This is the third in a series called Pump and
Dump On The Hydrogen Fuel Cell Saga. This series is meant to highlight one of
the biggest stock market frauds that took billions from not only greedy and the
usual unsuspecting investors but also thousands of young first time,
environmentally conscious investors as well. The fact that the fraud was
ignored by the media that created the stock's frenzy and and then stuck in the
pin that burst the highly inflated hydrogen fuel-cell stock bubble in 2013 and
2014, was certainly interesting in its own right. But, the more important
question remains, was it a possible portent of the future of the stock market?
What makes this even more amazing, sad, important, or whatever adjective you
could tag on it, is the fact that it happened at exactly the same time the oil
industry was beginning to feel threatened by upcoming alternative energy
technologies. Just that fact alone should make the plight of the hydrogen fuel
cell industry one worth definitely investigating. But as we can see, there are
forces at work here that make no one want to talk about it at all.
Before we can
continue with the third part of the series, we must at least have a basic
understanding of what a stock is and what forces affect both individual stocks
and the stock market itself. In order to do that, it is important that we have
at least a basic understanding of what is commonly known as economics.
Fortunately for us, the economics that we're concerned with are quite simple
and not completely boring, as they are concerned with what you and I would know
as common sense. They are known as supply-side economics. According to
supply-side economics, if an item can be had in relative abundance, its price
is generally low because that is what people are willing to pay for the item.
However, if the item is rare and has the added bonus of being a necessity or a
perceived necessity, then according to supply side economics, those who produce
the item can charge whatever the market will pay. Hopefully, that will be a
price that will make it profitable for the producer to continue to supply the
item to the market.
When it comes to
the the stock market, the same forces are going to apply. If a stock is
something that a lot of people want, especially if it becomes a stock for which
there is a perceived need, then the price of the stock will increase.
Conversely, if the stock is not something that is desired, then obviously its
price will decrease. Therefore, this fundamental rule in the stock market is
based on the fact that stocks that are more valuable are so because people
perceive they are going to increase in value. And again, if it needs be said,
if the stock is not perceived as being financially prolific in the future, the
stock will most likely lose its appeal and barring any help from outside
forces, will decrease in value.
So, with those
fundamental rules in hand, it appears the stock market is a very black and
white operation where obviously good ideas and industrious far thinking
industry leaders and entrepreneurs are able to attract the capital they need to
make their dreams come true, while those industries that cannot keep up with
modern tastes or the realities of the changing world, will of course die off in
the true spirit of the free market economy. Of course immediately, we must
address the fact that the idea of a true free market economy in terms of the
stock market is much less true than the practitioners of the stock craft would
have you believe. Of course, those who make their living from the stock market
and publicly traded companies will sing the song of the free enterprise system
right up until their own investment failures, sometimes planned, sometimes not,
force them to come begging for bailouts from the federal government. Any other
time, however it certainly doesn't hurt to have the federal government's
backing when it comes to an industry that needs large federal government
contracts to jumpstart its private sector market.
And so, there
you have the first of the artificial forces that affect the price of the stock,
government interest or government intervention. Of course, all of the
artificial forces that affect the price of stock cannot exclusively include the
government but more often than not they do include the anticipated infusion of
contracts and therefore money, etc. which causes the price of the stock to
increase with its desirability. It is not only the actual act of the signing of
a government contract or a big business deal that will influence the price of
the stock, what tends to be even more valuable and more necessary for getting
in on the stock cheap, is to get access to the information before the events
actually happen. With this basic understanding of the forces that govern the
stock market and the price of stocks, we shall adjourn the discussion for now.
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