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I've been thinking ...
creepycoug
Member Posts: 24,066
This one is for the Philosopher King Bros. Those poasters who, like F. Scott Fitzgerald's Monroe Stahr, and Creepycoug, prefer to ascertain the essence of things.* While our brothers of the Tug carry on with their tedious and pedantic sermonizing, we? men (and woman) of means are afforded the luxury of security and thus moar time for higher-level thinking. That's what it means to be a Finance Bro./Sista. With that in mind, amidst the tumult of the last few weeks in the markets, I reprise a question I've been asking people for years:
To what end purpose are the US capital markets? Isn't it like anything else in that it is there to serve a fundamental purpose in our society? Isn't it the case that the ultimate point of the markets is to serve as a place where interests in going concerns are traded and thus valued according to what the highest-paying buyer is willing to pay? If you agree with that on a basic level, what are your serious thoughts about the market becoming a casino? Is that why it's there? Does it do damage to the market that it has become so? I will proffer for consideration the following radical thought:
The market exists for corporate capital aggregation and therefore for legitimate investing in a going concern. Therefore, should there be a basic rule that any exchange-traded security be bought and sold only for "bona fide" investment purposes? Towards that end, should Congress pass laws and direct the SEC to adopt rules and regulations pursuant to those laws that require that any person who buys an equity security on a US stock exchange hold that security for a minimum period of time? The holding period could be a day, a week, whatever. At the same time, outlaw, or regulate with massive transparency, shorts and options (put and call) in such securities?
Should we eliminate all of this Malarkey and keep these clean capital markets free from all those silk suits and oily hair grease balls passing themselves off as real investors while in reality warping the reality of market forces with their shenanigans, tomfoolery and ballyhoo? For God's sake, we regulate actual, straight-forward gambling with cards and gameboards. How can we not limit how many people thwart and exploit (I know, sensitive word) the capital markets?
*Creepycoug had flown up very high to see, on strong wings, when he was young. And while he was up there he had looked on all the kingdoms, with the kind of eyes that can stare straight into the sun. Beating his wings tenaciously – even frantically – and keeping on beating them, he had stayed up there longer than most of us, and then, remembering all he had seen from his great height of how things were, he had settled gradually to earth.
The Last Tycoon
F. Scott Fitzgerald
To what end purpose are the US capital markets? Isn't it like anything else in that it is there to serve a fundamental purpose in our society? Isn't it the case that the ultimate point of the markets is to serve as a place where interests in going concerns are traded and thus valued according to what the highest-paying buyer is willing to pay? If you agree with that on a basic level, what are your serious thoughts about the market becoming a casino? Is that why it's there? Does it do damage to the market that it has become so? I will proffer for consideration the following radical thought:
The market exists for corporate capital aggregation and therefore for legitimate investing in a going concern. Therefore, should there be a basic rule that any exchange-traded security be bought and sold only for "bona fide" investment purposes? Towards that end, should Congress pass laws and direct the SEC to adopt rules and regulations pursuant to those laws that require that any person who buys an equity security on a US stock exchange hold that security for a minimum period of time? The holding period could be a day, a week, whatever. At the same time, outlaw, or regulate with massive transparency, shorts and options (put and call) in such securities?
Should we eliminate all of this Malarkey and keep these clean capital markets free from all those silk suits and oily hair grease balls passing themselves off as real investors while in reality warping the reality of market forces with their shenanigans, tomfoolery and ballyhoo? For God's sake, we regulate actual, straight-forward gambling with cards and gameboards. How can we not limit how many people thwart and exploit (I know, sensitive word) the capital markets?
*Creepycoug had flown up very high to see, on strong wings, when he was young. And while he was up there he had looked on all the kingdoms, with the kind of eyes that can stare straight into the sun. Beating his wings tenaciously – even frantically – and keeping on beating them, he had stayed up there longer than most of us, and then, remembering all he had seen from his great height of how things were, he had settled gradually to earth.
The Last Tycoon
F. Scott Fitzgerald
Comments
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It doesn't look broken to me.
Can't we? fix something that doesn't work? -
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ??? -
Fuck the stock market. Actually, my family owns many shares I just don't know which ones.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
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I feel like I should make money in the stock market, the old fashioned way, which is to earn it over the long haul.
I don't get all this day trading bull shit, short sells, and all the other malarkey.
