The Fourteenth Banker writes today:
In the stock market, program trading dominates volume. I heard recently that 70% of trade positions are held for an average of 11 seconds.
He’s correct.
As the New York Times dealbook noted in May:
These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said
Similarly, FT’s Martin Wheatley pointed out last month:
I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds
And market analyst Peter Cohan writes at AOL’s Daily Finance:
70% of trading volume on the major exchanges is conducted by high-frequency traders who hold a stock for an average of 11 seconds.
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Short term bets? Seems like poaching off real investment transactions. As usual, the SEC seems uninterested in protecting the people’s savings.
Short of regulations, perhaps real investment funds should develop counter-HFT algos.
Allen C
That is actually not too hard to do. The only thing is that the person doing it would have to have as their sole motive the goal of destroying the value of other short-term traders. Would you be willing to -lose money- if you could stop short term trading? How much?
There used to be a popular (amongst computer people) ‘algorithmic battle’ called ‘core wars’ (check wikipedia), it was simply a battle between to programmer’s algorithms to see which one could destroy the other by overwriting it’s memory in the machine.
It would become an ‘arms race’ between algorithms. However, it is possible to use ‘genetic algorithms’ to automatically ‘grow’ algorithms to suit a particular purpose, you as programmer become more of a ‘gardener’, keeping your population of algorithms diverse enough to find new problem solutions, but also figuring out how to artificially select (ie, like evolution) which grown algorithms are ‘best’.
In this case the ‘problem solution’ is to 1. identify stock portfolios of short-term traders, and 2. make them lose value. Of course this sounds highly unethical and illegal now that i am writing it down. But knowing how wall-street people think (thanks to the plethora of new books like EConned) I am quite sure that someone has already
1. thought of this
2. is doing it, but not as a ‘protest’, more as a ‘targeting maneuver’ against rivals or as part of a scheme to boost one stock at the expense of others.
Actually, now that I write that, I am thinking of the new crop of computer-based AI traders, and thinking that the AI trading probably has ‘discovered’ some of these techniques on it’s own, without the managers even understanding or knowing what it was doing. These AI might be manipulating the market illegally as we speak, but how do you put a computer in jail?
Now we all know that an owner whose dog mauls someone is liable for damages. But that is one of those rules for us little people, not for the Panglosses whose ‘market efficiency’ guarantees us this Best Of All Possible Worlds.
What I mean to say is that….
If you take ‘core wars’ to the stock market, then the market itself becomes the ‘playing field’. Imagine an array of numbers, that change over time. that’s all the stock market is.
So the stock market becomes a sort of ‘game’. When M Douglas says that ‘its not about the money, its about the game’, he was being quite literal.
The stock market is like any other computer game now, like ‘world of warcraft’ or etc.. The goal is to make a little bar go up, or make a number increase over time. That is the point. Make numbers go up. It is a game.
There are people who cheat at the game, and the companies running the games try to kick them out. But on the stock market, the companies running the game are the same ones playing the game, so they can apparently twist the rules however they want. It is funny to think that an online game for teenage boys has more enforcement and monitoring than the foundation of our economy but whatever God is a funny person sometimes.
You better divulge that this all mass can easily go in destructive direction resulting in unwanted results. You should also mention that genetic algorithm may result in just about nothing.
One day, men will replace machines…I hope.
How long are the other 30% of the shares held?
How do we know HFT is a bad thing? If 70% of all trades are HFT, these machines are trading with one another. Those who go short must inevitably cover. Perhaps this adds an upward bias to “the market”?
How do we know HFT is a bad thing? If 70% of all trades are HFT, these machines are trading with one another.
but their true goal is to trade with the institutional investors. Nick them for a penny here and a penny there, every time that the big institutional investors (and small retail investor) trades.
those pennies rack up.
they are just extracting wealth from others, there is no added price discovery, no added anything… except added bonuses to their pocketbooks.
It is also most likely one of the reasons that we CONTINUE to have mini “flash crashes” intermittently. The latest was just this week, right?
Any business model that adds little to no value to should be banned. Period.
the myth is hft add liquidity. search “hft” on karl denninger’s blog to read why it is a myth.
I’m sure *trading* adds liquidity, but all the liquidity the world needs can be supplied by trading shares no more frequently than once a day.
Why don’t we tax the seller of a share a small percentage every time it’s sold? We do it to houses.
Are those trades on instruments above certain capitalisation and volume?
