Personally, I believe that is incorrect. The amount of market activity related to getting capital to companies is dwarfed by other activity. As data points:

- Commodities markets don't allocate capital to companies (or farmers or whatever) at all.

- Most new stock sales (IPO or otherwise) happen outside of the public markets first, and are allocated to a minority of the market participants.

I think a much better way to think of the markets is as primarily about pricing risk. That this risk assessment function happens to provide a good way to allocate capital to companies is a by product.

> This secondary market is the other function of the market (what you just called investing in the flow of money in and out of a position). Both are necessary.

I clearly addressed that markets have more than one function.

I'm not convinced that the capital allocation component of the markets is even as you say "necessary". You could easily envision the markets chugging along fine without allowing any direct sale of equity to the markets. That is some intermediary would be required to buy the equity from the company as it became available and in turn could then sell that equity into the markets. We are almost to that point already.

Well, no, anytime the company is selling shares you can invest in the company rather than the secondary market. The IPO is obviously the first such event, but it isn't necessarily the only such event.

You are forgetting about dividends.