This is a friendly, interactive exchange of information on all Real Estate related subjects. Follow on Twitter: @RETALKS


Moderator: admin

 
thomasbeyer2000
Real Estate Talker
Topic Author
Posts: 82
Joined: Mon Apr 07, 2008 7:39 pm
Contact:

The Stock market - for gambling, trading or investing ?

Sun Sep 04, 2011 10:25 am

Have you noted that the stock market is quite volatile lately .. say the last year or 2 ?

Have you also invested in stocks and seen unusual price movement for no good reason ?

Have you owned stocks, that after a surge fell sharply, sold by you in disgust to prevent further loss, just to see it rise again days or minutes later to prices higher than your entry price ?

Have you also wondered, perhaps quite frequently recently: is this how I fund my retirement or my kids' education ?

The stock marked used to be a source for funding of new firms or their continued growth, with a platform that allowed investors to co-own firms and to get in and out with relative easy, at fair prices set by buyers and sellers !

Lately it has evolved into a casino mentality almost uncorrelated to real economic activity of the market or the specific company.

In my (humble) opinion, the main reason for extreme stock market volatility of late is a) the many internet and trading enabled devices like PCs, laptops and cell phones, b) the lack of transaction taxes and c) the lack of massive (close to 100%) capital gain taxes to reduce incentives for short term trading! And the main reason for b) and c) is the "tithing" of these profits with US politicians, i.e. the dependence of the US electoral system on large donations.

Wall Street is the US politician's main street !

Some solutions are being discussed:

Europe is now at least starting a discussion to introduce a transaction tax. http://www.cnbc.com/id/44163841/Financi ... for_Europe

High frequency code is being looked at by the SEC, see article here: http://business.financialpost.com/2011/ ... y-traders/

Normally I am not a big fan of add'l government interference and add'l taxation, yet Canada should take a lead here in my opinion, and introduce a 2% trading tax - like real estate in ON or BC - and a "greed" or "day trading" tax as follows: 90% tax on trades held less than 1h, 80% tax on trades held less than a day and 75% for trades held less than one month - DEDUCTED AT SOURCE!

This high frequency or day-trading benefits no one except a few trading houses and is essentially theft from medium to long term investors. The stock market needs to return to an investment vehicle.. and not a trading vehicle benefiting few at the expense of many!

Related post, by Texas Maverick billionaire owner Mark Cuban, comparing high frequency traders to hackers or thieves: http://blogmaverick.com/2011/08/08/what ... reet-in-2/

What these two changes (transaction tax, high greed tax on short term profits) will do is re-establish is a foundation for stock market investing .. as opposed to merely trading ! It will allow people to get in and out of the market, it will allow companies access to funds for IPO's or growth, it will reduce intra-day or very short term stock market manipulation, it will create valuable government revenue and it will restore trust in the stock market as an investment platform that has been lost by me and millions of others !!

Will politicians go there ? We'll see ! I hope so !

Your thoughts on this ?

Thomas Beyer, President
Prestigious Properties - www.prestprop.com
T: 403-678-3330
E: tbeyer@prestprop.com
 
Taipan
Real Estate Talker
Posts: 3574
Joined: Fri May 30, 2008 11:24 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Sun Sep 04, 2011 6:46 pm

..
Last edited by Taipan on Sun Aug 11, 2013 4:34 am, edited 1 time in total.
 
westcoastfella
Real Estate Talker
Posts: 1583
Joined: Fri Mar 23, 2007 8:11 am
Contact:

Re: The Stock market - for gambling, trading or investing ?

Mon Sep 05, 2011 10:27 am

90% tax on trades held less than 1month, 80% tax on trades held less than a 4 months and 75% for trades held less than one year - DEDUCTED AT SOURCE!

Hows that sound?
It sounds like overkill.

Traders flipping stocks on a daily basis has been around for ever - and there are very legitimate and unforseen reasons to trade a stock on a daily basis, never mind monthly or yearly. I think the real main source of current volatility is high-frequency trading programs, which are relatively new - thanks to the speed of computers, networks, and sophisticated trading algorithms, they have the power to swing entire markets in a very short period of time. They account for far too much of the overall trading volume, and are too fast to be monitored by humans - so when your algorithm says "sell", the program will sell before anyone has a chance to intervene. Throw in an naturally volatile market due to actual market conditions, and they can be poison. Look at the recent incidents of "flash crashes", and you see what can happen. Human trading patterns cannot come close to creating the type of trading mayhem that even one HFT program can.

