How to Fix the Stock Market
How to fix the stock market?
This lens is my simple common sense approach to fixing the stock market.
- Oct. 2008
It is very simple...
Just follow the following steps...
- Eliminate margins. No more borrowing to invest in stocks.
- Eliminate short selling. No more betting on stocks of a company going down...
- Eliminate options trading.
- Regulate Hedge funds as regular Mutual funds.
- Hold auditors accountable to their statements...When they are caught not doing their job, they will go to jail or pay fine or loose their license.
- Electronic trading must be limited to a cap amount per day. No more than up/down swing of 3% per day. This will prevent run away swings in the market.
- Top executives must not be able to buy and sell their own company stocks on the open market.
- Company 401K plans must not include stocks in their own company.
- Companies should limit their Executive compensation plan with regard to offers of Stock options. These should be strictly long term incentives based on positive results and not be used to manipulate company balance sheets for short term gains.
No more golden parachutes.
- Finally, fees by mutual funds should be made transparent and standardized. No more hidden charges (front loading, back loading...) of fees.
Why should investing be so complicate?
The answer is - it doesn't have to be.
Why do we need experts or financial advisors?
Why is investing in the market like a gambling casino or worse? (like a fixed horse race...)
Because some people make lots of money using inside knowledge.
- Don't trust the experts or advisors - they don't know any more than you do. They just think they know more...
- The old adage applies - what is too good to be true - usually is...
- Everyone should has some basic knowledge about investing.
It is not too hard to learn.
- Don't take more risk than necessary - at any age...
- Don't follow the crowd... They are usually wrong.
- Basic sound principles are the best way to go.
Everyone must play by the same rules.
The integrity of a trading system must be first and foremost. That means everyone, from the CEO down to the traders to the common folks must abide by the same rules. It is like playing BlackJack at a casino. The rules are the rules. Everyone knows what they are. No betting outside of the system.
Insider trading will be punished swiftly...
Some related links...
- The SEC (our watchdog)
The SEC should keep an eye on the system and make sure it is honest and above board...