These guys are just efficiently allocating investment capital. They just change their minds very quickly about about which companies are well-managed and are likely to produce increased future earnings.
Seriously, is there any way that this practice and the relentless extraction of wealth from the system, from real investors and from companies that might use investment capital to create additional wealth and jobs is not a bad thing? Can anyone point to any economic service that these people perform in terms of adding value? It would be so easy to regulate this practice out of existence, that its continuation seems only attributable to political corruption.
Paging John Law, Paging John Law. Please report to the Federal Reserve.
I have no problem with robo-trading per se. My question is: “What government privileges allow the Exchanges to get away with a virtual monopoly?” In other words, why doesn’t the “free market” punish such behaviour?
That certainly helps to explain the somewhat flippant attitudes towards property rights, when property is just a few electrons chasing each other across a screen for eleven seconds.
Duration of positions is one matter for concern but duration of orders is the biggest problem.
All buy/sell orders should be valid for a minimum of ONE SECOND on any exchange. This should be an across the board rule. Agreements onthis with other OECD countries would help.
The reason is that it allows theoretical human response time to lift such orders. It levels the field.
Only this way can markets be fair to all traders/investors.
Hmm. Could I have 5 seconds to make up my mind, fill out my order, and push the send button? I’m getting older and my price discovery powers are waning.
Winter
Sure, but like Bob says
“It would be so easy to regulate this practice out of existence, that its continuation seems only attributable to political corruption.”
In the meantime we have flash crashes where the gains or losses are decided after the fact….in the first flash crash they decided 59% up or down was a good trade…..later in another flash crash of an individual stock they decided 10% was the figure and in a recent flash crash of -10% in an SPY ETF they decided to DK the trades…….
We are now at a stage where profits are being made by the favored few via past posting with the profits being determined by the very people who are supposed to be policing the markets.
http://en.wikipedia.org/wiki/Late_betting
Seems obvious when you see the arbitrary nature of the decisions on which trades count and at what price, they check who won and loss and set the numbers from there.
(I meant my earlier reply to attach here, apologies).
Also, I have long held the view that HFT spikes should never be DK’d as this breaks the feedback mechanism which punishes the owners of rogue algos. i.e. if they tear up the ladder buying or selling then later when the price normalises – the HFT owners are invariably left with a large loss. Ideally, when a few of them lose their shirts it will make the programmers tidy up their act. Reducing spikes. DKs are moral hazard like bailing out TBTFs. So it should not happen at all.
I agree. There is systemic fraud at every level and in many domains. But all we can do is highlight it (hat off to Yves) and recommend solutions. Hammering away at it might just turn this supertanker round. Remaining silent and not pushing solutions is the default which the plutocracy/kleptocracy want from the people.
http://seekingalpha.com/article/230777-10-18-10-spy-flash-crash-summary
Here’s a link to a story about that crash.
These things are becoming so commonplace nobody mentions them even happening anymore.
Until the big one hits….that they will talk about!
While I am not generally in favor raising taxes (other than on energy), I wonder if raising the short term capital gains tax to 95% (at least for holding periods under 30 days) might not put a serious dent in this and a lot of other destructive short term trading. (And no special rules for hedge funds while we’re at it.)
Oh, go on. Raise taxes. Think of free medical care for all. Free dental. Free postage. Free phones. Free internet. Free cable TV. Free mass transit, to anywhere, from anywhere in the US. Four weeks paid vacation. Double Social Security & start it at age 60. Government funded campaigns.
It’s not that taxes are evil, it’s that we just don’t get anything in exchange for them. Time to stop giving tax money to the greedy rich & give it back to the starving masses. Time to make taxes pay!!
Thanks for bringing this up. It doesn’t get nearly enough attention and it is the most bizarre aspect of our current “market” economy.
Yves,
Please show that HFT is not just zero-sum. Don’t my limit orders still work? Why should I care?
(Just realized the original post was written by George Washington. Sorry George!)
If it’s just zero-sum, then where do you think their profits come from?
The only halfway plausible argument that speculators make that they’re providing any socially useful function is that they provide liquidity. If the high-frequency trading firms supply, on average, 11 seconds worth of that liquidity, then that argument seems weakened. How much extra would you pay, given the choice, to get your order executed 11 seconds faster?
Lol, Ned
Your limit orders will only work so long as the system is not programed to exclude or ignore them. Also,if they fill, you will only benifit from them by the amount that the “People in Power” decide that you should be allowed to profit??
