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Thread: Value Added to Society by Idle Shareholders and Landlords

  1. #46
    cpr
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    What proportion of shares are held by individual idle shareholders? I'd say not many. Most companies have a fair chunk of their shares owned by large blocks - be they company founders, hereditary holdings, investments from other companies etc. I'd argue these groups are active, not idle, shareholders, in that they will take direct action against a board to safeguard a companies future.

    Of those who buy in for investment only (ie, no care what's happening in the company itself, just the share price), I'd wager a fair chunk aren't individuals but groups like pension pots etc. They are contributing to society in that they provide long term stability for individuals. For example, my father won't survive on his state pension alone when he retires, but wise investment in a pension plan that's bringing in some very decent returns over the last few years means he isn't unduly concerned about old age, and feels he can retire (from full time at least) when he reaches pension age. Without that plan he set up a few years ago, he'd be facing continuing his full time (very long houred manual) job until he was in his 70s.

    Landlords I'm a bit on the fence about. On one hand I can see it as a valuable investment like a pension pot above, in that by paying in over years (mortgage) it can release a decent nest egg at retirement. It can also provide a valuable step up for the younger generation if done kindly. My sisters first house was bought by my parents - a fact i'm still in no way bitter about in my rented home 20 years later - as an investment and as a way to reduce her living costs whilst at Uni (when it was sold she got the gains as her first deposit, saving her from having to save).
    However at the same time I'm pretty pissed about how easy its become a viable business for the comfortable. Getting a second mortgage (and third etc) to buy to rent has become easier than getting a first mortgage to buy the same house for the young, meaning that people are snapping up property portfolios with huge investment from banks and propped up by those the banks are failing to help. It's become a cycle that needs breaking to a fair extent, because it's choking the younger generation.
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  2. #47
    123/5 Flem274*'s Avatar
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    I don't mind most landlords, however property management companies that exist solely to gouge as much profit from owner and renter as they can are the scrum of the earth.
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    International Coach ankitj's Avatar
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    Allow me to stereotype: Bangali Communist investment banker.
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    International Coach Anil's Avatar
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    Quote Originally Posted by ankitj View Post
    Allow me to stereotype: Bangali Communist investment banker.
    isn't that a contradiction in terms?


  5. #50
    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by ankitj View Post
    Allow me to stereotype: Bangali Communist investment banker.
    Nah I disapprove of Communism.

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  6. #51
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    Quote Originally Posted by ankitj View Post
    Allow me to stereotype: Bangali Communist investment banker.
    Is rhyming slang allowed as an insult now?

  7. #52
    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by Anil View Post
    isn't that a contradiction in terms?
    It's a common right-wing tactic to bracket left-wing people into one of the following two categories:
    1. poor leftists existing in capitalist economy -> 'begging for equality because they can't compete'
    2. rich leftists existing in capitalist economy -> 'hypocrites'

    So if you belong to the left, there is no way you can escape one of these two labels. However, you can shift from one category to another as and when your economic standing changes.
    Last edited by weldone; 06-03-2019 at 10:58 AM.

  8. #53
    Hall of Fame Member Ikki's Avatar
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    Quote Originally Posted by weldone View Post
    We often hear this expression 'A well-functioning capitalism rewards those who add value to society'.

    I want to hear views from members about what value the following two classes of people are adding to society. How are they actively contributing to society, for which they are being (sometimes very highly) rewarded?

    1. Idle shareholders (I'm not talking about the Elon Musk or Larry Page type as they are clearly not idle - they are actively contributing to the Company)
    2. Landlords of all type.
    1) They have invested in products or services other people are benefitting from. Their correct estimations and consequent success allows them to make more investments which add value to society as a whole. The risk they take is losing all their money.

    2) They are providing a dwelling for those that cannot afford to buy one. In order to provide that dwelling, they incurred the costs and risks involved in setting the building up (and also the costs of upkeep). They can also directly and indirectly stimulate the supply of housing which adds value to society (market based expectation, not government mandate).

