1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Let's say you're a producer/hedger in a commodity, and you need to offset a large position or buy a large position in something for your business, the only way you can do that is if there is volume in the market. If there is no speculation, there will be no volume, and the only person willing to take the the other side of your trade would be another hedger (if you can find one). This would make running your business more difficult. Speculators provide the volume that allow large hedgers to get in and out of positions easily, at least in the commodities markets.
Similarly in the stock market: if a company needs to raise capital, it can do so by issuing shares. Without heavy market volume to sell those shares into, fewer people would be willing to assume the risk of investing in that company, thereby reducing the amount of money they could raise. Investors are going to be less likely to put down large money on a stock if they know that they will be trapped in it for a long time with no decent amount of traded volume to let them get out. How willing would you be to buy a large position in stock for the long term if you knew that it would take you 4 months to exit your position instead of 4 days? How willing would you be to invest in a large position if you knew that the loss you could suffer would be 60% of the stock's value if things went wrong, instead of 30%? You would lose more in a less liquid market. Would you put in as much?
Lack of market liquidity hurts investment in business. This is why speculation is a necessary function for the economy: the markets would trade much lower volume without it, and that would make raising money more difficult for legitimate businesses. Even long-term investors want to know that they can get out reasonably quickly without taking a huge loss due to lack of liquidity, if they start to see things going wrong with the company.
Dr. Z has an interesting take on it in the 3rd post from the top on this page...
http://www.elitetrader.com/vb/showt...64&perpage=6&highlight=parasitic&pagenumber=4
just remember money won is twice as sweet as money earned. pure satisfaction for the ego, to me thats plenty of economic value. the socialist just dont want us to think that way. they want us to be puppets who do the 9-5 and live paycheck to paycheck. thats the problem with america today nobody has the balls anymore to just tell it how it is. and another thing i dont care what a person does as long as they put food on their table and roof over their head thats all the economic productivity thats needed. hell the guy could shovel shit all day or stuff envelopes. bottom line is you dont have to impress anybody but yourself. if you make money and support your family who gives a shit if your profession is considered productive or unproductive especially by a bunch of strangers.
There was an awesome post from Cutten a few months ago about our economic role and why we should not be ashamed of what we do.
The major problem is we provide a service ( liquidity ) in an impersonal, organized and remote way whereas the public would like to see personal and physical relationship to the exact same occupation to figure out what it's all about.
They see us as a bunch of kids playing a video game endangering and manipulating the economy while they would have no problem with someone at the local market saying :" Hey, you are buying those potatoes for 3$( previous ask ) at the big house( replace with banks ) , I can sell you the exact same for 2.90$ "(after you've bought them for 2.50$ ). They would just say :"Wow, you are a great "trader"(and we appreciate your prices).
I can list a million jobs that are more useless for the economy.
The major problem is we provide a service ( liquidity ) in an impersonal, organized and remote way whereas the public would like to see personal and physical relationship to the exact same occupation to figure out what it's all about.
They see us as a bunch of kids playing a video game endangering and manipulating the economy while they would have no problem with someone at the local market saying :" Hey, you are buying those potatoes for 3$( previous ask ) at the big house( replace with banks ) , I can sell you the exact same for 2.90$ "(after you've bought them for 2.50$ ). They would just say :"Wow, you are a great "trader"(and we appreciate your prices).
I can list a million jobs that are more useless for the economy.
exactly. this is the argument used in favor of a command economy. eliminate advertising and distributors and the price of everything would be cheaper. middleman are extremely important in getting a product distributed efficiently and quickly. they are useful in getting rid of products that are no longer in favor.
another name for a command economy is communism. there were no distributors and the shoes set on the shelve for years because nobody wanted them
"return of day traders raises volume"
http://online.wsj.com/article/SB125301723012911741.html#printMode
a US senator will read this article and conclude what a great way this is to raise revenue.
http://online.wsj.com/article/SB125301723012911741.html#printMode
a US senator will read this article and conclude what a great way this is to raise revenue.
Damn, fucking Kouchner( french foreign minister ) is talking about the damn thing in french newspapers. Didn't find a link in english.
He's claiming that UK is open to talk about it in a further G20. He talks about a light version of 0.005 %.
US people, you are my last hope. Obama mustn't enter their game.
He's claiming that UK is open to talk about it in a further G20. He talks about a light version of 0.005 %.
US people, you are my last hope. Obama mustn't enter their game.
but UK alrady has stamp duty on every stock transaction