If the article posted by the OP is correct, and HFT accounts for half of all stock trades in the US (probably similar for Canada), then you simply curtail that sort of trading, either via ban or high taxation for trades made in the same trading day - HFT programs normally end the day with zero net investments, and make all their money during the day on micro-spreads. Take that motivation away, and the technology isn't worth it anymore.
 
Lost Soul
Real Estate Talker
Posts: 1464
Joined: Tue Nov 09, 2004 11:24 pm
Location: Swimming in a fish bowl
Contact:

Re: The Stock market - for gambling, trading or investing ?

Mon Sep 05, 2011 3:43 pm

Nah, there's no reason to do anything about HFT -- it's a zero-sum game amongst the participants -- no need for non-participants to get worked up about it. If you're a true investor, you know what you're buying and you're in it for the long term so what happens over the course of days or even weeks and months is pretty irrelevant. I don't buy the conclusion that these transactions are stealing from mom & pop -- if anything, I think the story is the result of Wall St boys becoming worried that their commissions/fees are at risk if people sideline the markets rather anything about market values. If you're that scared sh*tless by these gyrations, maybe you didn't do enough due diligence to be comfortable with your holdings and you shouldn't be investing.
-- Wish you were here ...
 
Taipan
Real Estate Talker
Posts: 3574
Joined: Fri May 30, 2008 11:24 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Tue Sep 06, 2011 2:25 pm

..
Last edited by Taipan on Sun Aug 11, 2013 4:34 am, edited 1 time in total.
 
RENoob
Real Estate Talker
Posts: 515
Joined: Fri Nov 21, 2008 8:37 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Sat Sep 10, 2011 3:45 pm

Transaction tax will give the brokerage houses and traders a great incentive to take their business to overseas exchanges where there's no such tax. This is how government sent all the manufacturing overseas as well and they'll slowly do it to financial services industry. I think the dips in the market have very little to do with HFT and much more to do with the horrible state of many world econnomies including the largest one and printing of money everywhere. The huge amounts of money being printed worldwide must go somewhere and with 0% interest rates it ends up in the markets.
As far as investing is concerned I think the last 3 years were great times for many investors. Several sectors have done really well while others not so much. High volatility is irrelevant to long term value investors. Don't blame your poor investment returns on HFT.
 
eyesthebye
Real Estate Talker
Posts: 5863
Joined: Tue Jan 06, 2009 2:53 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Sat Sep 10, 2011 4:11 pm

"Taipan"]Common denominator between stock markets and real estate markets at the moment. Debt and fear of excessive debt
you got it backwards fella.
Fear of debt is what keeps mosts of these bears from every taking on a mortgage.
The bold own homes, the bashful don't
No risk = no reward
the cure for higher prices is moving to a destination with lower prices
 
thomasbeyer2000
Real Estate Talker
Topic Author
Posts: 82
Joined: Mon Apr 07, 2008 7:39 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Wed Sep 21, 2011 3:02 pm

.. High volatility is irrelevant to long term value investors. ..
DOW is up not even 20% IN A DECADE .. 2%/year on average .. or ZERO if you deduct an annual 2% mutual fund fee .. and those are the top 30 stocks in the US .. in Canada TSX is up about 35% in a decade .. deduct 2.5% annual mutual fund fees yielding 1%/year on average for an average buy-and-hold. Therefore, does long term buy-and-hold make sense for most stocks ?

Yours Sincerely,
Thomas Beyer, President - www.prestprop.com
Prestigious Properties Group
T: 604-564-7673 E: tbeyer@prestprop.com
 
User avatar
jesse1
Real Estate Talker
Posts: 5097
Joined: Mon Feb 18, 2008 12:51 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Wed Sep 21, 2011 3:17 pm

in Canada TSX is up about 35% in a decade .. deduct 2.5% annual mutual fund fees yielding 1%/year on average for an average buy-and-hold. Therefore, does long term buy-and-hold make sense for most stocks ?
It was sunny yesterday. Does it make sense that I saw a crow land in my front yard today? I think we can agree: it's a bad omen for sunny days.
 