In other words, there is nolonger any sense deluding oneself that you can set orders for ‘Defensive Trades’, in case of a large/exteme market move. Eg. If you set an order to sell 1000 shares of AAPL @$250.00 in case of a crash. This order, if filled, would more than likely be canceled, or worse yet, reset causing you a large loss.
Since commissions have come down so much compared to 40 years ago (to free in a lot of cases) and we moved to 1 cent moves in price from 1/8 of a dollar, the house (wall street houses) has to get its vigorsh from the casino. So they do it this way. If you are a buy and hold investor (enough to go long term in capital gains terms its not that much of a big deal, but its a great way to kill the day traders that are left off. Actually its just automating the day trader.
It does argue for the transaction tax of 10 basis points on each transaction, it would make a lot of money off these guys, but then the house would find a new source of vigorsh.
The predominance of HFT is the clearest evidence that the markets are rigged. Only a fool wanting to be parted from their money would enter into such a stacked arrangement. Such trading also cuts any connection to traditional market signals. This is why a bad jobs report or trouble in China or Europe or foreclosuregate has little or no effect on markets and that markets can rise despite them.
It is still a casino but it is one where the dice have been shaved, the cards marked, and the wheels weighted. It is a place where there are only fleecers and the fleeced.
…and the casino has a giant counterfeiting press in the basement with printer named Ben feeding the primary dealers at the tables. Heads the house wins; tails the players lose.
A very simple way to put an end to this nonsense is the Tobin tax, a tax on financial transactions. It would be very low, with practically no impact on the small investor and investors that hold on to their investments for a good while. It would be something like 0.001%, or even less, of the value of the transaction (I am sure some of you know about this tax and can correct me).
Applying an Eisenhower-era income tax on all incomes no matter what their type (wages or profit) would then take care of excessively high incomes. Then, with all this treasure, the government would have all it needs to redistribute wealth with universal health care, free education, a living wage for all, etc. etc.
Can you get your proposals into bumper stickers, and get someone to put up money to fund think tanks and PR, and get it done? I’ve been talking this line to the guys at work and they don’t listen to me anymore, I’m not much at selling and trying to synthesize what I learn here at NC into lunchtime talk that can compete with sports and local gossip is a losing battle.
We’ve got enough capacity we could all get along and live well, but how do we get there?
“The fact that the vast majority of stock market trades are held for 11 seconds shows that the stock market is not a real market with real traders governed by the law of supply and demand, and with no real price discovery.”
I do not agree. Real money is changing hands over a real market among real traders who find real price discovery. Arbitraging disparities is a well traveled facet of the trade. No doubt, the manner in which this occurs via HFT surely provides fertile commentary about this moment in history on both fundamental and technical fronts. Yet sure profits banked for but liquidity made available probably is the most relevant subject. So, then, to what degree is usury put to practice via HFT? Not a losing day in four years, eh?
This is not real price discovery, it’s churning which distorts prices. However, real money does indeed change hands. Real money is sucked from the market by completly useless organisations and individuals (useless in terms of economic output: they don’t create anything).
They drain resources away from the real economy, and the more the drain away the more the real economy suffers.
Let me propose that a lot of this is an unintendend consequece of decimalization of the market. When stocks used to trade in 1/8 of a dollar increments hft might not make sense as the market would move a bit slower. Trading in $.01 increments as they do today, makes the chance to make profits in 11 seconds all the greater.
Great article. Just a small – and petty – remark though.
The fact that the majority of trade positions are held for an average of 11 seconds is not the same as saying that the “vast majority of stock market trades are held for 11 seconds”.
The average of 11 seconds is a calculated number and not a measured number. It is entirely possible that you won’t find many samples in the measured set that are exactly 11 seconds.
An example:
Four measurments: 2,4,6,8
Average(assuming arithmetic mean): 20/4=5
Now, if you look for all fives in the set, you will turn out empty handed.
This doesn’t take away from your article’s conclusion: It’s a completly rigged market and this is true not only for the stock market(s) but other markets as well:
http://www.zerohedge.com/article/dxy-flash-crash-detonates-entire-currency-complex
I’m not quite clear that there is an authoritative source for the 11 seconds number. There are a few anecdotes which repeat the same number (rather suspiciously similarly). But is there any really authoritative complete source, like a distribution chart of holding times for a defined proven period? I’d like to see something a bit more than a few guys giving interviews to the press, all offering an off the cuff estimate of an identical number that has become a sort of urban myth.
