What is Stock?

Stock is the unit of currency in a large, institutionalized, regulated, and government-approved Ponzi scheme. To participate in this scheme, you purchase "shares of stock".

Shares of stock are not tangible, real objects, like real estate or gold coins. They are imaginary entities invented by the people who run the Ponzi scheme. Usually, when you buy shares of stock, the only way you know you own them is to look at the piece of paper your stock broker sent you. On it are written which stocks you have purchased, and the number of shares. Compare this to similar pieces of paper, such as a lottery ticket, or a handwritten I.O.U. from your brother-in-law.

If you get really finicky about it, and pay an extra fee, the people who run the Ponzi scheme will send you a fancy certificate with your name inscribed on it. [It is usually rather impressive, on the order of a college diploma. You can admire it and show the rest of the family, but showing it to co-workers or strangers is usually considered a breach of etiquette.] Note, however, that this too is only a piece of paper with writing on it that says you own shares of stock.

As in all Ponzi schemes, the organizers will periodically reassure you with press releases and mailings, and many actually give out money (" dividends") to entice you to stay in the scheme.

Sometimes, the name of your stock will appear in an article in the business section of a newspaper, and you will feel a special twinge of pride in the stock you purchased. If you are exceptionally fortunate, the article will appear in the Wall Street Journal, the premier publication pandering to participants in the scheme.

When you decide to leave the scheme, you simply sell your shares of stock. If you are lucky, you will be able to sell them for roughly what you paid for them, although many times you will find that nobody wants your particular stock very much, and will offer you quite a bit less than you paid for it.

Occasionally, and pretty much at random, one of the stocks you bought will suddenly, and with a great deal of excitement, become even more popular than it was when you bought it! In this felicitous situation, people will actually offer to purchase your stock for more than you paid for it! If you keep your wits about you, you will sell it to them (although this is not commonly done).

Note, however, that your stock broker charges you a fee ("commission") when you buy the stock, and again when you sell it. These fees are necessary to maintain the operation and organization of the scheme. You needn't bother writing checks to pay these fees, though, as your broker will conveniently and silently deduct them from the amount in your account.

One might suppose that a better strategy, from the organizers' point of view, would be to make "purchases" free, to tempt more people to participate in the scheme, and charge a fee only for "sales". However, stock brokers understandably prefer to make their commission twice, rather than only once. Er, except that two commissions are paid each time you buy stock (your broker charges you, and the seller's broker charges him) and two again when you sell (your broker and his broker again). So really there are *four* commissions involved in one cycle of the scheme. (This explains why stock brokers are able to own summer homes and yachts.)

Many times, however, the longer you own your shares, the greater the probability that they will become worthless. The reason for this is the same as with any Ponzi scheme: The persons who originally placed the "shares of stock" on the market no longer have the money they took in: They spent it! Exactly how they spent it, when and for what, are rarely known, because of the (purposefully) complex format which the scheme regulators require information to be compacted, in a document known as the "financial statement". (It is curious that a financial statement will consist mostly of nouns and adjectives, but no verbs, so that only quite rarely is there an actual grammatical statement in a "statement".)

In my experience, when the stock of a company becomes worthless, you are unlikely to receive an apology of any kind from the company's managers. You may, as I do, find this rather unmannerly. Each time this has occurred to me, I have hoped anew and awaited soothing words of apology, but alas, none has ever been forthcoming. [If anyone has actually received same, please post. I would be most interested.] Occasionally I will receive a verbose letter from some law firm inviting my participation in a lawsuit against the company's managers, but I always decline the invitation, figuring that to participate would only encourage them!

Well, that about sums it up. You may be wondering, at this point, "Why bother?" Well, as with any other hobby, it's something to do, and it provides something of interest to liven up our otherwise drab lives. It's best kept it as a hobby, though, and whatever you do, don't go into it thinking that you will thereby become wealthy!

Disclaimer: The author has purchased and sold stock, currently owns stock, and has tongue firmly in cheek.