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On this board, we capitalize "Malarkey".YellowSnow said:I feel like I should make money in the stock market, the old fashioned way, which is to earn it over the long haul.
I don't get all this day trading bull shit, short sells, and all the other malarkey.
Just a heads up. -
My choice of gif has my proxy.creepycoug said:
On this board, we capitalize "Malarkey".YellowSnow said:I feel like I should make money in the stock market, the old fashioned way, which is to earn it over the long haul.
I don't get all this day trading bull shit, short sells, and all the other malarkey.
Just a heads up. -
I hate the derivatives market. It's just a way for smart money people to muddy the waters so stupid money people can be more easily taken advantage of - and even people of above average intelligence are money stupid when it comes to things like derivatives. Shoot, you had Moody's putting triple A ratings on garbage, and the investment sides of banks peddling stocks of companies they were financing on the VC side. Complete bullshit.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
That's the shit that rattles people's confidence, IMO. If I can't trust Moody's to tell me what's crap and what isn't, then who can you trust?
Those Moody's boys have Ivy League degrees, too. Shouldn't they have known better? I think they did - they're just not trustworthy.
I liked your poast - I was just busy at work today, so I had to wait to expand on my comments. In my experience, our politicians are more likely to break the stock market than they are to fix it. Any elected official at the federal level should be forced to divest completely from the market to avoid impropriety, IMO. That will fix more than anything those retarded assholes could pass as legislation.
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Problem isn’t the derivatives trading and all that other craziness...problem is simply the Fed. Or specifically the Fed printing $$$ to try and act like benevolent overlords thinking the short term meth hit has no long-term consequences. 12 years and still going of heavy meth use isn’t good on a person...or an economy.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
Recessions happen...the idea we need 0 or negative interest rates to prevent them is academic stupid, and the side effect of providing an unlimited spigot of cash to the govt with no consequences is as obviously a bad idea as giving a kid a case of fun dip candy and telling him to only eat one package. It won’t happen, and the kid will be bouncing off the walls afterwards hopped up on sugar doing all sorts of stupid things...kinda like the govt now. This is painfully obvious to everyone but the FS “smartest men and women in the room” academics now running things.
Add to that the side effect on the private sector in funding all sorts of FS projects in hopes of getting a return...any return on their money because interest rates are so low and it’s one big fucking mess.
I remember after the 2008 crash there was one economist who was preaching that the Fed should never, ever let interest rates go under 2% and he was roundly ignored and ridiculed.
And he was right.
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Disagree.HoustonHusky said:
Problem isn’t the derivatives trading and all that other craziness...problem is simply the Fed. Or specifically the Fed printing $$$ to try and act like benevolent overlords thinking the short term meth hit has no long-term consequences. 12 years and still going of heavy meth use isn’t good on a person...or an economy.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
Recessions happen...the idea we need 0 or negative interest rates to prevent them is academic stupid, and the side effect of providing an unlimited spigot of cash to the govt with no consequences is as obviously a bad idea as giving a kid a case of fun dip candy and telling him to only eat one package. It won’t happen, and the kid will be bouncing off the walls afterwards hopped up on sugar doing all sorts of stupid things...kinda like the govt now. This is painfully obvious to everyone but the FS “smartest men and women in the room” academics now running things.
Add to that the side effect on the private sector in funding all sorts of FS projects in hopes of getting a return...any return on their money because interest rates are so low and it’s one big fucking mess.
I remember after the 2008 crash there was one economist who was preaching that the Fed should never, ever let interest rates go under 2% and he was roundly ignored and ridiculed.
And he was right. -
It’s like playing wack-a-mole. Say you fix the “derivatives” and say limit short-selling or whatever you think is the problem. It still doesn’t fix the fundamental instability in the system...the world being awash with free money meaning everyone will try to leverage up with little consequence (because of crazy low interest rates) to get rich. The biggest deterrent to taking that risk is having to pay a $$$ premium to do it. Which you don’t when rates are so low.dflea said:
Disagree.HoustonHusky said:
Problem isn’t the derivatives trading and all that other craziness...problem is simply the Fed. Or specifically the Fed printing $$$ to try and act like benevolent overlords thinking the short term meth hit has no long-term consequences. 12 years and still going of heavy meth use isn’t good on a person...or an economy.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
Recessions happen...the idea we need 0 or negative interest rates to prevent them is academic stupid, and the side effect of providing an unlimited spigot of cash to the govt with no consequences is as obviously a bad idea as giving a kid a case of fun dip candy and telling him to only eat one package. It won’t happen, and the kid will be bouncing off the walls afterwards hopped up on sugar doing all sorts of stupid things...kinda like the govt now. This is painfully obvious to everyone but the FS “smartest men and women in the room” academics now running things.
