Guest Post: The Stock Market Is An "Attractive Nuisance" And Should Be Closed

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

The Stock Market Is An "Attractive Nuisance" And Should Be Closed

The dark pool of parasitic scum known as the stock market is an "attractive nuisance" that should be shut down.

In tort law, an attractive nuisance is any potentially hazardous object or condition that is likely to attract the naive and unwary, i.e. children.

A classic example is an abandoned swimming pool half-filled with fetid water.

Since many stock market investors are demonstrably naive about the risks and unwary of the dangers posed by the stock market (the proof of this is that they remain invested in the market), it is but a slight extrapolation of the attractive nuisance doctrine to declare the stock market is clearly an "attractive nuisance" and should be closed immediately.

Is this really a legal stretch? Consider the conditions that characterize an attractive nuisance. I have edited these to pertain to the stock market and investors:

1. The market is one in which the Powers That Be (the exchanges, the Central State, the central bank, et al., the effective "owners" of the stock market) know or have reason to know that brainwashed or ill-informed investors are likely to risk their money in.

2. The market is one of which the Powers That Be know or have reason to know (and fully realize or should realize) will involve an unreasonable risk of financial loss or ruin to such investors.

3. The investors, because of their consumption of officially sanctioned propaganda and misrepresentation of market risk and return, do not discover or realize the risk involved in placing money in the stock market.

4. The utility to the Powers That Be of maintaining the condition and the burden of eliminating the danger are slight compared to the risk borne by investors.

5. The Powers That Be fail to exercise reasonable care to eliminate the risk or otherwise protect the investors from potentially catastrophic financial loss.

Can any reasonable person deny that the rigged, manipulated U.S. stock market is nothing but a predatory skimming operation that is increasingly at risk of systemic failure? If you have any doubts about the true nature of the American stock market, please read the new book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print edition)   (Kindle edition) by financial reporter Scott Patterson.

Today's stock market has as much in common with the market of the 1960s as a horse-drawn carriage has with a Formula 1 race car. Most of the trading on the market is done by computers that hold shares for perhaps 11 seconds before skimming a slice from investors who lack the high-speed data flows from the exchanges, warp-speed processing power and sophisticated algorithms.

Another huge chunk of market-moving activity is officially sanctioned manipulation by the Federal Reserve (the privately owned central bank of the U.S.) and Central State agents: the "fat finger" leaps at day's end, the "stick saves" whenever gravity threatens to topple the corrupted market, and all the other interventions that are obvious to every active trader.

In effect, the stock market has become an officially sanctioned bucket shop where "ownership" of shares has been rendered meaningless. The market exists for two reasons: 1) to skim low-risk profits from naive/brainwashed investors and 2) as a propaganda front that can be lofted ever higher by authorities for the purposes of managing perceptions, i.e. the market is higher, so the economy is doing great, never mind what your own eyes and experience are telling you.

The stock market is demonstrably an "attractive nuisance" and should be closed immediately. It should never be reopened unless these conditions can be met: 1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law.

If you insist on putting money at risk in the stock market, be aware that you are playing a rigged roulette wheel and thus you are a mark. You might win, or the entire game might collapse in a rotten heap of lies and corruption. Just remember that the market is ruled by parasites who need to keep their hosts (investors) alive so they can continue to feed off them (i.e. biotrophic parasites).

If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire.

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Badabing's picture

After doing a thorough analysis using OHLC charts overlaying Elliott wave principle, Fibonacci ratios, momentum rate, the 200 and 50 DMA, and resistance break out trending I have come to the conclusion that the in-depth analyses just preformed is for SHIT because the market is counterfeit!

Pladizow's picture

The cure for an attractive nuisance is a hanging banker!

malikai's picture

I normally find myself in agreement with CHS, but this time not so much.

I think we need less nanny state, not more of it.

Bananamerican's picture

Just buy the fucking dip........in the reeking, fetid pool.

"1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law."

By the way maliki, aint nothin' nanny bout common sense

malikai's picture

Don't think so much about the intentions.

Think about the implementation.

How many laws are rooted in common sense? Most.

How many laws are implemented with common sense? None.

