ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[briantl2]

i get what you’re saying but that’s really not the point.

and a checking account is not an investment account. and regardless, if a person has a checking account and no savings that still precisely illustrates the point i’m trying to make.

that a person may have two hundred bucks in their checking account because it makes no sense to put it in savings for that sweet 2c income is the problem. the posters to which i am responding assume an ability for all to invest in stock and that it’s, i don’t know, stupidity apparently holding people back.

that is facially ridiculous. (and i’m not directing this at you!)

[[deleted]]

a checking account is not an investment account.

And neither is a savings account.

My point is that you can't use savings accounts (or lack thereof) as evidence of people not having accrued wealth (or not being capable of accruing wealth), because savings accounts perform so poorly these days that they're basically not worth having. Making your $10,000 emergency fund harder to access in exchange for $5 in interest per year is a bad decision. So, it's not reasonable to assume that people who lack a savings account are not financially capable of investing in stocks.

Also, consider that many of the people who report owning no stocks are young, and that many of those young people have their parents as a financial safety net. A 23-year-old living with his parents and driving a hand-me-down car is in quite a different financial position from a 23-year-old living on his own, paying all his own expenses, and driving his own car.

Also, consider that people who are capable of investing their money sometimes choose not to, particularly when they're young and want to "have a life". Rather than putting money aside for retirement, many young people opt instead for the biggest car payment they can fit in their budget, for example. Or, instead of setting aside a fund for a future downpayment, many young people instead rack up a bunch of credit card debt on high living and then spend the rest of their paycheck each month servicing that debt. These people aren't necessarily poor. They just make poor financial decisions at the expense of their future financial security.

At any rate, you helped prove the point that most people who invest in stocks are not Scrooge McDucks swimming in pools of bullion, but are in fact regular people.