The other is the expectations market in which investors imagine what will happen in the real market in the future and on the basis of that make a decision to buy or not buy the firms stock – which results in a stock price.
This has resulted in increasingly cynical and distant customers; all who know they come after the shareholders in the pecking order.
And the worst thing is that all of this manipulation of expectations has facilitated massive growth of the hedge fund business and hedge funds simply contribute to the casino mentality.
But by the mid-1990s, they were beating expectations 70% of the time, which was only possible only if CEOs and CFOs were manipulating expectations and earnings.
Then we had the bubble and bust, driven by option compensation.
The point spread is the exact analog of a stock price.