One of the proper, necessary functions of any investment market is to take money away from people who do the wrong things with it. That is how the system is MEANT to work. "I am an amateur who guessed randomly and threw money at things I didn't understand" is a confession, not a defence.
> take money away from people who do the wrong things with it
The quiet part: "Silly workers, thinking they could buy they're way into the capital class with some surplus hours of earnings. They don't even know how the game works! Ah well, back to the toiling for them I suppose."
“Risk vs reward” is a different model than the OP’s proposition that loss comes from wrong choices by investors.
A risky bet that loses doesn’t mean the bettor did something wrong, and one that wins doesn’t mean the bettor did something right. They played odds against unknown factors and came out up or down. If the market is efficient at all, it’s in the aggregate, not on an individual basis.
But for “amateur investors” enough loss may mean that they’re out of the game, which is different than for those who have the luxury of more capital.
Personal outcomes for “amateur investors” are very much about luck, even when pursuing more ostensibly conservative strategies.
Idk man I dont get how this is different for retail vs pros.
Its not like you have to have a certain amlunt of money to invest : we have nano options and fractional shares now. Theres no barrier to entry. E.g. you can run the same strategies as pros with the same risk of losing your bank roll. Having more money doesnt make it inherently less likely that youll lose all of it
because someone has to be on the other side of every transaction
and socially because the goal of the system is to get participants to behave in "optimal" fashion, for a certain very specific definition of "optimal".
Imagine you invested $100 into my company. Let's say my company specialized in doing absolutely nothing, as in, the company had a bank account and produced/sold nothing. In our little toy world where you always make money on investments, two weeks in I returned $150 to you (you've made $50).
This brings up questions like "where did that extra $50 come from", but maybe you get the point of the original comment now.
This incentivizes people to blindly make lots of normally risky and/or stupid investments with no fear of consequences and the potential of high upside if one of them pays off. This lack of consequences is subsidized by someone (taxpayers), who need to fund the burden of all the salaries of the unproductive companies that were paying salaries / buying materials / etc.
If that money is consumed as capital to further the goals of the business there has to be the possibility that nothing is available that can be returned.
This is the underlying principle of investment, that the money is being utilized by someone for potential economic gain.
If that money is just parked such that its always available for a return then it isn't really an investment.
And the people doing the wrong things are often cheered on by obvious scammers (e.g., crypto/blockchain) and the very suspicious (e.g., WSB making an echo chamber party that embraced behaving stupidly/irrationally, and could also be directed to manipulate the market).
If you are saying that the CEO of every company that defrauded/did something criminal to other people should be forced to pay back the stock to the people who invested in it, then yes, let's see it