User avatar
jesse1
Real Estate Talker
Posts: 5097
Joined: Mon Feb 18, 2008 12:51 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Thu Sep 22, 2011 7:53 am

Carry trades are going funny, it seems. On the plus side Canadian real estate just got a whole lot cheaper on a currency adjusted basis. On the minus side Canadian real estate just got a whole lot cheaper on a currency adjusted basis.
 
gse36
Real Estate Talker
Posts: 1451
Joined: Sun Feb 20, 2005 9:20 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Thu Sep 22, 2011 8:20 am

.. High volatility is irrelevant to long term value investors. ..
DOW is up not even 20% IN A DECADE .. 2%/year on average .. or ZERO if you deduct an annual 2% mutual fund fee .. and those are the top 30 stocks in the US .. in Canada TSX is up about 35% in a decade .. deduct 2.5% annual mutual fund fees yielding 1%/year on average for an average buy-and-hold. Therefore, does long term buy-and-hold make sense for most stocks ?

Yours Sincerely,
Thomas Beyer, President - www.prestprop.com
Prestigious Properties Group
T: 604-564-7673 E: tbeyer@prestprop.com
Don't forget dividends, and MER is usually lower on index funds. Funds will trade, reinvest, exit, etc.

TD Canadian index fund up over 100% past decade:

http://www.tdam.com/Download/216-I.pdf

If you really want to buy an hold then just buy an ETF!
 
RENoob
Real Estate Talker
Posts: 515
Joined: Fri Nov 21, 2008 8:37 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Thu Sep 22, 2011 3:56 pm

.. High volatility is irrelevant to long term value investors. ..
DOW is up not even 20% IN A DECADE .. 2%/year on average .. or ZERO if you deduct an annual 2% mutual fund fee .. and those are the top 30 stocks in the US .. in Canada TSX is up about 35% in a decade .. deduct 2.5% annual mutual fund fees yielding 1%/year on average for an average buy-and-hold. Therefore, does long term buy-and-hold make sense for most stocks ?

Yours Sincerely,
Thomas Beyer, President - www.prestprop.com
Prestigious Properties Group
T: 604-564-7673 E: tbeyer@prestprop.com
I never said to invest in US indexes, but I said that you do have to pick the right sectors and stocks in order to make money. Commodities, namely precious metals sectors have done extremely well in the last 10 years. Emerging and other foreign markets (china, hong kong, singapore, new zealand) have also done very well in the last 10 years. Their indexes are up considerably since 2000. Forget SP500 and DOW Jones or any other US index. There are still some very solid and innovative companies in the US but the new socialist agenda of protecting the workers and villifying, taxing and regulating the businesses to death will eventually destroy them or drive them out of the country. The only investments I have in the US is some ETF holdings, I don't hold any US companies at in my brokerage account.

I hold this fund (but different series) amonst others in my rrsp. It returned 1800% in the last 10 years.
http://fundinfo.rbcgam.com/mutual-funds ... /rbf468.fs
Image
 
jeevanswaraaj
Newbie
Posts: 1
Joined: Fri Apr 27, 2012 7:14 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Fri Apr 27, 2012 7:23 pm

Doing research is the key to investing in the stock market. If you were to just take a list of stocks and throw darts at them, it would be more similar to gambling. However, the more you learn about how companies are valued and operate, the more ammunition you will have when picking stocks. Remember that when you buy a stock and it immediately goes down, it might sometimes feel like you are gambling but that is mostly out of frustration. I would say that if you do your homework and pick your stocks carefully, you should be able to make money long term in the stock market. One thing is for sure that the stock market is a much better place to be betting your money than the casinos.
 
User avatar
WhipMaster
Real Estate Talker
Posts: 5129
Joined: Thu Mar 07, 2013 2:42 pm
Contact:

Re: The Stock market - for gambling, trading or investing ?

Sun May 18, 2014 10:40 am

Image

yes...the Fawk Market... :lol:
Hoo~Cudda~Not~Nod~ed????? :-)

Who is online

Users browsing this forum: No registered users and 1 guest