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stock analysisIndustrialization and economic development of the last 100+ years is unprecedented, and many multinational corporations evolved into gigantic proportions in this period. 

During 1900-1950, the theme was automotive companies such as GM, Ford, Benz, Audi, Steel chemicals, Infrastructure, petroleum and textiles. 

During 1950-2000, the theme evolved into computers, electronics, pharmaceuticals, retail, airlines, media and transportation. 

From 2000, the theme shifted to big pharma, social media, networking, service industries related to online and e-commerce. 

During all these years, many multimillionaires and multibillionaires evolved on their own effort from the stock market leverage. From Ford, Trump, Bill Gates, Warren Buffet to Indian billionaires such as Ambani, Birlas, Tata, Rakesh Jhunjhunwala, Mahindras and numerous software companies. 

One common theme from the riches is that a large part of wealth came from the stock market leverage of their holdings in the company. It is a stark difference to a common businessman who generates profits by selling his goods or services. For example, a good business with one crore sales revenue can make 10 lakhs profits if his costs are 90 lakhs. He can keep these 10 lakhs in his pocket after paying taxes. 

The amount of wealth he can generate by the business is usually limited even if he grows into a large size. But he can leverage his business by listing it in the stock market and generate wealth 100 or 1000 times by taking the help of venture capitalists. Sounds good?

Even if you do not make profits in your company operations, the stock market valuations, VC funding and future potential profitability can work wonders to make you a millionaire in 5 years!

Every established organization in the world is expected to continuously cut costs, bring new products into the market, drive sales quarter on quarter to deliver profitability. Senior executives and CXOs are driven by revenue and profit targets of listed corporations. It is the only driving factor of large corporations in the last 100 years. 

Let us analyze how this driving behavior changed the history of mankind?

Multinational corporations such as big pharma companies (Merck Eli lily Etc.) are today interested in money-making diseases such as cancer, diabetes, heart ailments etc. The whole doctor community is controlled by big pharma and research. So today you cannot blame a doctor prescribing a long list of tests and medicine as he/she is bound to keep their hospital network and sponsoring companies profitable without fail!

In the food industry, one drives profits by delivering food which is addictive to people in taste and looks. It is supported by clever marketing and hype. So, it appeals to everybody that a junk pizza or coke is more upmarket than a normal dosa in a local eatery. 

The relentless drive to stock market performance had driven these corporations to market and deliver products and services which are addictive to humans. The unproportionate wealth generated from the stock market for a small part of the population also catered to new luxury industries such as private jets, island resorts, luxury cars and large houses. The rich get richer and the poor get poorer. Today in Mumbai Ambani owns a property worth equivalent of one lakh or more middle-class people in the same city. His family wealth is approximately equivalent to the wealth of more than 10% of Indian populations. Jeff Bezos the owner of Amazon is worth close to 160 billion USD which is around 30% of the foreign reserve of the whole of India. 

Such a vast disproportionate wealth was generated from the stock market. Of course, there is a trickle-down effect of this wealth seeping into the hands of the poor. The poverty is more or less eliminated. Access to food and basic living is largely addressed among masses. 

But the greediness of capitalism through the stock market has created a vastly unproportionate wealth effect. In India alone, during from March 2020, at least 10-15 crores lost the job and income whereas during the same period Ambani added his wealth by 2 lakh crores as the reliance stock went from Rs. 800 levels to Rs. 1700 levels today! Note that nothing much changed in his company in the last three months compared to last year. It is only his management effort of selling his debt changed the stock market game and showered him with such wealth. There are plenty of parallel examples all around the world. Elon Musk of Tesla generated huge wealth as Tesla stock went from USD 400 to 1050+ in three months (more than doubling the wealth). 

There is the whole financial services industry manipulating the stock market and luring poor traders into quick money. A vast majority lose their wealth in the markets. Now the bank interest rates are very low, so most of the people invest in the stock market through mutual funds and again adding to the proliferation of financial services. 

As a result, the whole money ecosystem is revolving around corporate greed and financial services including stock markets. Government is also keeping this money ecosystem keep running. For example, the Indian government announced corporate tax cuts last year waiving 1.5 lakh crores to Indian companies in taxes. The same Indian government is not ready to spend money on the transportation of migrant workers and made them to walk for thousands of kilometers.

Who needs help? corporate tax cut for companies like Bajaj finance or a migrant worker who cannot afford Rs 1000?

It is the way of life for many poor people all over the world. Around 10-15% of the people will enjoy the wealth of the planet whereas 50% of the people will try to make a living for their lifetime and indirectly work to add more wealth to the rich. The inequality is bound to rise over the next decade. 

what can be done now? The current COVID-19 pandemic period may be a once in 100 years opportunity for bringing serious changes. The governments can focus on many fronts to address inequality. From giving tax breaks to low salaried population to super rich tax, can garner more revenue. Environmental regulations can be made stricter and many polluting industries can be eliminated even at the cost of employment. Why do we need to dump harmful chemicals in Vellore and Erode and spread cancer for the benefit of western countries enjoying fashion cloths/leather shoes!

The government can formulate social justice laws ensuring food, shelter and healthcare for every citizen at affordable levels.

At the individual levels, we can ensure to adopt a minimalistic lifestyle and buy only from local farmers. Why do we need apples imported from Washington US and buy a bunch of curry leaves from Reliance air-conditioned super market?

Our personal consumption is changed a lot now when most of us are hit by this pandemic. It may require little effort to make it permanent. Let the change start from us!

Ganapathy Nallasivan

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