    Quote Originally Posted by weldone View Post
    Indeed. It's amusing to see joe people lecturing an Investment Banker about the importance of secondary markets haha.

    People are assuming here that Companies raising more capital is essentially good for the society. If that's the case then Governments should print more money and distribute to all Companies as much as they want.
    Well, yes, it is a good assumption to make. Even if the investment into more capital does not pay off in the long run, in the interim it means money goes towards the providers of capital and creates new jobs for the capital to be put to use.

    In order to raise more capital a company has to be doing something right - either to have gained the capital through business to reinvest or to satisfy an investor in terms of parting with their money in order to create potentially more wealth. If a government simply prints money, the cost mechanism in the market makes all investment meaningless and devalues the currency of exchange.
    Last edited by Ikki; 06-03-2019 at 11:25 AM.
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  9. #54
    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by cpr View Post
    What proportion of shares are held by individual idle shareholders? I'd say not many. Most companies have a fair chunk of their shares owned by large blocks - be they company founders, hereditary holdings, investments from other companies etc. I'd argue these groups are active, not idle, shareholders, in that they will take direct action against a board to safeguard a companies future.

    Of those who buy in for investment only (ie, no care what's happening in the company itself, just the share price), I'd wager a fair chunk aren't individuals but groups like pension pots etc. They are contributing to society in that they provide long term stability for individuals. For example, my father won't survive on his state pension alone when he retires, but wise investment in a pension plan that's bringing in some very decent returns over the last few years means he isn't unduly concerned about old age, and feels he can retire (from full time at least) when he reaches pension age. Without that plan he set up a few years ago, he'd be facing continuing his full time (very long houred manual) job until he was in his 70s.
    In my discussion with harsh earlier in this thread, I have hinted upon a system where all people working for a Company own the Company. In such a system, your father would earn much more from his job and would be less dependant on pension.

    Quote Originally Posted by cpr View Post
    However at the same time I'm pretty pissed about how easy its become a viable business for the comfortable. Getting a second mortgage (and third etc) to buy to rent has become easier than getting a first mortgage to buy the same house for the young, meaning that people are snapping up property portfolios with huge investment from banks and propped up by those the banks are failing to help. It's become a cycle that needs breaking to a fair extent, because it's choking the younger generation.
    Yes

    Quote Originally Posted by Flem274* View Post
    I don't mind most landlords, however property management companies that exist solely to gouge as much profit from owner and renter as they can are the scrum of the earth.
    I don't have any issue with landlords - they are regular people like you and me. I have issue with a system that rewards landlords for just "assuming the risk" rather than using their body and brain for purposes to quicken progress of human civilization.

  10. #55
    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by Ikki View Post
    1) They have invested in products or services other people are benefitting from.
    They have invested in products or services with the goal of benefiting from other people's hard work.

    Quote Originally Posted by Ikki View Post
    Their correct estimations and consequent success allows them to make more investments which add value to society as a whole.
    Their correct estimations and consequent success allows them to make more investments so that they can get benefited more from other people's hard work.

    Quote Originally Posted by Ikki View Post
    The risk they take is losing all their money.
    Do you know anyone who has put all their money in one Company? In my experience, any investor who has an iota of sense invests in a diversified portfolio. Yes in theory they can lose all their money (just like anybody else) but in reality the 99.9%ile worst case is losing a chunk of their money.

    Quote Originally Posted by Ikki View Post
    2) They are providing a dwelling for those that cannot afford to buy one. In order to provide that dwelling, they incurred the costs and risks involved in setting the building up (and also the costs of upkeep). They can also directly and indirectly stimulate the supply of housing which adds value to society (market based expectation, not government mandate).
    As I said earlier in the thread, if landlords aren't allowed to buy properties to rent out, the property prices will go down sharply. Houses will become much more affordable. "Those that cannot afford to buy one" in the current system will be able to buy by paying less monthly mortgage payment than their current monthly rent.

