit that can go wrong all the time. It isn't stock purchases. Stock is like--betting on a Monopoly game. Actually running a store means you know your business inside and out, and still and all, someone else is spinning a roulette wheel with your name on it.

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