expertpanda Posted July 8, 2012 Report Share Posted July 8, 2012 is it wrong to purchase stock in a company that benefits and purposefully lobbies and jockies for government contracts? Let's say Lockheed Martin Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 8, 2012 Report Share Posted July 8, 2012 (edited) No. After the IPO, the company doesn't profit from stock trading - all of it is done by individuals who have bought shares. On a side note, I do think it would be hard to find a company that is perfectly aligned with objectivism. Businesses will always lobby and will continue to lobby for beneficial government policies. Granted, it is wrong, but I think it speaks more to our policy makers who allow it to happen. Edited July 8, 2012 by Matt Giannelli Quote Link to comment Share on other sites More sharing options...
expertpanda Posted July 8, 2012 Author Report Share Posted July 8, 2012 the company benefits from high share price with: a) compensation costs via stock options lower borrowing costs on debt if low risk c) potential future offerings to raise funds but i agree with the other part you said Quote Link to comment Share on other sites More sharing options...
expertpanda Posted July 8, 2012 Author Report Share Posted July 8, 2012 haha it turned b into a smiley Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 8, 2012 Report Share Posted July 8, 2012 (edited) Right, but how does buying shares increase the share price? Speculation, business expectations, and business performance drive the price up or down, not you buying shares from other shareholders. Edited July 8, 2012 by Matt Giannelli Quote Link to comment Share on other sites More sharing options...
Hairnet Posted July 9, 2012 Report Share Posted July 9, 2012 (edited) You can't really blame business men for taking money from the money hole. Blame the people who force us to put money in the money hole. http://www.youtube.com/watch?v=eyS5n0ByLag&feature=fvwrel Edited July 9, 2012 by Hairnet Quote Link to comment Share on other sites More sharing options...
expertpanda Posted July 11, 2012 Author Report Share Posted July 11, 2012 Matt, by your logic it's moral to buy shares but not IPOs? can I buy bonds? Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted July 11, 2012 Report Share Posted July 11, 2012 I don't see any reason to avoid stocks, bonds etc. of companies that do business with the government. In the case of Lockheed Martin, I imagine most of their business must be defense-related.So, at least their general area of operation is legit. Some business might simply be lobbying the government to use its force in order to protect their position, or to get money for something that the government ought not to be doing. However, many businesses have to lobby to some extent, and it's nothing to feel guilty about.Voters put them in that position, and businessmen are pragmatists who simply deal with the reality the voters created. So, except for the more egregious examples, I don't think this should influence your decision on investment. Quote Link to comment Share on other sites More sharing options...
agrippa1 Posted July 11, 2012 Report Share Posted July 11, 2012 Right, but how does buying shares increase the share price? Speculation, business expectations, and business performance drive the price up or down, not you buying shares from other shareholders. You're kidding, right? Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 11, 2012 Report Share Posted July 11, 2012 No. One person doesn't affect the stock price. It goes up and down because the law of supply and demand. If more people demand it because they expect the business to do better then the price will go up. But one person cannot control the market place. Quote Link to comment Share on other sites More sharing options...
agrippa1 Posted July 11, 2012 Report Share Posted July 11, 2012 No. One person doesn't affect the stock price. It goes up and down because the law of supply and demand. If more people demand it because they expect the business to do better then the price will go up. But one person cannot control the market place. Assuming an equilibrium in a stock price, all buy orders are at lower levels than all sell orders, and the current price reflects the last buy order that was fulfilled by the lowest sell order. When you place a new buy order, without a target price, you are sold the stock at the lowest sell order price, plus a brokerage spread. The result is the price rises from the previous exchange price to the new exchange price. Likewise, if you place a sell order without a target price, you will sell to the highest buy order on the books, minus the spread, and the price will drop to that new price. You won't affect the next exchange, except possibly to signal another person to sell or buy based on the price change, but you do immediately "set" the price of the stock for your transaction. When hundreds and thousands of people are making sell and buy orders, your transaction gets lost in the noise, but the price is driven up or down by the ratio of individual buy orders to individual sell orders. Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 11, 2012 Report Share Posted July 11, 2012 Matt, by your logic it's moral to buy shares but not IPOs? can I buy bonds? Sure you can do whatever you want. I don't think it is immoral to buy IPOs. Is it immoral to buy crops from a company that has subsidized crop insurance? Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 11, 2012 Report Share Posted July 11, 2012 (edited) You won't affect the next exchange. Right, so we agree, one person doesn't control demand. Edit: I reread my post, I meant to say no one person *sets* the stock price, not *affects*. Edited July 11, 2012 by Matt Giannelli Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted July 11, 2012 Report Share Posted July 11, 2012 the company benefits from high share price with:.. ...In a sense, the company is the shareholders qua shareholders. So, in addition to the points you listed, shareholders qua shareholders benefit when the price of their stock goes up. This is an important reason so many CEOs focus so much on their stock-price. Quote Link to comment Share on other sites More sharing options...
Nicky Posted July 11, 2012 Report Share Posted July 11, 2012 Right, but how does buying shares increase the share price? The law of supply and demand. Quote Link to comment Share on other sites More sharing options...
thenelli01 Posted July 12, 2012 Report Share Posted July 12, 2012 The law of supply and demand. I know that. My point was that one person doesn't set the stock price. One person doesn't control demand. Quote Link to comment Share on other sites More sharing options...
expertpanda Posted July 19, 2012 Author Report Share Posted July 19, 2012 i feel like this answer is wishy washy. you can buy stock as long as the company doesn't lobby TOO much? I thought objectivists don't think in shades of grey Quote Link to comment Share on other sites More sharing options...
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