[SK in CV]

[quote=pri_dk]Sk,

I must be missing something. Doesn’t the cash end up in the seller’s checking account?

BTW, stock exchanges do not provide any way to trade one stock directly for another. That would be incredibly complicated…

Back to the interesting stuff:

By “pt” do you mean basis points (1/100 of a percent)? Imposing a 25 cent transaction fee on a $10K trade would definitely change the behavior of high frequency trading systems (this is not necessarily a bad thing.)

I’m not arguing against such a fee, I’m just making the point that liquidity is a good thing in markets. It benefits *all* participants, from the high-volume trader to the individual investor. Taxes on transactions will take some of this benefit away. But it may be a good tradeoff with the right parameters.[/quote]

You have a good point there. I didn’t really write what I was thinking. If an investor moves money from a bank account into the market by buying stock and the seller of that stock then acquired a different stock, the money supply has gone down. If the seller stays in cash, you are correct, no change to the money supply. And by trading, I meant sell Ford, buy Alcoa.

1/4 pt is .25%. $2.50 on a $1,000 trade. Serious investors will bitch, but not flinch. Specially if it’s only one side of the trade. Many day traders will flinch. But it would be like the casinos on some cruise ships, where the blackjack dealer stays on a soft 17. Some gamblers will still sit down at the table, despite the reduced odds.

[SK in CV]

[quote=pri_dk]Sk,

I must be missing something. Doesn’t the cash end up in the seller’s checking account?

BTW, stock exchanges do not provide any way to trade one stock directly for another. That would be incredibly complicated…

Back to the interesting stuff:

By “pt” do you mean basis points (1/100 of a percent)? Imposing a 25 cent transaction fee on a $10K trade would definitely change the behavior of high frequency trading systems (this is not necessarily a bad thing.)

I’m not arguing against such a fee, I’m just making the point that liquidity is a good thing in markets. It benefits *all* participants, from the high-volume trader to the individual investor. Taxes on transactions will take some of this benefit away. But it may be a good tradeoff with the right parameters.[/quote]

You have a good point there. I didn’t really write what I was thinking. If an investor moves money from a bank account into the market by buying stock and the seller of that stock then acquired a different stock, the money supply has gone down. If the seller stays in cash, you are correct, no change to the money supply. And by trading, I meant sell Ford, buy Alcoa.

1/4 pt is .25%. $2.50 on a $1,000 trade. Serious investors will bitch, but not flinch. Specially if it’s only one side of the trade. Many day traders will flinch. But it would be like the casinos on some cruise ships, where the blackjack dealer stays on a soft 17. Some gamblers will still sit down at the table, despite the reduced odds.

[SK in CV]

[quote=pri_dk]Sk,

I must be missing something. Doesn’t the cash end up in the seller’s checking account?

BTW, stock exchanges do not provide any way to trade one stock directly for another. That would be incredibly complicated…

Back to the interesting stuff:

By “pt” do you mean basis points (1/100 of a percent)? Imposing a 25 cent transaction fee on a $10K trade would definitely change the behavior of high frequency trading systems (this is not necessarily a bad thing.)

I’m not arguing against such a fee, I’m just making the point that liquidity is a good thing in markets. It benefits *all* participants, from the high-volume trader to the individual investor. Taxes on transactions will take some of this benefit away. But it may be a good tradeoff with the right parameters.[/quote]

You have a good point there. I didn’t really write what I was thinking. If an investor moves money from a bank account into the market by buying stock and the seller of that stock then acquired a different stock, the money supply has gone down. If the seller stays in cash, you are correct, no change to the money supply. And by trading, I meant sell Ford, buy Alcoa.

1/4 pt is .25%. $2.50 on a $1,000 trade. Serious investors will bitch, but not flinch. Specially if it’s only one side of the trade. Many day traders will flinch. But it would be like the casinos on some cruise ships, where the blackjack dealer stays on a soft 17. Some gamblers will still sit down at the table, despite the reduced odds.

[SK in CV]

[quote=pri_dk]Sk,

I must be missing something. Doesn’t the cash end up in the seller’s checking account?

BTW, stock exchanges do not provide any way to trade one stock directly for another. That would be incredibly complicated…

Back to the interesting stuff:

By “pt” do you mean basis points (1/100 of a percent)? Imposing a 25 cent transaction fee on a $10K trade would definitely change the behavior of high frequency trading systems (this is not necessarily a bad thing.)

I’m not arguing against such a fee, I’m just making the point that liquidity is a good thing in markets. It benefits *all* participants, from the high-volume trader to the individual investor. Taxes on transactions will take some of this benefit away. But it may be a good tradeoff with the right parameters.[/quote]

You have a good point there. I didn’t really write what I was thinking. If an investor moves money from a bank account into the market by buying stock and the seller of that stock then acquired a different stock, the money supply has gone down. If the seller stays in cash, you are correct, no change to the money supply. And by trading, I meant sell Ford, buy Alcoa.

1/4 pt is .25%. $2.50 on a $1,000 trade. Serious investors will bitch, but not flinch. Specially if it’s only one side of the trade. Many day traders will flinch. But it would be like the casinos on some cruise ships, where the blackjack dealer stays on a soft 17. Some gamblers will still sit down at the table, despite the reduced odds.

