Thread by @mpawlo

The stock market exists so that not only wealthy heirs or states can start and run companies. External investors get liquidity through the marketplaces and dare therefore to invest. Dark pools, shorts, frontrunning, HFT have very little to do with this.

Modern credit facilities were invented in lieu with the industrial revolution. Allright, the Medicis started the precursor to modern banks in Florence as early as the 15th century, but our kind of limited risk financing did not exist at scale before the industrial revolution.

Previously, you had an unlimited responsibility for your company's liability. If the company went belly-up, you had to bear all the company's debts. The poorhouse next, in other words!

As a result, few had interest in investing in companies they did not control themselves. Perhaps a good thing, given some examples of today! But if we talk about social mobility, it will be limited and feudalism and serfdom an effect without limited liability financing.

About 1830, however, two Belgian banks create something completely new. They are allowed by the growth-obsessed Belgian government to operate with limited liability, as a kind of forerunner of today's LLCs.

If the bank goes bankrupt, the shareholders only lose their respective initial investment, they do not lose their homes.

This in turn leads to the banks being able and daring to finance factory projects, which in itself leads to urbanization, increased productivity and higher wages and a higher standard of living even for the newly created working class (it is "invented" at the same time) over time

This not only gives us Spinning Jenny that you are all familiar with from school, but the entire society is reformed, also in terms of transport and communication. Railways are built. Steamboats!

Over time, financing is shifted to not only being sourced from banks but also from wealthy families. What happens next is that you should be able to get out of your investments without the entire company having to be sold.

Granted, Amsterdam had already invented the stock market, given the creation of the East-India Company (VOC), which was created through an equivalent of a modern stockmarket. A world first!

Anyway, this leads to the creation of marketplaces. Initially, you need to find a buyer for your particular shares, quite far from the current situation. It is also a pastime only the aristocracy and successful merchant class can engage in.

Today, anyone can become a shareholder in Tesla or Apple or Spotify and it can be done with a device in your pocket! You do not have to be a millionaire, but you can become one. Investing has been democratized, it is impossible to get away from this fact.

At the same time, the financial sector is constantly working out new financial instruments. In the last 20 years, this development has been prosperous. Mr Michael Lewis is a great writer to read for anyone who wants to make a deep-dive in popular modern financial history.

Today, financial instruments that are supposed to create increased liquidity are instead just an instrument that mints money for those placed on the right side of the table. That is not the purpose of the stock market and the marketplaces. There is work to be done here.

Shorting, for example, should be the crawfish of the stockmarket, eating up bad seeds and find bad actors.

However, this does not mean that stock exchanges and marketplaces are a bad idea, as suggested at Twitter by Bernie Sanders and at least one leading Swedish Social Democrat. We have to remember why it exists and how amazing it is that Greta, 59 can become an owner in Spotify!

You can still reasonably suspect that what Citadel has been up to this week is something that is bad for the market. WSB is possibly also not the popular movement or revolution that many want, strong sharks lurk in the background.

If you want full communism/socialism, you can of course abolish the stock markets. It is a perfectly reasonable attitude if you are, for example, a left-wing party member, I respect that, even if I do not agree. Being some kind of Social Democrat and saying it is less impressive!

Then, of course, you become slightly weary following a week looking like this:
Blockbuster $BLIAQ: +1,233%
Dogecoin $DOGE: +513%
GameStop $GME: +405%
AMC $AMC: +280%
Apple $AAPL: -5.2%
Tesla $TSLA: -6.3%

This ends my little rant that the stock market should exist and demands of the opposite would take us back to the early 1900s when Greta, 59 is not holding Spotify and merely old-money bother with investing capital. Thanks for your patience and have nice weekend! @gamblinglamb

If you got through this thread you might also enjoy this column on how short-sellers have a positive impact done correctly (obviously not at 120% as in GameStop): bloomberg.com/opinion/articl…

In other news, Reddit's subreddit WallStreetBets (WSB) now has some 7 million subscribers. SEVEN MILLION. #stonks

Some whale made a killing, alas taking $DOGE with him:
forbes.com/sites/nicholas…