NotApplicable's picture

You've likely noticed that these statists always talk in "oughts" and "shoulds" rather than the "is" that occurs.

Because to them, it's the belief in the facade that's important, rather than the reality it obscures. As long as their intent is pure, they're free to commit the most heinous crimes, all in the name of humanity.

Humanity meanwhile, has only for it's defense a "love of life" based on the voluntary cooperation between free individuals.

Gully Foyle's picture

NotApplicable

You do understand that Anarchism is the only political system with the tenet "based on the voluntary cooperation between free individuals"?

Libertarianism, at least in the US, is nothing but small government Republicanism.

Don't beleive that, then maybe Ayn Rand can set you straight

“Libertarians”

For the record, I shall repeat what I have said many times before: I do not join or endorse any political group or movement. More specifically, I disapprove of, disagree with, and have no connection with, the latest aberration of some conservatives, the so-called “hippies of the right,” who attempt to snare the younger or more careless ones of my readers by claiming simultanteously to be followers of my philosophy and advocates of anarchism. Anyone offering such a combination confesses his inability to understand either. Anarchism is the most irrational, anti-intellectual notion ever spun by the concrete-bound, context-dropping, whim-worshiping fringe of the collectivist movement, where it properly belongs.

“Brief Summary,”
The Objectivist, Sept. 1971, 1

Above all, do not join the wrong ideological groups or movements, in order to “do something.” By “ideological” (in this context), I mean groups or movements proclaiming some vaguely generalized, undefined (and, usually, contradictory) political goals. (E.g., the Conservative Party, which subordinates reason to faith, and substitutes theocracy for capitalism; or the “libertarian” hippies, who subordinate reason to whims, and substitute anarchism for capitalism.) To join such groups means to reverse the philosophical hierarchy and to sell out fundamental principles for the sake of some superficial political action which is bound to fail. It means that you help the defeat of your ideas and the victory of your enemies. (For a discussion of the reasons, see “The Anatomy of Compromise” in my book Capitalism: The Unknown Ideal.)

“What Can One Do?”
Philosophy: Who Needs It, 202

The “libertarians” . . . plagiarize Ayn Rand’s principle that no man may initiate the use of physical force, and treat it as a mystically revealed, out-of-context absolute . . . .

In the philosophical battle for a free society, the one crucial connection to be upheld is that between capitalism and reason. The religious conservatives are seeking to tie capitalism to mysticism; the “libertarians” are tying capitalism to the whim-worshipping subjectivism and chaos of anarchy. To cooperate with either group is to betray capitalism, reason, and one’s own future.

Harry Binswanger, “Q & A Department: Anarchism,”
The Objectivist Forum, Aug. 1981, 12

 

dwdollar's picture

I don't give a shit whether Wall Street is a bunch of parasites feeding off the money of naive investors.

What I care about is banksters (who in large part are themselves the parasites) having the power to print (debase) money because they got too greedy and ate the money of all the naive investors.

FEDbuster's picture

As for the "market", GET OUT (see Ann Barnhardt).  As for the counterfeiting by the FED and banksters, trade your paper for something real.  Best assets are those you can stand in front of a defend with an AR-15 (also Ann Barnhardt).  We are in a WROL economy now, invest accordingly.

No counter party risk or rehypothication of my beans, bullets and bullion investment portfolio, bitchez!

 

FREE BRANDON RAUB

LawsofPhysics's picture

Believing in absolutes in a chaotic world will get you killed.

In the absence of any real consequences for bad behavior, "isms" are irrelevant.

The only thing anyone should have any faith in now is that which cannot be sustained, won't be.

Well that and like-minded, trustworthy, innovative and hard-working employees, neighbors and friends.

GAAPpreNixon's picture

The only thing Ayn Rand understood was the proper method one can employ to GILD A TURD or put LIPSTICK ON A PIG!

The greedy bitch tried to put a euphemism on selfishness and egotism and came up with the cockamamie term "objectivism". She might as well have called it "One born every minutism"!

Sofa King Confused's picture

Can you imagine if you had to hold your old lady 4 hours after busting a nut

acetinker's picture

The closing sentence; "If the hosts all leave the market, the parasites will have only themselves to feed on, and they will quickly expire." doesn't sound statist to me- not one bit.