I don’t doubt there is far too much high frequency trading, and don’t doubt its potential for destructiveness. Just would like to see some real, detailed, authoritative numbers on what the distribution of holding times looks like, across a wide universe of securities and a defined time period.
Leave it to Alan Greenspan who stated about 7-8 years ago that the Dow Jones averages overstated stock values. On the other hand go to a chart of the DJIA that plots the daily close for 11-12 years and see that after climbing to 10,000 in mid 1999, essentially NOTHING has happened in terms of steady increases. Lots of spikes=bubbles, but no real growth.
What the . . .?
http://finance.yahoo.com/echarts?s=^DJI+Interactive#chart3:symbol=^dji;range=19970401,20101022;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on
(pull the slider on the bottom of the graph to set it to 01/01/1999 and end on the current date)
That tells me that the stock market is only a game for some folks to play in, a pool to splash around in; a small number-two or three thousand, get rich and the rest are spectators. But the stock market seems to reflect nothing real about the actual world of finance, banking, economic growth, or macroeconomic events.
The idea of value in the stock market is a fantasy. Individual stocks are supported by buying and nothing else. Most of the buying comes from institutions with limited alternatives (stocks or bonds or cash.) Most of the selling originates with shorts (except during panics).
Buying and holding stocks of companies with real businesses and honest executives drawing reasonable compensation still makes sense. Unfortunately, very few such companies now exist. The essential problem is executive looting enabled by directors who are bought and paid for and accountants who have turned manipulation and fraud into generally accepted principles.
So does this means that CNBC and every financial news network, – actually ANY discussion of the markets anyone every hears that attributes market activity to human decisions – are complete and utter fictions? From the newscaster that states, “Oh markets closed down today as investors were worried about inflation fears, etc etc” to the 24/7 coverage provided by CNBC – is it all a total and complete fabrication? Are we all just actually watching/listening to people make up stories about the activities of computers? Or more accurately and insidiously, stories about the activities of computers run by a handful of powerful entities? If so, this is like me sitting in front of a game of Tetris on my computer and doing a running commentary on the reason the different blocks were selected to drop was due to something I had eaten this morning or what kind of sleep I had last night. How is it not exactly the same thing? Remember, 70% of within 11 seconds which prolly means that – I’m guessing – 95% are probably made with 3 minutes. So are people with long term investments – 401ks etc – basically fed truckloads of BS just to give the appearance that someone somewhere actually is actually helping to determine the value of their assests and they are not just involved in ultracomplex version of a video slot machine?
People may complain that our political system is simply a “kabuki dance” for monied interests but there exist too many ways for politicians and those involved to cling to plausible deniability. However, in this situation involving actual data and numbers the accusations that we are knee-deep in a “Matrix world” may not be so easy to brush aside in my opinion.
Is this too alarmist? If so talk us down.
Study the history of capital markets and speculation. It’s the same game, only speeded up and enlarged by a factor of xxx. Real people get paid real dividends. Real companies produce real good and services. Whether or not the books are cooked is another matter.
Yes speculation creates bubbles, but eventually the oxygen runs out, or the pressure gets too high and they implode or explode.
Markets are creations of human psychology. The only way to understand them is to study human perception. The computers are the latest, greatest tool to play the game. In many cases, they have become proxies for the traders. However, do not forget that it is humans who feed power to these machines, and it is humans that can pull the plugs.
Yes, a War Games/2001 scenario is theoretically possible where the computers take over. This is why systems must have fail-safe overrides. You play any or all games at your own risk. Just drop the pretense that there is any guarantee of the next moment being precisely A, B, or C. It could be Y or Z or a previously undiscovered mathematics/perception frame. The best you can do is learn the rules, assess the risks, and play with open eyes and an open, flexible mind. Reality throws curveballs.
the only safe haven is awareness
You wrote:
“Yes, a War Games/2001 scenario is theoretically possible where the computers take over.”
I guess my question is how would we know that this hasn’t already happened?
Sure, investors would continue – i.e, be allowed – to make money in the markets but what if human investors and their actions are no longer the basis for movements in the markets? I mean, the markets would still exist but only as a “hologram” if you will of what a market used to be – as you stated -a product of human psychology.
How would we ever know the difference from an “end user” point? Theoretically, wouldn’t the tranistion to such a pseudo-market be nearly seamless and undetectable except for a few “bugs” – e.g., flash crashes – as long as our commentary about the markets never acknowledged this fact? This I guess goes back to my main point.
