How to level the playing field at the stock market?
January 13th, 2010
Back in the day when RedHat was going public, many of the people who gave their time and talent to making free software and linux were named and shares were reserved for them at the IPO price of each. Most of them were NOT allowed to purchase the shares since they had no history of trading. Within a week of the IPO, RedHat stock was selling at /share.
But the people who helped build it were left out in the cold.
Nowadays, some wealthy person can make shattering amounts of money whenever the stock market is weak by a marathon session of selling short, driving the market down in the process, and gaining great amounts of money from the 401(k)’s of folk like you and me.
In the Great Depression, Franklin Roosevelt grabbed one of the most unscrupulous traders of the time and shanghaied him into writing regulations to prevent the abuses that he knew about. Perhaps we need to do something like that again, because the relative wealth of some folk make it almost impossible for each of us to come out winners.
But who? We are out of rich Kennedys who know the market.
Perhaps Ivan Boesky?
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Posted in Stock Market Software | 
Tags: 401 k, franklin roosevelt, free software, Great Depression, ipo price, Ipo Stock, ivan boesky, kennedys, linux, marathon session, money, relative wealth, Stock Market, wealthy person
If you look at who Obama is surrounding himself with, they are typically insiders who know the tricks. "Change" will ultimately be determined by what he has them do.
In the end, capitalism is capitalism, and hostile take overs happen. That is why I only offer my talents to small or employee-owned firms. I want to own my own success, not exchange it for mere sustenance.
Totally leveling the playing field is not possible. Offering education will be a means for helping some understand business dynamics, non-compete clauses, profit-sharing, etc. Others just don’t think about it.
Anybody can open a cash trading account and buy shares for $7 to $40/trade. If they believed that deeply in it, then they could have made it happen.
All we need to do is re-institute the uptick rule and ban private IPOs.
Also enforcing existing regulations on the dark pools of liquidity would also be of tremendous help for the retail investor. Right now, dark pools are largely unregulated. A rich guy can sell a billion shares of a security that has only 4 million share float from a dark pool. When it get’s pink sheeted, he can just buy them back for pennies without many people noticing until it’s too late.
Creating a national anti usury law to limit financial institutions risk taking would go a long way to preventing this from ever happening again.
We don’t need someone new to write these laws. The old regulations kept the markets safe and relatively stable for decades until some rich people convinced some lawmakers that we didn’t need them any more.