You got some other axe to grind with Charlie?

 

pazmaker's picture

try reading his article yesterday on healthcare and then tell me he is not a statist.

acetinker's picture

There's only two viable choices on healthcare.  Either it's a single payer system where taxes go to 95% of income or Gov GsTFO altogether.

Charlie knows this.  I can't say which way he'd lean, but he seems more in the GTFO camp to me.  That's what I'd choose, anyway.

0z's picture

So ... the stock market should be shut down?

By whom? Criminals?

Let me get this right ... Criminals have to shut down the stock market?

I'm not sure what the point is.

Ohh I get it! The author is  Despot!

bankruptcylawyer's picture

hedges is a good guy and has good ideas. but he is at root a statist. the problem with statism is not that it's so obviously WRONG most of the time, it's that it begs the question------

how do you actually protect people from monopolistic oligarchs in bed with the CIA, without somehow using the power of the state? it's a tricky dick that question. 

LawsofPhysics's picture

Laws?  real consequences for bad behavior?  What a quaint idea.

Blah blah blah, when is the next treasury auction?

TruthInSunshine's picture

Here's a completely legitimate & simple idea that would take a massive bite out of the massive scam that is the current equity investing racketeering operation:

 

Go back to the 'antiquated' model of investing in publicly traded corporations by having those interested in "owning" a portion of any such company and the company deal directly with each other, cutting Wall Street out of the picture completely.

If you want to invest in a public company, send your fiat to them in exchange for their shares.

All the claims about "but....but....what about market makers?....who'll provide liquidity?" are bogus anyway.  The market crashes with relatively regular frequency, and when it really crashes, you can depend on those "like, totally necessary market makers" to take you out of your $50 stop-loss order at about $30 or $15 (or less), so when it really counts, the market maker model is just a continuation of the scam.

As just two examples of the many scams this would eliminate, the best friends forever of the New York Branch of the Mother Whore Federal Reserve could kiss scalping and quote stuffing bye-bye.

Oh noes!!! But what is capitalism and what are markets without HFT & dark pools???!!!

Tortuga's picture

You can do that now with DRIPS.

TruthInSunshine's picture

Well, that automatically re-invests one's dividend income into the purchase of future shares of stock, but yes, one can buy stock directly from some publicly traded companies, though this isn't exactly a widespread practice.

What I'm stating is everyone save for Wall Street and its criminal co-conspirators, who do nothing of value and everything constituting massive, daily theft via their control of the infrastructure through which shares are "traded" (where they scalp, fleece, shave, cut and pry ever larger transactional costs from the transfers, let alone rig the entire framework), would be better off by bypassing the exchanges and insist on buying shares of the corporate stock for sale & that they wish to purchase directly from the respective companies, thus completely eliminating Wall Street, which has not only failed of its original alleged intended purpose, but has transformed into one of the largest criminal enterprises, making Las Vegas or Macau casinos look like virgins in comparison.

New York City (and London, if repeated 'over there') gang members now employed by the racketeers would actually have to face the prospect of finding honest work or going hungry, and more importantly, actual capitalistic and market-oriented efficiencies would be restored.

GAAPpreNixon's picture

The business administration courses out there state that the purpose of issuing stock is to obtain capital for plant and equipment. IOW to grow the company and the profits of the stockholders. HOWEVER, the main reason a business INCORPORATES is to LIMIT LIABILITY. So once a business becomes a CORPORATION,  a new reason for issuing stock is added to the others. THAT REASON is to spread risk. When a corporation goes public issuing stock is MAINLY a vehicle for spreading risk and obtaining capital for plant and equipment is almost totally eclipsed. You go from a legitimate concern where anyone buying stock knows the business managers have a vested interest in keeping the business healthy to a CONTROL FRAUD operation by corporate management to scam stock buyers while they sink a public corporation, run off with the profits that limited liability allows them to steal and leave the share "holders" HOLDING the SHIT. 

THE PROBLEM IS THE "PUBLIC" CORPORATION! 

Ghordius's picture

+1 though changing something there is difficult
Btw "1) All shares must be owned for at least four hours"
4 hours are not enough, you would have to make it one day so that it can't cross all timezones endless times.