My interest isn’t in the intracacies of the market itself – e.g., the speculation, bubbles, etc – but rather whether the market as a whole is already approaching the level of a simulacrum that we all have just consciously or uncousciously have decided to validate.
Yes, the market is already a simulacrum or a hologram, if you will. It always was. Only now, the technology is rendering this more clearly. It is now becoming obvious, the entire market, precisely money itself, is a derivative! Regulate the derivatives market? That is a tautology. The market itself is the derivative.
Reality, as we know it, as a human psychological construct, is a hologram. I am not being facetious. Study quantum/theoretical physics. The market is a useful aspect to reflect upon this. There is no separation between our perception and reality, as we live it. So, draw your own conclusions. The “Matrix” movie is probably the best model we have to date that describes our present situation.
the only safe haven is awareness.
Thanks for the response.
Being familiar with the hologram model of the universe as stated in quantum physics still doesn’t quite get to the heart of my problem however is it ethical for some people to realize that they exist/invest in a holographic world and for some not to?
Obvioulsy, this could open up the question of choice – e.g., red/blue pills, etc – or ability as a determinant factor as to “who knows” but this knowledge does have real world, life/death implications beyond simply making money in markets.
Question:
By knowing that the market is not what it has traditionally been defined as since earliest history – a very real place where very real buyers and sellers traded very real commodities – and still particpating in it, are we not aiding and abetting the FORCED disjuncture of mankind from any viable definitions of reality? I mean, all of the financial commentary still speaks using very traditional terms yet we’re forcing people to unwittingly accept a new version of reality through lies/propaganda. This doesn’t sound very noble.
Sure, it’s fun/exciting to think about it in the ways you’ve described, but the vast, vast majority of people don’t like think this and yet they stand to be most affected by moves away from traditional concepts of reality whether they like it or not. I guess I’m trying to damper what I see as a somewhat cavalier attitude.
Also, sorry for the typos I am at work and am typing quickly.
Additionally, because some people realize that all of reality – and not just markets – is an illusion/hologram/simulacrum, does that imply that those who know get to take advantage of those who don’t until they wake up?
Are ethics not carried forward into this new “paradigm” as well? Is the difference between what is beneficial for mankind and what is detrimental for mankind lost in the erasure of reality lines as well?
Again, I guess ethical considerations are on my mind this morning.
Capitalism is crudely notioned here and in other writings, as some sort of economic activity. It is not. It is a way to manage and direct economic activity, primarily by the control of money in its accumulated form, capital. Hence the need for banks. MMT seems to be emerging as a new model of managing economic activity, based not on the pursuit of an abstract idea, profits, but maintaining cybernetic control of the data into information, money into productive enterprises. The Media of economic activity is money, and control of it on the scale of our current social order requires saying good by to profits and focusing on productivity and cybernetic control.
Pragmatism as the new governing ideology, so we can make decisions based on what will work and not lead to evolutionary dead ends. Like financial collapses or HFT for the sake of reaping money. Since banks are clearly not profitable, they are all insolvent, we no longer witness the economic organization based on profits, but survival and retention of power and the privileges that come with.
Banks and capitalism are dead. Pragmatism, a biologically based philosophy emerged with the master concept for our time, that of evolution. We are not an element on the periodic table that needs the mechanistic model of physics, we are living organism, delimited by the margins allotted by life. We can enter into sustainable prosperity with formal organizations for business based upon a pragmatic economics, with the feedback mechanism of observable validation from the measurable consequences as opposed to the ideological adherence to political factions. Blindly following static ideals, even though circumstances have completely changed, for example, the world of kings and empires of Adam Smith in 1776 to the republics and constitutional nations in the 7 billion populated world of 2010, leads to evolutionary dead ends. A failure to see change and respond accordingly. Pragmatism allows for us to transcend looking for a new theory and practice to replace the old theory and practice through means of civil war or social breakdown.
The model of pure competition leading to optimal outcomes is absurdly flawed (aka “Monopoly” master/slave). The model of pure cooperation (aka “communism”) is also absurdly flawed because you just replace once set of masters (“capitalists”) with another (the “state bureaucracy”), and there is never total agreement among the group about the best way to distribute resources. We need a balance between competition and cooperation that leads to better solutions for all people. Innovators must be rewarded, but exploitation must not be rewarded.
It is easier for people to exploit than to innovate, and there is too much built-in incentive for exploitation in our present social arrangement. People respond to incentives, and this is the best way to think about structuring the rules of the game to promote constructive behaviour we prefer, individually and collectively, and to discourage destructive/exploitative behaviour. Socialism/communism falls short because it does not provide adequate incentives to produce. Laissez faire falls short because it does not provide the adequate disincentives to curb bad behaviour.
