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How to Fix the Stock Market

Updated on November 16, 2016

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.

Investing 101

Why should investing be so complicate?

The answer is - it doesn't have to be.

Why do we need experts or financial advisors?

We don't.

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...

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    • jackclee lm profile image

      Jack Lee 2 years ago from Yorktown NY

      breakfastpop - Yes you are correct. If only...

    • breakfastpop profile image

      breakfastpop 2 years ago

      Sounds like great advice. ow if only the powers that be would cooperate.

    • jackclee lm profile image

      Jack Lee 2 years ago from Yorktown NY

      Larry, I always wonder who dreamt up these trading schemes such as shorting and derivatives trading... Where is the SEC when you need them?

      Thanks for checking in.

    • Larry Fields profile image

      Larry Fields 2 years ago from Northern California

      Hello, Jack. I liked your second point:

      "Eliminate short selling. No more betting on stocks of a company going down..."

      Shortly before 911, there was much-heavier-than-usual short selling of the stocks for the airlines that were directly affected. Short selling is a mechanism by which terrorists and their financiers can profit from killing innocent people.