I don't understand shorting, how is this legal?

[kort677]

The stock market has been a place for gambling since its inception. It really operates as both. For those who invest on sound principles and do something like dollar cost averaging, it continues to be a valuable place to keep money. For those who trade short term, it’s more of a game, and that game has been squeezed mostly out due to faster and smarter algorithms that are happy to take your money.

yes, there has always been a speculative side to playing the stock market and that speculation was one piece of the puzzle, however with the advent of the algos and technology which enables the high speed trading, speculation has taken an outsized place in the stock market game. sure you can be an old school value/dividend seeking investor but the algo/high speed traders are distorting the entire picture.

 

[kort677]

Gambling on stocks and commodities really took off when the Internet became the tool of choice.
It can actually make financial sense to spend $100,000 on articles and links to alter stock pricing. Why do I know this? Hundreds if not thousands of companies are doing it and the number is increasing.

In order for gambling to work better, you need a way to make money in both directions, hence options.

If you wanted to reduce the gambling, here's what you would do:

1) Stocks purchases require a background check delay to stop insider trading. 30 days then adjust accordingly.

something like this already exists for company officers and large shareholders and is easily circumvented

2) Stock transfers are subject to sales tax.

I cannot be certain but I believe that there may be some transaction taxes in place and there certainly are exchange fees, but the exchanges encourage the high speed crowd by rebating the fees based on volume trader

3) Commodity buyers must take physical delivery before transferring ownership.

this is nonsensical, 99% of all commodity positions never result in actual delivery and a ridiculous practice like that would cripple the markets

Let's see Warren Buffett come out for that plan if he truly believes the rich aren't taxed enough, and he believes in no insider trading and hype to drive prices.

warren buffet is for warren buffet, his broad views on political or tax issues are irrelevant.

 

[ohmman]

sure you can be an old school value/dividend seeking investor but the algo/high speed traders are distorting the entire picture.

This is only true for short term traders. Most research has shown that high frequency algo trading is beneficial for long term investors as it has narrowed spreads and drastically improved liquidity.

 

[kort677]

This is only true for short term traders. Most research has shown that high frequency algo trading is beneficial for long term investors as it has narrowed spreads and drastically improved liquidity.

they certainly have added volume just don't be on the wrong side when they all rush for the exit at the same time.