Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-18-2011, 01:25 PM   #21
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 102
Don't think anything wrong with high speed trading. In fact, I support it. Company's fundamental hasn't changed but market's perception of that company wildy fluctuates up and down b/c of high speed trading. As a value investor, I love that b/c I'll buy when the market has negative perception and sell when it's up. It's easier said than done but I do think you can use to your advantage on a small part of your portfolio.
__________________

__________________
HatePayingTaxes is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-18-2011, 01:30 PM   #22
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 119
Quote:
Originally Posted by Gone4Good View Post
Another way to do that is through a financial transaction tax, as recently proposed in Europe. That would eliminate the profitability of the razor thin margins captured by high-frequency traders.

I don't have a strong view on the merits of this particular idea, but I'm generally favorable to the notion of taxing things we want less of. If we want less speculative trading, it makes sense to tax that instead of taxing things we want more of . . . like saving, investing and working (and no, high-frequency trading isn't saving or investing).
We had a transaction tax in 1929. Our market still crashed.

In addition, a transaction tax will drastically reduce volume in the market. As a result the bid/ask spread will increase. Who knows by how much. But it is safe to say that a transaction tax will mean that the cost for everybody will go up, irregardless if you have a regular equity account, an IRA, a 401k etc.

There are better ways of going after high-frequency traders than a transaction tax.
__________________

__________________
george76 is offline   Reply With Quote
Old 08-18-2011, 01:48 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by george76 View Post
As a result the bid/ask spread will increase. Who knows by how much. But it is safe to say that a transaction tax will mean that the cost for everybody will go up, irregardless if you have a regular equity account, an IRA, a 401k etc.
So?

If the revenues are used to offset income taxes then the cost of everything impacted by those goes down. The question isn't whether a 'Tobin Tax' produces a net good in and of itself, but whether it is preferable to the other ways we raise revenues. That's a much harder question to answer, but I suspect the answer is . . . it is preferable.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 08-18-2011, 02:05 PM   #24
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by HatePayingTaxes View Post
Don't think anything wrong with high speed trading. In fact, I support it. Company's fundamental hasn't changed but market's perception of that company wildy fluctuates up and down b/c of high speed trading. As a value investor, I love that b/c I'll buy when the market has negative perception and sell when it's up. It's easier said than done but I do think you can use to your advantage on a small part of your portfolio.
About the only impact it has for most of us is to encourage the use of limit orders (where you specify an exact price to buy or sell at) rather than market orders (sell or buy at whatever the 'current' price is), which high frequency trading makes a bit dangerous with wiggling the current price around hundreds of times a second, often violently.
__________________
M Paquette is offline   Reply With Quote
Old 08-18-2011, 02:14 PM   #25
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 119
Quote:
Originally Posted by Gone4Good View Post
So?

If the revenues are used to offset income taxes then the cost of everything impacted by those goes down. The question isn't whether a 'Tobin Tax' produces a net good in and of itself, but whether it is preferable to the other ways we raise revenues. That's a much harder question to answer, but I suspect the answer is . . . it is preferable.
I guess we have to agree to disagree. Unless all countries agree to a world-wide transaction tax, it will fail as investors will simply move their funds to markets that do not have this tax. Ask the country of Sweden how their transaction tax worked. Not only did they fail to raise revenue, most of their prior volume left for London which had a much less onerous transaction tax than Sweden.

I find it interesting that people like to criticize speculators and high frequency traders the second the market starts going down. Why was there no criticism of speculators and high frequency traders in late March 2009 through the rest of 2009 when the market took off?
__________________
george76 is offline   Reply With Quote
Old 08-18-2011, 02:33 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by george76 View Post
Unless all countries agree to a world-wide transaction tax, it will fail as investors will simply move their funds to markets that do not have this tax.
I agree with that criticism.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 08-18-2011, 02:59 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by george76 View Post
I guess we have to agree to disagree. Unless all countries agree to a world-wide transaction tax, it will fail as investors will simply move their funds to markets that do not have this tax. Ask the country of Sweden how their transaction tax worked. Not only did they fail to raise revenue, most of their prior volume left for London which had a much less onerous transaction tax than Sweden.

I find it interesting that people like to criticize speculators and high frequency traders the second the market starts going down. Why was there no criticism of speculators and high frequency traders in late March 2009 through the rest of 2009 when the market took off?
There are legitimate concerns.

There are ways to deal with it other than a tax.

Of course the people making money from it are going to deny they are causing instabilities or that they have an unfair advantage.

Those markets are essentially money machines... and people do exploit them unfairly.

We had that flash crash and there are many people (in the profession) that are concerned about it. I believe it is very rational to be skeptical about it. It should be looked at very closely.

Technology changes are often ahead of us understanding how it might impact the overall system and the participants in the system.

We may be getting to a point where changes to normal convention require more testing and vetting before they are allowed "on the road" so to speak.
__________________
chinaco is offline   Reply With Quote
Old 08-18-2011, 03:39 PM   #28
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by DFW_M5 View Post
Right, the inexperienced do not have a staff of 100 PhD's developing quantitative algorithms that are executed via computers/high speed data lines positioned in close proximity to wall street.
You mean like the Nobel-prize-winning parolees experts at Long Term Capital Management?
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 08-18-2011, 04:37 PM   #29
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 119
Quote:
Originally Posted by chinaco View Post
There are legitimate concerns.

There are ways to deal with it other than a tax.

Of course the people making money from it are going to deny they are causing instabilities or that they have an unfair advantage.

Those markets are essentially money machines... and people do exploit them unfairly.

We had that flash crash and there are many people (in the profession) that are concerned about it. I believe it is very rational to be skeptical about it. It should be looked at very closely.
I couldn't agree more. What caused the flash crash needs to be addressed.

I simply think a solution such as a transaction tax is not the best way to go. Why penalize regular small investors for the abuses of those people that caused the flash crash?
__________________
george76 is offline   Reply With Quote
Old 08-18-2011, 06:22 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,896
Did you really think things would calm down so soon?
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 08-18-2011, 08:38 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by Alan View Post
The internet rhythm method of contraception was invented by Al Gore over 20 years ago
I'll never think of algorithms in the same way ever again!!!

Audrey
__________________

__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Job Boat is Rocking in the wrong way! Aiming_4_55 Young Dreamers 23 08-31-2011 11:13 AM

 

 
All times are GMT -6. The time now is 02:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.