Modern stocks are primarily owned by other corporations, think banks, especially after Glass Stegal was repealed and ordinary banks could act as merchant banks allowing them to borrow at extremely low rates from the Fed (I think it's something like 0.7%) it allows banks to roll the dice with huge funds that aren't even theirs (and we now know how that works out). With the funds at their disposal any significant purchase will very likely develop purchasing trends by themselves, and especially when high frequency trading coincides. High frequency trading is when stock purchase orders are intercepted, delayed, and new stock purchase orders by whoever intercepts are placed ahead of the original order. this means the interceptor gets a cheaper price for the stock, the original ordered has to pay more for their shares and the end result is a developing trend so the interceptor can make a guaranteed profit when they turn around and sell their shares.
So let's say a bank buys 1000000 shares for $Y, the actual price doesn't matter, the share price goes up some percentage because of the purchase (this is the model high frequency purchasing uses), even if the price goes up 5c per share, if the bank then turns around and sells the 1000000 shares, the bank will make $50000 and this was in possibly only in a few seconds. A bank with international access can do this all day long 1000s of times in 5minutes, all day all night assuming a stock market is open and they are open all over the world.
Banks don't have to worry about purchasing and selling costs of shares that ordinary people have to pay either when buying and selling stock. Also there is no sales tax on shares either.
There is a lot of potential for good here. A crowd source funded cooperative could also work this system guaranteeing profits are shared fairly but most 401k managers take their profits and share only something like 5% with their clients yet will conveniently hide behind their limited liability if they mess up. there is always risk with stock market casinos as I like to call them, however the odds are really you are betting stocks will go up or down and you have to maximize your share of the difference, or settle for increments of profit. Someone once suggested you should aim for 10% on the cost of the share. Banks and other major players however can settle for 5c because they can rinse repeat millions of times per day. And this also minimizes their risk. ordinary people have buying and selling costs so 5c is too small of an increment and this is where you truly get entry barriers.
Anyway the point of this article is penalizing small players because they sit on their shares because of the evil the corporation is doing is cruel because they are very likely to be uninvolved in the decisions to do the evil and the CxOs are really playing to the major players who are buying and selling millions of shares a minute.
Penalizing owners always comes down to penalizing small players.
So let's say a bank buys 1000000 shares for $Y, the actual price doesn't matter, the share price goes up some percentage because of the purchase (this is the model high frequency purchasing uses), even if the price goes up 5c per share, if the bank then turns around and sells the 1000000 shares, the bank will make $50000 and this was in possibly only in a few seconds. A bank with international access can do this all day long 1000s of times in 5minutes, all day all night assuming a stock market is open and they are open all over the world.
Banks don't have to worry about purchasing and selling costs of shares that ordinary people have to pay either when buying and selling stock. Also there is no sales tax on shares either.
There is a lot of potential for good here. A crowd source funded cooperative could also work this system guaranteeing profits are shared fairly but most 401k managers take their profits and share only something like 5% with their clients yet will conveniently hide behind their limited liability if they mess up. there is always risk with stock market casinos as I like to call them, however the odds are really you are betting stocks will go up or down and you have to maximize your share of the difference, or settle for increments of profit. Someone once suggested you should aim for 10% on the cost of the share. Banks and other major players however can settle for 5c because they can rinse repeat millions of times per day. And this also minimizes their risk. ordinary people have buying and selling costs so 5c is too small of an increment and this is where you truly get entry barriers.
Anyway the point of this article is penalizing small players because they sit on their shares because of the evil the corporation is doing is cruel because they are very likely to be uninvolved in the decisions to do the evil and the CxOs are really playing to the major players who are buying and selling millions of shares a minute.
Penalizing owners always comes down to penalizing small players.
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