[cipheredStones]

The article says that he made it by stock trading. It is, at best, difficult to articulate how that could be creating value rather than capturing it. Many of the world's billionaires made their money that way.

Doing something positive-sum is a way to become a billionaire, but many people are very handsomely paid to ensure that their clients are on the good side of zero-sum transactions.

[whatshisface]

Taking money away from mismanaged companies, and giving it to well-managed ones, is a net positive of stock trading. Another net positive of stock trading is making buyers and sellers available all day, for anything on the market. Yet another benefit of stock trading is to make it more difficult to manipulate the market - there's a reason why pump and dump scams only occur with assets that see very little attention (i.e. are low-volume).

[cipheredStones]

> Taking money away from mismanaged companies, and giving it to well-managed ones, is a net positive of stock trading.

Where "well-managed" means "good at delivering money to its shareholders", which is at best obliquely related to a positive impact on the world. (Also, I'm skeptical that the stock price in itself makes that much of a difference to what the company is able to do.)

> Another net positive of stock trading is making buyers and sellers available all day, for anything on the market. Yet another benefit of stock trading is to make it more difficult to manipulate the market - there's a reason why pump and dump scams only occur with assets that see very little attention (i.e. are low-volume).

In other words, the benefit-to-the-world of stock trading is that it makes it easier to trade stocks? And both of these are the result of unprofitable trading as much as profitable trading, so they can't be the proof that the money comes from the value delivered!

[glompers]

Not GP, but if I recall correctly, "taking money away from mismanaged companies" only occurs if the companies choose to do another issuance of shares in the future to raise equity, or stock options in the future to compensate people, in which case they would have to issue shares at a lower valuation, or issue more stock options to provide a similar benefit, than if they were a desirable company.

But stock trading also penalizes well-managed companies in slow-growing or more mature industries by giving them a higher cost-of-capital, just as it would if they were poorly managed. It seems a haphazardly blunt instrument for allocating liquidity to value generation. It piles on where rewards seem ready to be reaped, and makes it harder for mature sectors to renew or reinvent themselves.

[dclowd9901]

Does the quality of management of a company actually dictate its positivity to the world at large? Seems like a quite unrelated signal.

[whatshisface]

The world's not all tobacco advertising and chemical spill coverups, there are also dishonest mechanics and dirty restaurant kitchens.

[CityOfThrowaway]

He did it through offering a _money management_ service to large institutions and wealthy individuals.

That money management service includes, amongst other things, picking stocks. But that's the tactical "what". The value-added element is that he preserved and grew that wealth instead. It turns out that is hard to do, and is indeed a positive sum service to customers. They get to relax _and_ make money. Great outcome.

[cipheredStones]

Yes, he was capturing value for his clients, and getting paid some of that. That isn't the same thing as doing something that increases the amount of wealth in the economy, which was my point.

[ipaddr]

The entire point of the stock market is to get capital to companies to allow them to do things that may increase wealth (could be local, state, country or globally). Successfully doing this means the companies he supported did well.

[quesera]

> The entire point of the stock market is to get capital to companies

Only if the shares are newly-issued, though.

Usually your counterparty is just someone with different cash flow needs, or who disagrees with you about the future. No benefit accrues to the company.

[FanaHOVA]

Do you really think a single individual could make $7B of profits from stock trading? They'd need to be trading $30-100B. Point72 manages $35B and has almost 3,000 people on staff.

[Arch485]

Sure, but you could also toss that $30bn into SPY and make a killing.