3/7/08

Day traders harm United States

I know money isn't everything, but here I am watching my retirement savings go up in smoke and down the toilet.  I am not the richest man in the country, but I was expecting to see some steady growth to my mutual funds. 

Thank God that I still have a job and can pay the mortgage and put food on the table.  But I was so looking forward to a secure retirement.  Can you sympathize with that?

I am writing to you, not because I think that you are responsible for the real estate and mortgage crisis/fiasco.  But I feel that there are some improvements that the United States Government can take to improve my situation.

I blame the lenders for lending to sub-prime high-risk borrowers.  So I believe that government should not bail-out these fools.  And maybe I am one of the fools, because now my broker is telling me that the mutual funds that I thought were balanced were actually heavy into real estate and financial. 

I blame also the stock market day-traders.  I see these day-traders as the culprits that cause the markets to swing up and down so wildly.  I am a long-term investor.  The day-traders are my enemy.  The day-traders suck gains out of the market before the long-term guys ever see the profits to their investments.  For sure.  The day-traders do what is termed "taking profits".  If a stock goes up, they sell, and thus cause a drop in the stock price.  The long-term guy suffers with this drop.  Happens daily, hourly.  Day traders harm the market, the economy and the country.  I repeat, day traders harm the United States with their greed.

Government can alleviate some of this day-trader churn by imposing a sales tax on these quick stock sales.  Put a five percent tax on stock sales.  Then, remove this tax over five years, pro rated.  Real investors will have no tax, because they buy and hold. 

I believe that it is the responsibility for the government to repair the harm done by the stock market day traders.

4 Comments:

Blogger Stephen said...

Thats a pretty weak argument. Some day traders are trend followers and some provide liquidity. Either way, both make the market more efficient. If you remove players from the market, you remove liquidity. Less liquidity, more volatility.

11:26 AM, August 24, 2008  
Blogger BaruchAttta said...

Stephen -
No, they do not make the market more efficient, unless you mean by efficient to have a higher volume of trading, which is worthless for the main reason for having a stock market.
You have it exactly wrong. Greater liquidity implies greater volitility. Lower trade volume implies better stability and lower volatility.

But you can not deny that every dollar that a day-trader removes from a stock's value is a dollar sucked out of the pocket of a long-term investor.

4:39 PM, August 25, 2008  
Anonymous Anonymous said...

How does transfering profits from a US citizen day trader to a US citizen long term trader help the US economy ?

9:43 PM, March 02, 2009  
Blogger BaruchAttta said...

Anonymous said...
How does transfering profits from a US citizen day trader to a US citizen long term trader help the US economy ?
Excellent question, Mr. Anonymous.
And here is my excellent answer.
Look at the opposite - that is, transfering profits from the long term investor to the day trader. It's like transfering from the honest worker to the thief. Of course, that transfer is good for the US economy, if you are so short sighted to think that any money spent in the economy is good for the economy.
But is it too hard for you to understand that a nation of thieves will not thrive? Or do I need to explain that to you?

10:14 AM, March 03, 2009  

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