Texas Ginslinger's picture

Agreed.

BTFD.

I made a 2% gain in the first hour today on a stock that spiked down, and then back up in very rapid fashion.

Volatility is a beautifull thing....

NotApplicable's picture

It's an interesting mix of Kool-Aid he's got today, that's for sure! I like this part,

1) All shares must be owned for at least four hours

Why four hours? Why not three? Or five? There's nothing rational here, merely a number he's comfortable with, which is the exact same logic driving the algobots. Time held is merely an artifact of two ends of a transaction. What matters is the perceived value gained/lost over any period. If the bot can realize the gain, then it's not really any different than the objective of a carbon-based day trader, or even Grampa's buy-and-hold strategy. All are speculating about capital appreciation (dividend's notwithstanding).

This isn't to say I think algobots are healthy for humans in general, but they do serve as an agent for specific ones. The idea that these same people can form a centralized government to control it all for everyone's' benefit is incoherent on its surface.

piliage's picture

But what about dark pools where there is no price disclosure? What about when those algos are used to manipulate price? Those things are illegal in other industries.

I don't want to sound like some occupy wall street nutcase, but HFT, and particularly dark pools, are part of the problem, not the solution.

Umh's picture

Bingo! The dark pools are a greater risk than the HFT, because some crooks have access to the information in the dark pools that is denied to most investors.

GAAPpreNixon's picture

 

 

If the bot can realize the gain, then it's not really any different than the objective of a carbon-based day trader, or even Grampa's buy-and-hold strategy. All are speculating about capital appreciation (dividend's notwithstanding)..

You make a valid point but you are leaving out the fees the vampire squids running the alpos make from churn. That's a significant source of income (i.e. THEFT) for the fed's broker dealers on the taxpayer tit. I would change the 4 hour hold requirement  to 24 hours but any amount over a minute would seriously tilt the HFT algos. The point is that the deliberate attempt to extract profit from churn rather than capital appreciation is an official admission by the fed and its broker dealers that capital appreciation isn't possible!  Just like bank robbers, the vampire squids always go where the money is.

 And then there is the problem of difficulty of determining capital appreciaiton when the metric is a currency (the dollar) that is being massively inflated. Any government that creates $2.08 of debt for every $1.00 of expense is nuts.

johnQpublic's picture

kim khardashian

another attractive nuisance

malikai's picture

Attractive? Yes, with a muzzle on.

johnQpublic's picture

going for name recognition...my bad

 

+1 to you sir

NotApplicable's picture

Kris Humphries approves of this message. (how could he be so dumb?)

macholatte's picture

 

The cure for an attractive nuisance is ........

 

                Well, in my case it was penicillin.

Tortuga's picture

You're working tooooo hard. Be an "attractive nuisance" for awhile. Forward.

azzhatter's picture

I thought it was closed to retail

hedgeless_horseman's picture

 

 

State Street's SPDRs (Swimming Pools Diseased Ridden) are open for everyone's enjoyment! 

Dive in, kids!  Everyone is doing it.

machineh's picture

Yes.

And both, sadly, retarded.

Nothing To See Here's picture

Shares should be owned for at least half a year. The purpose of the stock market should be to allow people to invest in a venture, not to speculate short term on securities without knowing the underlying stuff.

piliage's picture

"1) All shares must be owned for at least four hours"

This isn't needed. Just take away the fractional cents and round alll shareprices to increments of 10 cents. That will remove most of the nonsense electronic activity immediately.

BooMushroom's picture

The stock market used to trade on 1/8 of a dollar increments, until congress changed it around y2k.
I think tenths would be fine, too. Better yet, ban electronic stock exchanges altogether.

e2thex's picture

Thank god there is fishing.

Stuck on Zero's picture

Your priorities are unimpeachable.

 

francis_sawyer's picture

On the I USED TO CARE meme... (as in, 'about stock markets')...

~~~

The girl with the big tits (in the ROAD KILL ad wearing the t-shirt printed with the above slogan) is an "attractive nusiance" too...

ParkAveFlasher's picture

Never underestimate the value of an ugly girl.

malikai's picture

I have encountered a wise man.