Because the man’s an ignorant tosser

Shares in quoted companies are almost irrelevant to their funding so why do we let so much emphasis be placed on them?

Shares in public companies on stock exchanges are, largely enough, the exit route for the original investors. Those people who actually stump up the risk capital to go and build the new thing do require an exit. Otherwise their insistence on annual returns would be horrifically high because they’d never be able to sell – they could only hold forever.

So, the existence of public equity exchanges increases the amount of capital spent upon building real stuff and new companies etc.

The only reason Spud doesn’t get this is because he’s ignorant. What makes him a tosser about it is that stock exchanges are the very method by which we gain what he says he wants, investment in new activities.

12 thoughts on “Because the man’s an ignorant tosser”

  1. Dennis, He Who Has A Degree In Economics

    Shares in quoted companies are almost irrelevant to their funding so why do we let so much emphasis be placed on them?

    This question comes from an “expert”, folks.

    One who teaches young adults.

  2. I used to keep an excel file of money raised on LSE and AIM but I gave up some years ago so I can only quote from the first useful site I found – that companies raised £17 billion through “Rights” issues in H1 of 2020 and £489billion from 1998 to 2020H1. The ability to raise money through Rights Issues is significantly dependent upon the share price – no-one will buy new shares if he/she/they can buy existing shares at a lower price – so Murphy thinks £489 billion is almost irrelevant.
    Of course he would just magic the odd £trillion out of thin air whenever one of his pet schemes needed some more money because it was insolvent …

  3. He’s not just a tosser, he’s a dangerous, paranoid lunatic. He seems to be predicting a coup by the armed forces now.

    “I keep getting adverse reaction to my suggestion that we are now living in a fascist state, but the evidence is overwhelming that we are. Even the military are now demanding greatest significance and resource, with the obvious desire that they might be able to react unilaterally.”

  4. Irrelevant to their existing capital perhaps, but theen that’s already raised so the cost is zero. Completely correlated with the cost of raising more capital though. This is day 1 on the financial markets course… arbitrage controls prices, not perceived value. Pretty impressive to get this 100% wrong.

    If I’m not mistaken this statement is pretty much equivalent to “the price of potatoes in shops is irrelevant to the cost of growing and distributing them so why do we let so much emphasis be placed on prices?”

  5. he says shareholders don’t own a company..someone has taken it up with him..who the feck else owns a company? he’s an idiot, he’s getting worse

  6. Bloke in North Dorset

    Stiv,

    A number of years ago his schtick was that shareholders don’t own companies, his argument was based on the claim that a shareholder couldn’t walk in to a company and see the accounts.

    At the same time he was complaining that shareholders had limited liability.

  7. First, why in that case the massive emphasis placed on share-related issues by economists, the media and others? Is it all just a giant con-trick on the investor, or are the media and economists conned too?

    Gee I don’t know – maybe it’s because share prices are at least indicative of a company’s value. What his alternative is I shudder to think. Given North Korea is apparently ‘Neoliberal’ the mind boggles

    Second, why do shareholders remain the complete focus of corporate reporting when they are so irrelevant?

    Does anyone know what this means? Shareholders are ‘irrelevant’? Where does he come up with this stuff?

    Third, why do pensions funds still persist in investing in instruments so unsuited to the needs of those that they represent; which carry such risk because their value is so obviously manipulated; and there is no social or macroeconomic gain from doing so?

    Surely they should invest in the assets proposed by Murphy which in most cases do not provide any tangible return whatsoever. All for ‘social gain’….you’ll lose your investment but feel great while doing so!

    Fourth, why do we give tax reliefs for investing in something so useless?

    He knows how to spend your money better than you do

    As several commentators have said – he’s actually becoming borderline psychotic at the moment. I’d diagnose presenile dementia.

  8. My name is Wonko and I was a Murphaholic. What I mean by this is I used to waste time engaging with his nonsense ramblings on an accounting website. One that unfortunately still gives his ideas too much publicity and credence. It doesn’t take to much effort to realise this engagement is pointless. He is a bit like Steven Bray. The ramblings are incoherent and wrong but nothing anyone can say will convince him this is so. For Murphy the Earth is flat.
    Of course the harsh truth is that he is not alone in his stupidity. As a simple example, anyone who thinks AGW is a real thing has failed to understand that the models used to support the wild claims bear no comparison to real world evidence, and the only way in which they do is when that evidence is manipulated to make it so. This is by no means the only example, but it does help to explain why I have a sign just inside my front door, facing outwards, that says “Welcome to the Asylum”. It wasn’t just the thing with the toothpick!

  9. just to offer some context, I think it is fairly clear that Murphy has no idea what a market is or how it works. But actually Lewis Carroll got him spot on, which suggests the Murphy ignorance is timeless!

    “When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

    ’The question is,’ said Alice, ‘whether you can make words mean so many different things.’

    ’The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.”

  10. 《the price of potatoes in shops is irrelevant to the cost of growing and distributing them so why do we let so much emphasis be placed on prices?”》

    Is markup far more significant?

    《In my model of the international economy, changing relative prices become noise that makes it difficult to see that demand and supply conditions are largely independent of price levels and exchange rates.》

    《we might define an efficient market as one in which price is within a factor of 2 of value, i.e., the price is more than half of value and less than twice value.11 The factor of 2 is arbitrary, of course. Intuitively, though, it seems reasonable to me, in the light of sources of uncertainty about value and the strength of the forces tending to cause price to return to value. By this definition, I think almost all markets are efficient almost all of the time. “Almost all” means at least 90%.》

    Last two quotations from Fischer Black, “Noise”

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