Huge
wibbled on Friday 11 December 2009 11:00

On 2009-12-11, Tim Lamb wrote:
In message , Tim W
writes

If we banned speculation and encouraged a long term view, the banking
geniuses would have normal lives, wouldn't burn out, would still be doing
what they do when they are 50 with the benefit of wisdom that age and
experience brings and the world would be a better place.

Yes but, how?

That was my response, too.

I didn't say I had the answer to the implementation. But I am clear in my
mind that that is what needs to be done. The current system encourages
behaviour which is not to the long term good, therefore it is a sub optimal
system.

My proposal would encourage, I believe, better and more productive (on
average) behaviour. There may be other ways.

Elsewhere I whinged about commodity trading being a siphon on any profit
made from growing crops. I was smartly put down on the basis that it
provides certainty to the market.

Quite.

Once an organisation has issued tradable shares it is open to the whims
of the whiz kid investors.

Or anyone who wants to save, have a pension and so forth.

There is a difference between saving/pensions by investing long term in
either a few big companies with solid futures or lots of little but wisely
chosen companies, again with long term expectations.

OTOH, the Dot-Com-Bomb was the finest example of the worst of the system:
people lobbing money into random startups with non credible business plans
in the hope of making a quick buck. Venture capitalists are the people best
placed to handle "unusual" company investments - they tend to be more
careful when it comes to they own money. That doesn't make them adverse to
taking on risk but they do tend to actually pay a great deal of attention to
what is going on.



One thing I have wondered about is the *sale* of stock not actually
owned. Not quite the same as somebody selling your house without your
knowledge but along similar lines.

W-e-e-e-e-e-lll. Naked shorting isn't allowed other than by market
makers, so it doesn't really happen. If the likes of you and I want
to short a stock, we have to buy or borrow the shares in the first
place.



--
Tim Watts

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