My friend's gma passed away, giving him $500k inheritance. He invested that money at the bottom of the crash last year and increased it to $1.2m.
In this situation, how did he contribute $700k of value?
Only if he's buying an IPO or angel investing or whatnot.
If I buy an Apple share right now, Apple's not getting that money.
This example isn't a problem either. Someone made 700k at the cost of someone else, likely an over-leveraged players who were forced to liquidate because of the threat of the pandemic. The market is far from efficient and the swings in prices are unavoidable. Normal long term investors didn't lose much if anything during this crash. The government got a cut because of money changing hands. If anything one could ask why is the government getting anything if no value was created.
A/ sell time
B/ buy/sell assets
One of these is heavily taxed, the other is not.
One of these produces value to society and the other does not. I acknowledge that some "time sellers" don't produce value, but _on average_ most time sellers are producing something positive.
Maybe if the company was creating more shares and the investor bought them directly from the company, then the company use the new funding to create value, but I'm not sure that is what actually happened.