Stock market or lottery?

The Buttonwood columnist for The Economist claims the stock market  “is not supposed to be a sophisticated version of the National Lottery.”

It may be that a lot of people get sucked into the lottery features of the stock market even though they may still believe the propaganda about participating in the economic growth of our society.  I am amazed at the number of (educated) people who don’t understand financial matters and who appear to not want to understand them.

Following is a quote from  page 49 of John Kenneth Galbraith’s The Great Crash 1929.  Investment trusts were a vehicle through which people could purchase a range of stocks and let an “expert” manage their money – something similar mutual funds and hedge funds.

Historians have told with wonder of one of the promotions at the time of the South Sea Bubble.  It was “For and undertaking which shall in due time be revealed.” The stock is said to have sold exceedingly well.  As promotions the investment trusts were, on the record, more wonderful.  They were undertakings the nature which was never to be revealed, and their stock also sold exceedingly well.


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