  11. #56
    International Captain Redbacks's Avatar
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    2) Tragedy of the commons

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    Quote Originally Posted by vcs View Post
    I kind of feel the same way about bitcoin TBH. I'm sure the entire block-chain system they've devised is extremely sophisticated and ingenious, but bitcoin mining uses a huge amount of computational power and cooling equipment, for what is basically counting.
    Bitcoin mining is how bitcoin transactions are secured and validated - a successful mine adds another block (which contains a large number of transactions) to the chain. The additional of multiple blocks to the chain after the one a transaction is in makes it extremely difficult to go back and amend that transaction at a later point, so it is now secure.

    The computational power is required because otherwise you could brute force it. It relies on multiple unrelated groups all having enough computational power to add blocks to the chain but no one group having more than 50% of the power

  13. #58
    I can't believe I ate the whole thing NZTailender's Avatar
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    Quote Originally Posted by Spark View Post
    Presumably, your rich landlords are the ones pouring capital into the housing market and stimulating further demand. Which means that more houses/apartments get built more regularly, which means that ordinary people have better and more affordable choices of places to live in good locations. And the additional activity in housing has spin-off benefits in a range of other industries.

    Whether this works in practice really depends, although I will say there are a bunch of cities around the world who could use reminding of the concept.
    It certainly depends on the city. The two main cities I've rented in have had different problems with renting.

    Dunedin, a student town with a lot of old buildings, have a lot of rentals that are incredibly substandard. Landlords don't care because students break **** and are messy, and students don't care because they can live like pigs. Except at some point landlords cottoned on to popular streets and were charging stupid amounts for cold, leaky, mouldy rooms and houses on popular party streets. The knock on is people actually, you know, get sick in these substandard dwellings, which in turn puts stress on the health system. Coupled with the fact not everyone are students, low income families renting what they can afford - shonky dwellings - means sick kids. It's been a vicious cycle that I think is only just letting up.

    But Dunedin, overall, is a cheaper city to buy a house so the effects are not as pronounced.

    Auckland, however, one of the most expensive cities in the world for property, is just diabolical. It's definitely a competitive market just to be a renter; we had to apply to live somewhere before viewing it, because of the huge demand for rentals meant most properties were taken before you had a chance to even see it.

    Auckland is a city of invested properties. I don't have trouble with landlords existing - they provide a service for people who need it and aren't ready to buy a house - but i do have trouble with the ones who own 50 odd properties and use

    Quote Originally Posted by Flem274* View Post
    I don't mind most landlords, however property management companies that exist solely to gouge as much profit from owner and renter as they can are the scrum of the earth.
    for everything. They're just farming money. You end up with a different vicious cycle: people can't afford to buy a house because the money they'd pay on a mortgage is going on rent, and saving enough money to get a deposit (at least 100k) means you need a) a high paying job which won't happen until you're at least 40 or you're in a super niche field or b) you have rich parents. Some are content with buying well out of the city and sitting through 1.5 hour commute to get to work. What's needed is more vertical development - inner city apartments at a more affordable price. There's been a push to build more of those recently, but often, a lot of them end up being bought by investors to rent out to people who might otherwise buy them if they had been born 20 years earlier and started saving then.

    Ultimately it comes down to lifestyle. People often say "what do you expect, it's Auckland. move to the country if you want to buy a house." I get it, but my desire to do a job I actually like outweighs doing a job I don't care about just for bricks and mortar in a city that's got **** all happening. that's coupled with why you'd want to buy a house anyway - I'd rather buy an apartment personally.
    Last edited by NZTailender; 06-03-2019 at 03:25 PM.
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  14. #59
    Cricketer Of The Year Ausage's Avatar
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    Quote Originally Posted by harsh.ag View Post
    weldone is essentially making an argument that rich people shouldn't be allowed to invest their money in multiple passive assets.
    Lol @ someone who thinks this calling themselves a Libertarian. Like a literal monkey-octopii.
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    Hall of Fame Member weldone's Avatar
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    Quote Originally Posted by Ausage View Post
    Lol @ someone who thinks this calling themselves a Libertarian. Like a literal monkey-octopii.
    This has no conflict with libertarian socialism. Read up. Don't confuse with the autistic idea of right-wing libertarianism lol.

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