The Ethics of Profiting from Others' Failure

[icehorse]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

 

[9-10ths_Penguin]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

The market as a whole tends to go up overall, so betting only on companies going down is usually a losing proposition.

Where these sorts of investment vehicles are most often used is in hedging: i.e. taking steps to reduce downside risk.

IOW, most people who make these investments are doing it as part of an overall strategy that bets that the market will go up, but they're trying to reduce or cap what their losses will be if their main "bet" ends up wrong by making these sorts of investments a small part of their overall portfolio.

 

[BSM1]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

If you're talking about 'puts' and 'calls' it's not exactly betting (as any stock purchase could be classified as 'betting').

 

[Eddi]

Capitalism has nothing to do with ethics

 

[9-10ths_Penguin]

If you're talking about 'puts' and 'calls' it's not exactly betting (as any stock purchase could be classified as 'betting').

Day trading could be classified as betting (and rightly so, IMO).

Buy-and-hold strategies that focus on the market as a whole or categories of investments... not so much.

The difference is like the difference between gambling in a casino and running a casino.

 

[bobhikes]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

Basically I see 2 problems.

Is it ethical to make a profit and what is the ethical profit limit

Is it ethical to make a profit off of others work whether successful or a failure.

To be honest I would say no to both but we justify it for survival.

 

[BSM1]

Day trading could be classified as betting (and rightly so, IMO).

Buy-and-hold strategies that focus on the market as a whole or categories of investments... not so much.

The difference is like the difference between gambling in a casino and running a casino.

How so?

 

[BSM1]

Basically I see 2 problems.

Is it ethical to make a profit and what is the ethical profit limit

Is it ethical to make a profit off of others work whether successful or a failure.

To be honest I would say no to both but we justify it for survival.

How much profit could you make and still be in the realm of 'ethical'?

 

[bobhikes]

How much profit could you make and still be in the realm of 'ethical'?

I would say none ethically we should treat each other fairly and only get what we spent. Humans are not really ethical we have more of an ego and justify our unethical behaviour.

 

[PureX]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

I think the stock market as it now exists should be eliminated, and replaced with a far simpler investment exchange. But greed never sleeps, and whatever system we put in place, the drive to obscure, manipulate, and ultimately exploit it will always a powerful force that will require powerful laws and counter-enforcement to keep it in check.

 

[icehorse]

Well, more to the point. In this time of pandemic, some industries are really taking a hit. So is it ethical to bet against them while they're struggling to survive?

 

[Revoltingest]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

It's ethical.
Why?
Nothing is being misrepresented.

Consider the analogy of insurance.
One can profit from another's death.
Yet all concerned agree to what they're doing.

 

[Revoltingest]

Capitalism has nothing to do with ethics

It's the opposite of that for me.
Ethics are very important.

 

[BSM1]

I would say none ethically we should treat each other fairly and only get what we spent. Humans are not really ethical we have more of an ego and justify our unethical behaviour.

Have you practiced that in your own life?

 

[Revoltingest]

Have you practiced that in your own life?

It would seem that all of pro sports might be unethical.
One makes money by making the other guy lose.

The world doesn't thrive based upon the participation trophy worldview.

 

[bobhikes]

Have you practiced that in your own life?

At times sometimes I give stuff away for free but the way society is made up ethics is not used justification is what we practice. I practice it as well I'm not hypocritical. I just dislike unhonest claims of being ethical when we aren't.

Profitable goals can never be ethical.

 

[Erebus]

I wouldn't say it's unethical in and of itself. However, attempting to engineer failure for the sake of profit would be unethical in my opinion.

I quite like the insurance analogy @Revoltingest used here. To expand on it a little, taking out life insurance on your children isn't unethical. Setting up an "accident" in order to claim on it would be.

 

[BSM1]

At times sometimes I give stuff away for free but the way society is made up ethics is not used justification is what we practice. I practice it as well I'm not hypocritical. I just dislike unhonest claims of being ethical when we aren't.

Profitable goals can never be ethical.

In your humble opinion, of course.

BTW, do you think the owner of this forum is making a profit?

 

[bobhikes]

In your humble opinion, of course.

BTW, do you think the owner of this forum is making a profit?

It is my opinion but I ask you what you asked me "How much Is an ethical profit"

 

[Mindmaster]

In the stock market, there are various ways to invest your money such that if a company's stock value goes down, you make profit. In effect, you're betting for these companies to weaken or fail.

Do you think that making such bets is ethical? I'm of a mixed mind.

It's not betting that the company is going to fail, so much as betting that the analysts are wrong. A company doesn't "evaporate" value in relation to a stock price -- there is a value of stock and an actual value of the business in terms of contracts, property, people, and other resources and they rarely coincide at all.

Let's put it more simply:

If you know the stock will decline you short it. (That's to say you make money went it loses value)

If you know the stock will gain you long it. (The exact opposite)

If you only play half the time (when it gains) you only make half the money... Presuming, of course, you were able to accurately determine either case with some consistency. This is why stock investors generally do both -- they may absolutely love a company and root for it in the long term, but they see a short term downtrend and still want to make that money. It's nothing about ethics.