philosophy-obooko-mind0016

the fact that the vast majority of nations subscribe to what
Adolf Hitler derisively termed "Judeo-Christian morality."
Agent-Principal Problem
In the catechism of capitalism, shares represent the partownership
of an economic enterprise, usually a firm. The
value of shares is determined by the replacement value of
the assets of the firm, including intangibles such as
goodwill. The price of the share is determined by
transactions among arm's length buyers and sellers in an
efficient and liquid market. The price reflects expectations
regarding the future value of the firm and the stock's
future stream of income - i.e., dividends.
Alas, none of these oft-recited dogmas bears any
resemblance to reality. Shares rarely represent ownership.
The float - the number of shares available to the public - is
frequently marginal. Shareholders meet once a year to
vent and disperse. Boards of directors are appointed by
management - as are auditors. Shareholders are not
represented in any decision making process - small or big.
The dismal truth is that shares reify the expectation to find
future buyers at a higher price and thus incur capital gains.
In the Ponzi scheme known as the stock exchange, this
expectation is proportional to liquidity - new suckers - and
volatility. Thus, the price of any given stock reflects
merely the consensus as to how easy it would be to
offload one's holdings and at what price.
Another myth has to do with the role of managers. They
are supposed to generate higher returns to shareholders by
increasing the value of the firm's assets and, therefore, of
the firm. If they fail to do so, goes the moral tale, they are