Why Bother Playing the Market?

[Akeron]

I feel foolish asking this question because I've studied economics for several years now, yet one of things I hate doing the most is empirical research in order to prove my points. Regardless, at some time or another I've come across some pieces which said that market involvement is completely irrational since returns on investments can always be improved by waiting for more information to be revealed and for other actors to take more risks. It's sort of like the deflation paradox where you'll always get a better rate for your money if you wait for tomorrow.

So why bother? You can make profits today, but you'll only get chewed up by your competitors tomorrow, and if you're an altruist that believes either that some progress is better than no progress or that the world will be better off if the market carries momentum even from self-sacrifice, your efforts are still going to be in vain because some selfish hedonist is going to gobble up all of your efforts later on. Heck, this even holds true if your "altruist" belief is in how free markets are the gateway to self-interested hedonist indulgence.

 

[samsara15]

Many of us have no choice, because our company 401ks are mutual funds. So we play the market even if we don't want to do so, and even if we fully realize that we have little or no knowledge of the market. Thank God the politicians in DC didn't force market ingnorant people to put all of their Social Security savings in stocks! What a terrible idea that was. Soon our society will also realize that 401ks based on mutual funds are not such a good idea, either.

 

[BigRob]

Many of us have no choice, because our company 401ks are mutual funds. So we play the market even if we don't want to do so, and even if we fully realize that we have little or no knowledge of the market. Thank God the politicians in DC didn't force market ingnorant people to put all of their Social Security savings in stocks! What a terrible idea that was. Soon our society will also realize that 401ks based on mutual funds are not such a good idea, either.

The idea to privatize social security did not "force" you to put your money into stocks. You could put it in an FDIC insured savings account if you chose too. Even at the interest rates of today (which are very low) you still beat the 1% return that social security gives you on all of your contributions.

 

[BigRob]

I feel foolish asking this question because I've studied economics for several years now, yet one of things I hate doing the most is empirical research in order to prove my points. Regardless, at some time or another I've come across some pieces which said that market involvement is completely irrational since returns on investments can always be improved by waiting for more information to be revealed and for other actors to take more risks. It's sort of like the deflation paradox where you'll always get a better rate for your money if you wait for tomorrow.

So why bother? You can make profits today, but you'll only get chewed up by your competitors tomorrow, and if you're an altruist that believes either that some progress is better than no progress or that the world will be better off if the market carries momentum even from self-sacrifice, your efforts are still going to be in vain because some selfish hedonist is going to gobble up all of your efforts later on. Heck, this even holds true if your "altruist" belief is in how free markets are the gateway to self-interested hedonist indulgence.

Are you talking about "playing the market" or actually "investing?"

 

[Akeron]

^

Just markets in general, not the stock market (or any other financial intermediary) in particular.