Add to that the side effect on the private sector in funding all sorts of FS projects in hopes of getting a return...any return on their money because interest rates are so low and it’s one big fucking mess.
I remember after the 2008 crash there was one economist who was preaching that the Fed should never, ever let interest rates go under 2% and he was roundly ignored and ridiculed.
And he was right.
it will just pop up as some other crisis a few years later.
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Surely, though, there is some negative to all the side-bar activity that doesn't constitute real bona fide investing. Getting at it another way, who will lose if it's no longer possible, and what will they lose?HoustonHusky said:
Problem isn’t the derivatives trading and all that other craziness...problem is simply the Fed. Or specifically the Fed printing $$$ to try and act like benevolent overlords thinking the short term meth hit has no long-term consequences. 12 years and still going of heavy meth use isn’t good on a person...or an economy.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
Recessions happen...the idea we need 0 or negative interest rates to prevent them is academic stupid, and the side effect of providing an unlimited spigot of cash to the govt with no consequences is as obviously a bad idea as giving a kid a case of fun dip candy and telling him to only eat one package. It won’t happen, and the kid will be bouncing off the walls afterwards hopped up on sugar doing all sorts of stupid things...kinda like the govt now. This is painfully obvious to everyone but the FS “smartest men and women in the room” academics now running things.
Add to that the side effect on the private sector in funding all sorts of FS projects in hopes of getting a return...any return on their money because interest rates are so low and it’s one big fucking mess.
I remember after the 2008 crash there was one economist who was preaching that the Fed should never, ever let interest rates go under 2% and he was roundly ignored and ridiculed.
And he was right.
When Clinton was talked into getting Fannie and Freddie all hopped up on speed, it led to a problem, but at least I could say his heart was in the right place by wanting massive amounts of liquidity in the mortgage financing markets. We? ran away with it and tossed underwriting standards to the wind, and got what we got. One of the fixes to all that was always making the underwriting bank hold onto and service a min. % of the loans they originated. You write it, you eat it.
What's the different here? -
These issues pop up and blow up all the time...it’s the size of them that is amplified by artificially low interest rates that result in people being able to leverage up to artificially high magnitudes to try and exploit them.creepycoug said:
Surely, though, there is some negative to all the side-bar activity that doesn't constitute real bona fide investing. Getting at it another way, who will lose if it's no longer possible, and what will they lose?HoustonHusky said:
Problem isn’t the derivatives trading and all that other craziness...problem is simply the Fed. Or specifically the Fed printing $$$ to try and act like benevolent overlords thinking the short term meth hit has no long-term consequences. 12 years and still going of heavy meth use isn’t good on a person...or an economy.creepycoug said:
Like Washington football damnit! ???dflea said:It doesn't look broken to me.
Can't we? fix something that doesn't work?
Does all the derivative trading and bullshit thwart the real price of a stock? Does it contribute to market destabilization? Does it, in the long run, compromise the public's confidence in the capital markets, which is so important?
Was my poast a beautiful waste of tim?
Where are my philosopher kings? @YellowSnow ???
Recessions happen...the idea we need 0 or negative interest rates to prevent them is academic stupid, and the side effect of providing an unlimited spigot of cash to the govt with no consequences is as obviously a bad idea as giving a kid a case of fun dip candy and telling him to only eat one package. It won’t happen, and the kid will be bouncing off the walls afterwards hopped up on sugar doing all sorts of stupid things...kinda like the govt now. This is painfully obvious to everyone but the FS “smartest men and women in the room” academics now running things.
Add to that the side effect on the private sector in funding all sorts of FS projects in hopes of getting a return...any return on their money because interest rates are so low and it’s one big fucking mess.
I remember after the 2008 crash there was one economist who was preaching that the Fed should never, ever let interest rates go under 2% and he was roundly ignored and ridiculed.
And he was right.
