Reply to: How long does the average share holding last?

[Freamon]

How long have you held your shares? 23 seconds!?!

Ever since I started the company. I will do an IPO and sell them to you and others, and then run the company into the ground, safe in the knowledge that the share price can never fall as none of you mugs will be able to sell your shares.

[Freamon]

Out of interest, don't even large companies have to pay some fee or deal with difference in buy/sell price... how do they make money on holdings of a few seconds when the price isn't varying much?

Many reasons, one of which is the rebates that brokers are given by the exchange for providing liquidity:

Some Additional Observations On HFT Stock Manipulation | ZeroHedge

Zero Hedge: Toxic Equity Trading Order Flow On Wall Street

[AtW]

If you think there should be a law that locks investors into holding shares for a minimum of 2-3 years then I have some shares I would be very happy to sell you.

How long have you held your shares? 23 seconds!?!

[Freamon]

So there you have it - free market has turned into computer driven spekulative tulip: perhaps it's time for compulsory 60 minutes delay between trades and 110% tax on capital gains made from less than 2-3 years of holding assets.

My personal shareholding record is over 20 years and still going strong

If you think there should be a law that locks investors into holding shares for a minimum of 2-3 years then I have some shares I would be very happy to sell you.

[d000hg]

Out of interest, don't even large companies have to pay some fee or deal with difference in buy/sell price... how do they make money on holdings of a few seconds when the price isn't varying much?

[Ignis Fatuus]

I think the point is that some market participants and types of behaviour distort the market to the detriment of the other participants.

I think the point is that some market participants and types of behaviour affect the market to the detriment of the other participants.

In what way is that a "distortion"?

[doodab]

So in conclusion - stock market is worse than a casino.

Casinos are the world in microcosm.

[AtW]

Key word here is 'average'.

Yes and this means lot of transactions are probably for under a second ownership and a handful of others lasting few years.

The market is there for economic reasons, or at least it was before it got turned into casino, in fact it's worse than a casino - people who try to use technical means in a casino get kicked out or even go to jail for cheating, even more importantly in a casino players gamble against each other and this has no material effect on real world who does not want to know about this tulip.

So in conclusion - stock market is worse than a casino.

[d000hg]

<rant>

Key word here is 'average'.

[fullyautomatix]

Unfortunately AtW, we are living in a era where companies issue shares and drop dead like flies the next moment because there was a recession or that consumers decided to stay at home instead of going out shopping. So it makes sense to make some short term profit instead of taking the risk of losing everything.

[doodab]

It's a market. Those who get involved in it do so of their own free will. Who are you to tell them that they should not?

I think the point is that some market participants and types of behaviour distort the market to the detriment of the other participants. The question is to what extent do you allow such behaviour when doing so effectively requires you to tell other people to go and **** themselves.

Although such short term exploitation might make money for those doing it, it seems it doesn't contribute much to the efficient allocation of capital in the wider economy, and if in fact it serves to dissuade longer term investors from getting involved then ultimately the market for new share issues and with it the supposed positive contribution of the market will suffer.

A related question is should we wait until any ill effects are proven before taking action or should the onus be on those wishing to engage in this practice to prove that it's harmless?

[Ignis Fatuus]

So you think it's ok for "shareholders" to hold shares for 22 seconds?

Until very recently (thanks to Brown) CGT on short term holding was 40% and those who held business assets like shares for over 2 years had their CGT rightfully reduced to 10%.

Whatever or whoever puts money into shares for 22 seconds are NOT investors - they should not even be in the market in the first place.

It's a market. Those who get involved in it do so of their own free will. Who are you to tell them that they should not?

Your OP:

Investors are advised to invest for the long-term, yet in the US the average share holding lasts just 22 seconds.

The consensus suggest that investors dabbling shares should be in it for the long-term, yet the average holding is less than a minute thanks to computer driven 'high frequency' trading.

So when you find out that your "are advised" and "consensus" doesn't describe the real world, your answer is to force the real world to fit?

[DodgyAgent]

So you think it's ok for "shareholders" to hold shares for 22 seconds?

.

23 seconds gets my vote before the Stasi are called in. Or should it be erm 30 seconds? a day? 10 days?, 30 days?

[Gonzo]

Sigh

You need to realise that there are two sides to the market.

1. There is the point that companies issue shares to the market to raise cash. Initial Public Offerings (IPOs)

2. There is the secondary market where those shares can be played with.

The primary market is the important bit. The secondary market can do what it likes, so long as people still think it is worthwhile playing in it because that supports the primary market.

If the secondary market becomes not worth playing then the primary market is finished, at which point there will be no new capital for business.

[Ignis Fatuus]

perhaps it's time for compulsory 60 minutes delay between trades and 110% tax on capital gains made from less than 2-3 years of holding assets.

Good old AtW. The answer to everything is a law enforcing what he would like to see.

You can take the boy from Russia.....