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Originally Posted by JohnR  The corporations who's equity he trades in, benefit though, because without active trading it would be difficult for them to raise new money by issuing new shares and such. |
I am sure you are aware of this (doesn't sound like it though), but just to be clear, the money is made when the shares are first offered to public. Any further trading between individuals have no value to the company.
To get more money, the company needs to issue more stock, and if their valuation is high at the time, then they get more money for the same number of shares offered. This is why keeping investors happy is very important. Investors care to see growth because growing companies generate more and more value which makes them desirable, so every company shoots for the stratosphere, trying to grow their sales ever more.
Once you hit major sales figures (hundreds of millions of dollars in revenue), it gets harder and harder to get more sales, investors lose interest when growth slows down, the company tries everything under the sun to keep its valuation up (especially when sales growth is next to impossible)... And you get the mess we have today.
Capitalism has its pluses for sure, but it has some serious drawbacks for certain boundary conditions. It promotes perpetual growth instead of sustainability which is what we really need to solve some of our major problems on this planet.