When Clinton was talked into getting Fannie and Freddie all hopped up on speed, it led to a problem, but at least I could say his heart was in the right place by wanting massive amounts of liquidity in the mortgage financing markets. We? ran away with it and tossed underwriting standards to the wind, and got what we got. One of the fixes to all that was always making the underwriting bank hold onto and service a min. % of the loans they originated. You write it, you eat it.
What's the different here?
Extremely simplistic and not quite right way to look at it, but say you can afford to pay $1,000 in interest. At 10% interest means you can borrow $10k. At 5% interest it means you can borrow $20k. At 2.5% it goes to $40k... Think of the corollary...would the Federal debt had gotten this out of hand if interest rates were 4% instead of 1%?
The entire basis of the cutting rates theory is that cutting interest rates from 7% to 6% incentives people to investment more, take more risks, etc and structurally that’s true. The eggheads haven’t figured out yet that thinking that relationship holds with no meaningful side effects is FS as you approach zero.
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All excellent, foundational questions. I'd expect nothing less from our deep thinking financial guru/dear leader.
It "seems" like a growing problem that I still struggle to fully understand. I think everyone is inherently uncomfortable with a stock market that can be so uncorrelated with the rest of the macroeconomy. That becomes extremely pronounced when something like the GME saga goes mainstream and shows everyone just how fickle the market can be. And all it takes is a legion of retards gathering on a subreddit. Of course, this kind of manipulation has been going on for as long as capital markets have existed. Jim Cramer and all his hedge fund asshole friends have built their fortunes on peddling nonsense to move prices. Tales of the Dutch East and West Indies Companies bullshitting about each others' cargoes with the aim of moving their stock price are common lore. I'm sure our ancient bartering ancestors relied on similar tactics to badmouth their neighbors' crops in order to generate sales.
So while we are in a period of relatively high P/E ratios with an alleged bubble burst somewhere around the corner, none of this is necessarily unprecedented. The market is still an excellent source of capital for companies, and "the fundamentals" still drive and shape the labor market and therefore the lives of the rest of us. I don't think this "peak irrationality" we're seeing really threatens that. Or maybe it does. Maybe the masses now recognize what a sham short-term stock prices actually are and we're entering a new period of unchecked volatility as consumer confidence waxes and wanes with the frequency of husky recruiting (that analogy worked better when the program wasn't a consistent piece of flaming garbage). EWIWBI.
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Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
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Don't disagree...would love to see a nominal tax on stock transactions to blow up the HF trading folks. They donate a ton of money to politicians though so it will never happen.Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
Still think if it ever does the issue will just pop up in some other form...intelligent crooks are amazingly creative folks.
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I often wished my employees were as hard driving as good criminalsHoustonHusky said:
Don't disagree...would love to see a nominal tax on stock transactions to blow up the HF trading folks. They donate a ton of money to politicians though so it will never happen.Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
Still think if it ever does the issue will just pop up in some other form...intelligent crooks are amazingly creative folks. -
This is essentially what I'm getting at. Who fucking benefits from that shit other than the person getting the lease payments from siting the servers on their office property right next door to the exchange, and the traders themselves? Otherwise, is this a useful activity for anyone else?Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
And before I get any libertarian-inspired responses from the peanut gallery to the effect that we're all free to make our own deals and use our agency to better our position irregardless of how it affects others, I'll remind us that the markets are regulated and for very good reason, and they exist at all by the grace of others. Think of the stock markets as analogous to the US Highway system. You? didn't build it, we? built it, and you? can use it so long as you abide by our? rules. Nobody is perfectly free. Not even @RaceBannon .
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That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.HoustonHusky said:
Don't disagree...would love to see a nominal tax on stock transactions to blow up the HF trading folks. They donate a ton of money to politicians though so it will never happen.Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
Still think if it ever does the issue will just pop up in some other form...intelligent crooks are amazingly creative folks. -
That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.HoustonHusky said:
Don't disagree...would love to see a nominal tax on stock transactions to blow up the HF trading folks. They donate a ton of money to politicians though so it will never happen.Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
Still think if it ever does the issue will just pop up in some other form...intelligent crooks are amazingly creative folks. -
I don't want anyone making that graph of Creepycoug and the Alliance Tech Fund circa March of 2000.FremontTroll said:
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Good poast.GreenRiverGatorz said:All excellent, foundational questions. I'd expect nothing less from our deep thinking financial guru/dear leader.
