tag:blogger.com,1999:blog-5465015914589377788.post1831550401775083242..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: What Makes the Stock Market Go Up?Michael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5465015914589377788.post-41212448674334798242009-06-22T10:31:43.673-04:002009-06-22T10:31:43.673-04:00Patrick: Trading is certainly a factor in value cr...Patrick: Trading is certainly a factor in value creation, but it's effect is mostly indirect. The value created by an individual trade that comes from the two parties valuing goods differently is a small effect. However, the ability to trade makes it possible to specialize and ultimately creates rewards for the best producers of each type of item. The desire to be the best producer then drives innovation, which is what I've argued is the cause of value creation. So, trading may be a necessary piece of the value creation puzzle, but I would say that innovation is a more direct cause.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-49920800403475068672009-06-22T10:20:29.875-04:002009-06-22T10:20:29.875-04:00It is true that these companies create value out o...It is true that these companies create value out of thin air. Human beings do that every time they take something thing and use their brain and brawn to turn it into something more valuable. (I don't believe as <a href="http://earlyretirementextreme.com/2008/11/zero-sum-games.html" rel="nofollow">some people do</a> that value is created by trading, or else you'd have to conclude that the value of a Nortel share really was $1245 at its peak.)<br /><br />As you hinted (but never actually said) there is no law of conservation of value.Patrickhttps://www.blogger.com/profile/16816252455472704262noreply@blogger.com