What Will it Take to Have a Fair Market and not a Vegas Casino?
In the past, I have written financial articles that address issues with trading. This one tries to provide ideas that need to be implemented to assure the little guy and control the market makers.
The first issue that is just blatantly abusive to the little guy is the after-hour trading. The market ends company reports great performance and the next morning plummets. Interestingly you can look at the after-hour activity and notice that there were many moves. SO who is trading?
If anyone is allowed to trade after the market then the market needs to be made 24/7 and then no one can sell or buy after hours.
The second issue is solved by applying the first solution BUT at minimum, the price at the end of the day needs to match the price at the start of the day. WHo the benefits of a price jump overnight? Most likely it is the big guys and not the little guy that can not buy or sell after hours.
Another issue that comes up is that during the first 30 minutes price rises so fast that even if you try to buy you will not get a position until the move has reached the top. And then interestingly the price drops.
The way that this could be controlled is to not allow large investment firms to move the market by getting a large position. Their ability to buy into the market needs to be limited by the number of shares as a percentage of their total portfolio. They should not be allowed to increase their position at the start of the day by more than a half percent. The same way on the shorting side. They can not slam a stock down and drive it into the ground.
No trading for congress. These guys have insider information and give it to their family and friends to benefit. That should be illegal. Why do they get the advantage that we don’t?
The main reason for this article is the latest Tesla slam. How does a company that exceeds expectations and revenue drop by $100? You can argue that the stock was overpriced and if so then the people buying it would be selling it more than buying it. The price is the price.
The solution is if a stock makes profits and revenue, a floor to protect drops due to opinions for a week would stop this mickey mouse game.
Some analyst that is doing a CYA and might not own any shares is deciding the fate of a business. They have no skin in the game. Analysts can not comment on stocks unless they own them. At a min of 5% of their portfolio. Not just a few shares.