[SK in CV]

You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement, but the out of control spending of the previous administration wasn’t meaningful enough to him to start it until there was some other guy sitting in the White House. Until there was both political capital and a hook in it. From the outside, I think I know what that hook is.

[SK in CV]

You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement, but the out of control spending of the previous administration wasn’t meaningful enough to him to start it until there was some other guy sitting in the White House. Until there was both political capital and a hook in it. From the outside, I think I know what that hook is.

[SK in CV]

You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement, but the out of control spending of the previous administration wasn’t meaningful enough to him to start it until there was some other guy sitting in the White House. Until there was both political capital and a hook in it. From the outside, I think I know what that hook is.

[SK in CV]

You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement, but the out of control spending of the previous administration wasn’t meaningful enough to him to start it until there was some other guy sitting in the White House. Until there was both political capital and a hook in it. From the outside, I think I know what that hook is.

[SK in CV]

You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement, but the out of control spending of the previous administration wasn’t meaningful enough to him to start it until there was some other guy sitting in the White House. Until there was both political capital and a hook in it. From the outside, I think I know what that hook is.

[SK in CV]

[quote=pri_dk]Buying a stock, or anything, with cash does not impact the money supply. The cash just moves from the buyer to the seller.

The more important issue regarding taxes /fees on trading is that the increased transaction costs will reduce liquidity, which as many adverse repercussions.[/quote]

Taking cash from a checking account and buying stock does impact the money supply. Trading one stock for another does not.

I’m not sure how a 1/4 pt transaction fee (or even 1/2 a point if its both sides) will substantially reduce liquidity. I suspect it would slightly decrease turnover. It would only reduce liquidity if the markets came to a screeching halt as a result. I have shares of stock to sell and there is no market for them as a result of the tax. Aint gonna happen.

[SK in CV]

[quote=pri_dk]Buying a stock, or anything, with cash does not impact the money supply. The cash just moves from the buyer to the seller.

The more important issue regarding taxes /fees on trading is that the increased transaction costs will reduce liquidity, which as many adverse repercussions.[/quote]

Taking cash from a checking account and buying stock does impact the money supply. Trading one stock for another does not.

I’m not sure how a 1/4 pt transaction fee (or even 1/2 a point if its both sides) will substantially reduce liquidity. I suspect it would slightly decrease turnover. It would only reduce liquidity if the markets came to a screeching halt as a result. I have shares of stock to sell and there is no market for them as a result of the tax. Aint gonna happen.

[SK in CV]

[quote=pri_dk]Buying a stock, or anything, with cash does not impact the money supply. The cash just moves from the buyer to the seller.

The more important issue regarding taxes /fees on trading is that the increased transaction costs will reduce liquidity, which as many adverse repercussions.[/quote]

Taking cash from a checking account and buying stock does impact the money supply. Trading one stock for another does not.

I’m not sure how a 1/4 pt transaction fee (or even 1/2 a point if its both sides) will substantially reduce liquidity. I suspect it would slightly decrease turnover. It would only reduce liquidity if the markets came to a screeching halt as a result. I have shares of stock to sell and there is no market for them as a result of the tax. Aint gonna happen.

[SK in CV]

[quote=pri_dk]Buying a stock, or anything, with cash does not impact the money supply. The cash just moves from the buyer to the seller.

The more important issue regarding taxes /fees on trading is that the increased transaction costs will reduce liquidity, which as many adverse repercussions.[/quote]

Taking cash from a checking account and buying stock does impact the money supply. Trading one stock for another does not.

I’m not sure how a 1/4 pt transaction fee (or even 1/2 a point if its both sides) will substantially reduce liquidity. I suspect it would slightly decrease turnover. It would only reduce liquidity if the markets came to a screeching halt as a result. I have shares of stock to sell and there is no market for them as a result of the tax. Aint gonna happen.

[SK in CV]

[quote=pri_dk]Buying a stock, or anything, with cash does not impact the money supply. The cash just moves from the buyer to the seller.

The more important issue regarding taxes /fees on trading is that the increased transaction costs will reduce liquidity, which as many adverse repercussions.[/quote]

Taking cash from a checking account and buying stock does impact the money supply. Trading one stock for another does not.

I’m not sure how a 1/4 pt transaction fee (or even 1/2 a point if its both sides) will substantially reduce liquidity. I suspect it would slightly decrease turnover. It would only reduce liquidity if the markets came to a screeching halt as a result. I have shares of stock to sell and there is no market for them as a result of the tax. Aint gonna happen.

[SK in CV]

[quote=Aecetia]Sk-

What if the money is in a pre-tax deferred comp. plan? Does that change anything? Thanks for your insight. I do think there should be some oversight of derivatives, but the way I understand it, there are sufficient laws there if they are enforced. Furthermore, the SEC was approached about Madoff several years before his scheme was outed and the whistle blower was ignored.

[/quote]

Tax deferred any different? I don’t think so. I don’t see how. If they do go the route of a transaction tax, there should be some exemptions, for direct purchases of stock like IPO’s. That encourages growth. I could even endorse special tax treatment on the sale of IPO stock. (It existed at one time, I should know if it still does, but I don’t) I could see an exemption for small farmers selling stock and crops.

Oversight of derivatives? The contracts themselvess are non-regulated. Entirely. Except to the extent they are owned/traded by regulated entities like federally chartered banks, there is nobody watching.

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