Geopolitics has become a giant game of prisoner’s dilemma. These issues will have to be addressed on a global level. It’s a great time to be alive
Ahh, so much to comment on and so late to the thread..:(
HFT is the ‘do everything’, Swiss Army knife, of the system:
-The HFT systems promote control/stability of prices for the entities controling the HFT systems. The only problems arrise where there are competing adgenda between the HFT systems.
-The HFT’s facilitate both both financial management and …Money Laundering…
Mentioned above”
-“Banks are not profitable”..That depends upon your definition of the Benificiary. Certainly they are not profitable for the dumb schmuck who buys shares. However, they are vastly profitable for management and specially profitable for those who use the Banks’ power as a weapon. I differentiate because the management are generally only “Very well paid puppets”. Those who really determine the policies and actions may take their ‘profits’ in nonfinacial instruments.
-There should be an “Capital Gains/Income tax” on these trades…That makes no sense. In the market there is one winner and one looser. There would be no gain to the government, and no additional control. What is needed if one wishes to reduce HFT’s is a ‘Sales Tax”.
-The financial markets are a necessary abstraction, not a “Hologram”. Given the complexity of modern commerce a person to person transaction system is totally unworkable. The direct transaction model is not capable of functioning on any level greater than a village. Can you imagine calling Juan Valdez to order your coffee supply for next week?? That would be damned expensive coffee and you still might suffer withdrawl before it arrived. The complexity of the Global Economy requires that traders make assumptions/bets on what will happen in the future.
-There is an underlying premis that traders and speculators are Evil. This is far from the truth. We are all traders and speculators in our daily activities, unless we have no thought or preparation for the future. Many people conciously choose to shun the markets as being predatory, yet they will purchase large amounts on a caselot sale or change jobs for higher wages. We are the Market!
All that said and done…The problem I see with HFT is not so much that it may generate profits for some companies. Rather, I suspect that the generation of profits is at best a secondary goal. I think that These massive trades are a weapon used for other purposes.
I reviewed Tyler Durden’ s remarks that were referenced in the article. Durden clearly illustrates the negative benefits of HFT- i.e. quote-stuffing that results in overstated prices for certain stocks, manipulating potential investors to pay more than fair value for a stock . Somehow I don’t see how this is any different than the strategy of “pump-and-dump” boiler room operators of the late 90’s(AR Baron, DH Blair, etc). While the tools employed have changed the underlying strategy remains the same.
The boiler room guys utilized telephones and cold calling. The HFT’s rely more on technology (algorithmic programs). The ultimate goal of both is to create a space between the true (un-manipulated) value of a stock and the price an uninformed investor is willing to pay. That difference winds up in the pocket of the manipulators and becomes a cost of doing business to the rest of society. How does this INCREASE market efficiency?
Proponents of HFT will argue that it creates market liquidity. Yeah right- they neglect to mention that this “liquidity” disappears during market convulsions when it’s most needed. And if it cannot be counted upon at those times- the liquidity argument is worthless.
As someone who deals with nonpublic clients in need of capital on regular basis, I am unable to fathom the value of an “Investor” willing to stick with you for only 11 seconds. Granted there may be businesses in need of ultra short term funding for working capital and other needs, but the sources of this money are usually not considered investors but rather lenders. It would be ridiculous for my clients to seek out “investors” with that investment time frame.
PRICE DISCOVERY is also a bogus argument. What’s the long term benefit to a company or its investors of knowing that its stock price was only $39.47 instead of $39.49 at 2:37 pm on October 21st? Understanding the value of a company is not about knowing its stock price at a particular moment in time but rather the price that can be maintained over an extended period of time, which is ultimately sustained operational performance.
i like computer games that are first person shooting and strategy games .
Raymond Robitaille October 23, 2010 at 12:49 am has the right idea with a ‘Tobin’ tax on stock transactions; it would increase stability of the market and raise some serious money.
Why didn’t the Catfood Commission consider it? Rather than slashing Social Security (which does not contribute to the deficit) or removing other tax advantages for the under 250k$/year set and spending the savings on tax reductions for the over 250k$/year set?
Certain things like the ‘Tobin Tax’ are somehow never discussed by our TV pundits. But we are apparently allowed to mention it on blogs. Perhaps someone should mention the Tobin tax at a ‘Tea Party’ event.