A new study released today by The Fraser Institute restores balance to the debate about stock markets.
Stock markets are no gamble.
Rather they help people protect themselves from financial risk, raise money for important ventures, discipline company managers, and reap rewards for longterm investments. This is the message of a book by Lewis Johnson and Bohumir Pazderka, Professors at Queen's University School of Business. They draw on their research, on research by the OECD, and on findings of hundreds of academics to bring us the real story about stock markets. The rise of derivatives trading has not made stock markets more volatile and listing of options on stocks of Canadian companies has had no effect on the volatility of the returns or on their trading volume. These investors take into account the long view by bidding up the prices of companies that undertake research and development.