1/4% Tax on all stock trades pushed in NY Times today

[piggie2000]

heres an article that popped up on cnn money today. it acts like it won't be seriously discussed for the next 2 years. but by the mkt skying back so quick its given the backers a huge plus to say"see greedy wall street is making a fortune" lets get money for the poor from them. the best thing that could happen is the mkt falls back 20-30% and goes sideways and this issue will die


http://money.cnn.com/2009/12/02/news/economy/financial_transaction_tax/index.htm

 

[Luckystriker]

Quote from loufah:

It is certainly heavy-handed, but any short-term efficiency gain has to balanced by the long-term damage that things like $140 oil did to the country.

Oh yes, the evil speculation.
You gotta be kidding me. Are you a trader?
Without the smoothing effect of speculators oil would have been min. $300 in mid 08. The chart would have looked just like the thinly traded Silver's did in the early 80s.
The move was purely an inflationary hedge against the upcoming printing of $. The last sharp exaggeration started about half a year before the actual bailout news hit the wires. When it came out it was "sell the news" and "what about supply and demand?" and oil crashed.

 

[loufah]

Quote from JOSEF:

When liquidity dries up as it will (most traders will go out of business, some will go to foreign markets), the bid-ask spreads will jump to where they were decades go. The increased spread will impact the long-term investor on every transaction they make.

It was not that long ago that we had 1/4 and 1/8 ticks, meaning the spread was often half a percent or more. Despite this, the market went up an average of 11% per year and millions of traders and investors managed to make money.

 

[loufah]

Quote from Luckystriker:
The move was purely an inflationary hedge against the upcoming printing of $.

If oil futures had been limited to oil suppliers and oil consumers, the price would have been based on supply and demand, not inflation, speculation, etc.

 

[piggie2000]

loufah you're correct on the spreads 8 years ago BUT THERE WAS STILL HUGE LIQUIDITY ON THOSE BIDS AND ASKS WERE IF YOU HAVE A HUGE TRANSACTION TAX THE SPREADS WILL WIDEN AS VOL FALLS 50-75%. remember day traders,hedge funds and black boxes make up more than 75% of vol. so if tax is there once they buy they won't be right back on the bid again for days. so liquidity is gone and stocks will move in crazy ways

 

[Luckystriker]

Quote from loufah:

If oil futures had been limited to oil suppliers and oil consumers, the price would have been based on supply and demand, not inflation, speculation, etc.

If you argument like that, then consequently we must have state-directed economy without private possibilities to invest capital and not a "small" tranny tax which still allows to speculate.
You must be out of your mind if you wish that.

 

[MrPowerBallad]

A bunch of pro-tax comments starting to congregate here:

http://www.businessinsider.com/trad...government-might-pass-transaction-tax-2009-12

 

[loufah]

Quote from JOSEF:

Are you going to go after pro-athletes next, what about the cigarette companies, how about Hollywood and their movie making, how about McDonalds, how about the liquor industry? Why not simply let people live their lives without Big Brother dictating what they can and can't do?

Pro athletes are their own ecosystem. I haven't been to a live game in 35 years. If people want to pay $50 to watch mercenaries battle each other, let them.

I haven't been to a movie in 4 years. Again, if people want to pay $12 to sit arm-to-arm with other people for two hours, that's fine with me.

People can smoke and drink all they want as long as it doesn't affect me. Yet they drive up my health insurance and medicare taxes. I object to that.

I object to $4/gallon gasoline that is only that expensive because traders wanted to make a few billion more dollars. That hurts the entire country.

 

[loufah]

Quote from piggie2000:

so if tax is there once they buy they won't be right back on the bid again for days. so liquidity is gone and stocks will move in crazy ways

Maybe they won't move in crazy ways. Maybe they'll move based on their fundamentals and not on manipulation. Maybe half the listed companies that shouldn't have gone public because they have negative PE and a dubious business plan will get delisted. Maybe people will invest in a company so that it can prosper over 5 years instead of 5 minutes.

 

[rsikit]

Quote from loufah:

Maybe they won't move in crazy ways. Maybe they'll move based on their fundamentals and not on manipulation. Maybe half the listed companies that shouldn't have gone public because they have negative PE and a dubious business plan will get delisted. Maybe people will invest in a company so that it can prosper over 5 years instead of 5 minutes.

The prosper every 5 years rather then 5 mins argument is dead in this day and age, as is buy and hold. Well my opinion anyways. Now adays with the media that are quick to jump on a rumor and print it as fact on companies , ceos, etc... it ruins the market. You have to get in and out. The media make its that way. Sure rumors might be proven false and what not but by that time the stock has been cut in half and people are forced out. The money is gone. We are in a day an age with technology is so fast and furious as is information reporting its hard to to watch and trade around these news, you have to now adays. Just like the crooked ceo's back in the day with slwoer media and no interent, the news diseminated slowly and was fact checked now its just thrown out there. Back in the day you could hold for 10 years becuase we wouldnt really hear these rumors and it wouldnt affect the market, now its a different world that calls for a diiferent investment strategy. Thats just the way it is. We should tax the journalists who report false rumors before they fact check, we should charge them with market losses caused by them when there reporting is the cause of those things. Just wishful thinking on my part!