The basic question that comes in the minds of the beginners is that how the stock market works. Understanding the stock market fundamentals and the essentials of investment in stocks discussed in this post, would eventually bring the process of buying and selling of shares within a methodical framework and it will take little or no time for you to know the ropes of the equity world about how to invest in stocks. This fund (held by ValueCap) will be positive for the stock market for the short-term.
I understand what you’re saying…but if I anticipated losing $50,000 dollars in a deal, and only lost 20,000…I’d consider it BETTER news than if I had lost $50,000. I’m not saying it’s great news that I lost anything at all, but it could have been $30,000 worse…I’m not sure if that’s what’s going on here, though. This immediately reminded me of how China government injecting funds to support share market.
If you watch the Dow regularly (and bear in mind other vital data’s effects), it always rises on news of unemployment and drops with news of worker gains, like increased minimum wage. Since consumer DEBT is about 70% of our GDP (which by the way is a fairly recent phenomenon – I’ll pull up the old stats if I can find), the stock market ‘fake growth’ cannot be sustained. Today I noticed the DOW was dropping a bit all morning and then within half an hour of this news making front page yahoo, it started to rise.
Most people (the other 90% who own the remaining 10% of all stock collectively) who own a little stock for their pension funds or whatever do not benefit, in my opinion, from such a situation. While setting up a pool to support the market will be good for the market in the short run, the jury is out on whether this will mark the bottom for the market. China, which is still wrestling with measures to support the stock market as well as control its depreciating currency, has very limited success. China stock market is still not far from its recent low and its foreign reserves had dropped substantially.
We face the same problem as China – plus the problem of political uncertainty – may have to contain with the same non-plus result. The government is rightly worried about the negative wealth effect of a depressed stock market and feels the need to act now. However, if the plan is to push up the market to help our embattled leaders, then the buying may not be sustainable as the stock selection may be biased or compromised.