Traditional Stockholders: The Night of the Living Dead
Traditional Stockholders: The Night of the Living Dead
This chapter analyzes the relationship between corporate irresponsibility and traditional stockholders, and discusses a study which reports that there are approximately 50,000 people engaged in day trading every single day. These investors have a profound effect on stock prices and market volatility, trade solely on rumor and volume, and care nothing for, and know nothing about, the corporations in which they invest. The chapter discusses the idea that modern finance theory supports the thinking of day traders, at least to some degree. The theory holds that corporate stock is nothing other than a measure of its risk in relation to that of other stock, and that the way to handle this risk is to develop a diversified portfolio of securities. The chapter also analyzes the role of the equity markets in detail.
Keywords: stockholders, trading, market volatility, stock price, finance theory, securities
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