It "seems" like a growing problem that I still struggle to fully understand. I think everyone is inherently uncomfortable with a stock market that can be so uncorrelated with the rest of the macroeconomy. That becomes extremely pronounced when something like the GME saga goes mainstream and shows everyone just how fickle the market can be. And all it takes is a legion of retards gathering on a subreddit. Of course, this kind of manipulation has been going on for as long as capital markets have existed. Jim Cramer and all his hedge fund asshole friends have built their fortunes on peddling nonsense to move prices. Tales of the Dutch East and West Indies Companies bullshitting about each others' cargoes with the aim of moving their stock price are common lore. I'm sure our ancient bartering ancestors relied on similar tactics to badmouth their neighbors' crops in order to generate sales.
So while we are in a period of relatively high P/E ratios with an alleged bubble burst somewhere around the corner, none of this is necessarily unprecedented. The market is still an excellent source of capital for companies, and "the fundamentals" still drive and shape the labor market and therefore the lives of the rest of us. I don't think this "peak irrationality" we're seeing really threatens that. Or maybe it does. Maybe the masses now recognize what a sham short-term stock prices actually are and we're entering a new period of unchecked volatility as consumer confidence waxes and wanes with the frequency of husky recruiting (that analogy worked better when the program wasn't a consistent piece of flaming garbage). EWIWBI. -
That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.
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RaceBannon said:
That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.
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Allegedly HFT firms are providing a benefit by cutting out the middleman (trading floor brokers), adding liquidity to the market and narrowing bid/ask spreads. Allegedly. The origin story for HFT is fascinating and I would suggest reading Dark Pools for the whole backstory for how the "plumbing" was initially created. HFT actually grew out of good intentions as a way for hedge funds to circumvent trading floor brokers, which had a different set shenanigans to manipulate the market before everything was automated. I'd agree with the other posts that it's mostly a net negative now since there are a select number of HFT firms which control the market and scalp every trade.creepycoug said:
This is essentially what I'm getting at. Who fucking benefits from that shit other than the person getting the lease payments from siting the servers on their office property right next door to the exchange, and the traders themselves? Otherwise, is this a useful activity for anyone else?Sources said:Would be nice just to start with eliminating high frequency trading and sale of counterfeit shares. Absolutely no economic utility in either. Won't happen though.
And before I get any libertarian-inspired responses from the peanut gallery to the effect that we're all free to make our own deals and use our agency to better our position irregardless of how it affects others, I'll remind us that the markets are regulated and for very good reason, and they exist at all by the grace of others. Think of the stock markets as analogous to the US Highway system. You? didn't build it, we? built it, and you? can use it so long as you abide by our? rules. Nobody is perfectly free. Not even @RaceBannon . -
I think I get the gist of what you're saying: The system should not allow for people to get inconceivably rich while providing zero or net-negative societal benefit?
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creepycoug said:RaceBannon said:
That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.
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If there were a line to that gif, it would be, "Where do I start?"RaceBannon said:creepycoug said:RaceBannon said:That's true. Still, all we can do is try to stay ahead of them, and when we can't, catch up.
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1to392831weretaken said:
I think I get the gist of what you're saying: The system should not allow for people to get inconceivably rich while providing zero or net-negative societal benefit?
I mean, yeah. Or, stated another way, don't participate in a public system that is meant for one thing and turn it into something else. We? don't care if you get fabulously wealthy. Fine. But don't warp the real market value of equities with your Malarkey. I think that's how I'd put it.
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I think this sums of my view of Wall Street most succinctly. I think the type of investors who should be rewarded are like those, for example, who got in on Amazon or Microsoft early. My wife has always gotten stock awards from the various firms she's worked for and those companies have mostly done well and the stock increases in value. The Malarkey part of the markets is beyond me and I can't possibly begin to understand its purpose or benefit to society. It's not "rent seeking" if you will, but it doesn't add anything of value or increase productivity.creepycoug said:1to392831weretaken said:I think I get the gist of what you're saying: The system should not allow for people to get inconceivably rich while providing zero or net-negative societal benefit?
I mean, yeah. Or, stated another way, don't participate in a public system that is meant for one thing and turn it into something else. We? don't care if you get fabulously wealthy. Fine. But don't warp the real market value of equities with your Malarkey. I think that's how I'd put it.
