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Guest Post: We Need a New Stock Market

Tyler Durden's picture




 

Submitted by Charesl Hugh Smith from Of Two Minds

We Need a New Stock Market

We need a new stock market exchange that is a transparent, retail-trader friendly alternative to the manipulated HFT-dominated pseudo-market we now put up with.

As I noted in The Stock Market Is an "Attractive Nuisance" and Should Be Closed, the stock market now bears little resemblance to traditional markets. Today's 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.

Can the current pseudo-market be restored to a true open market? To explore this question I contacted financial reporter Scott Patterson, author of the new must-read book Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System (print) (Kindle).

CHS: Your book poses this question: what can we do to restore the integrity of our stock markets?

 

Scott: This is essentially the role of the SEC, and it’s pretty clear that they’ve dropped the ball. In part this is due to the dramatic speed of the technology revolution that has completely overhauled the market. It’s easy to forget that just 10 years ago humans dominated trading. While, as I show in Dark Pools, the revolution had already begun in the early 2000s – sparked in many ways by Josh Levine and The Island ECN he build – it remained in its infancy. But now it’s clear to anyone paying attention that the market has been transformed, like a VW Bug turning into a Formula One race car, and the SEC doesn’t know what’s going on under the hood.

 

This conclusion isn’t up for debate. Mary Schapiro as much as admitted to Congress last year that she and her agency can’t surveille the market. That really is worrisome for obvious reasons. So what are they waiting for? It’s true that recently the SEC approved the so-called consolidated audit trail, or the CAT, which is billed as a giant eye in the sky for the market. But it’s still in the planning stages and who knows when it will actually be implemented—or whether it will actually be able to capture what’s going on.

 

CHS: While there are various regulatory “tweaks” that could be put in place (requiring a holding time of 1 minute for all securities, for example), I wonder if we don’t need a more fundamental “re-set” that asks what role the market should play in finance and the economy inhabited by everyday investors.

 

Scott: I think there are a lot of people in the industry wondering about whether there needs to be a massive overhaul. But it’s probably not a good idea for that to be imposed on the market by the SEC. The uncertainty would be potentially destabilizing. And I just don’t see it happening.

 

I think the change needs to come from within the market and needs to be imposed by its most important users—I mean, not the high-frequency traders, who are running the show at the exchanges in many ways—but the institutions, the giant mutual fund companies, the pension funds, the long-short hedge funds. They need to exert pressure on the exchanges to stop giving advantages to high-frequency firms.

 

Part of the problem is that many of these firms haven’t been paying attention to the changes, and again I point to the speed with which they have taken place. But more are waking up – I hope in part because some of them have read my book.

Thank you, Scott, for explaining the realities of the market and for your feedback on what could be done to restore a transparent, open market. It sounds like traditional market heavy-weights--institutions, mutual funds and pension funds--will only regain a say by removing their participation (and liquidity) from the current stock market: exit equities and go on strike, so to speak, until the exchanges and the SEC ban high-frequency trading, outlaw front-running and restore real transparency.

If the traditional heavy-weights abandoned the market, that would leave only the HFT firms and the Federal Reserve's proxies in the market, poaching each other in an ever-tightening circle of parasitic predation.

Removing liquidity that can be skimmed would push the present market into a highly vulnerable instability. The resulting implosion would "clear the decks" for meaningful reform.

If the traditional heavy-weights foolishly continue providing the "dumb money" that's being skimmed, perhaps retail investors could start a small, limited exchange that banned HFT, front-running and all the other manipulations. Such a market could restore one of the market original purposes, raising capital for new enterprises, and enable small retail traders access to an unmanipulated market.

Here are some common-sense rules for such a "new market":

1. Every offer and bid will be left up for 15 minutes and cannot be withdrawn until 15 minutes has passed.

2. Every security--stock or option--must be held for a minimum of one hour.

3. Every trade must be placed by a human being.

4. No equivalent of the ES/E-Mini contract--the futures contract for the S&P 500--will be allowed. The E-Mini contract is the favorite tool of the Federal Reserve's proxies, the Plunge Protection Team and other offically sanctioned manipulators, as a relatively modest sum of money can buy a boatload of contracts that ramp up the market.

5. All bids, offers and trades will be transparently displayed in a form and media freely available to all traders with a standard PC and Internet connection.

6. Any violation of #3 will cause the trader and the firm he/she works for to be banned from trading on the exchange for life--one strike, you're out.

Is such a retail-trader friendly exchange possible? There would certainly be a nice profit in it, for everyone who is tired of providing liquidity for HFT firms would flee the existing exchanges in a New York minute.

Given a choice between listing on the pseudo-market or a legitimate albeit smaller exchange (it would be a binary choice, you can only list in one or the other), many small-cap and micro-cap companies would choose the unmanipulated exchange once liquidity and demand reached critical mass.

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Sat, 09/15/2012 - 09:12 | 2798336 Cheeky Bitch
Cheeky Bitch's picture

Mary Shapiro has $9M reasons to protect the industry. Her parting gift from FINRA was $9M to make sure she continued to protect them.

Sat, 09/15/2012 - 09:48 | 2798390 malikai
malikai's picture

I know I'll get a million downvotes for this. But have a look if you're seriously considering alternatives. I know I am. It's the world's only truly free market exchange left.

https://glbse.com/

Sat, 09/15/2012 - 09:52 | 2798399 Stackers
Stackers's picture

rule #3 negates the need for rule #1 and #2, which would kill human day traders

Sat, 09/15/2012 - 09:57 | 2798406 tbone654
tbone654's picture

Holding for an HOUR...  how about a minute?  That would be enough to kill HFT...

Sat, 09/15/2012 - 10:02 | 2798413 Popo
Popo's picture

Even easier:  A $0.25 Federal tax on all trades.   For any legitimate trader, a quarter isn't going to hurt.   But if you're making 500,000 per hour, you're going to run out of money pretty quickly.

Sat, 09/15/2012 - 11:07 | 2798521 malikai
malikai's picture

The danger with taxation is that it becomes a 'revenue stream' and as such is subject to abuse by pandering politicos.

Sat, 09/15/2012 - 11:19 | 2798543 cocoablini
cocoablini's picture

Nytimes.suggested a human, long only market. No shorts options flying iron condors. For a people who invest.and.want.dividends and investing in a story not momentum. I bet the real market of HFT would make derivatives or ETFs of the new market and manipulate it anyway. Everyone thing.is gamed because government has no interest in rule of law and real economies. I don't invest anymore because its all a big kabuki show lie. Stocks are too pricey and the FED/PPT are determining price discovery. The market is dying and good riddance

Sat, 09/15/2012 - 11:44 | 2798574 malikai
malikai's picture

I think there's a strong case against leverage. But options and all the plays made with them serve a very useful function in the marketplace. Options boards were created to serve the very real need for hedging tools.

Leverage, on the other hand is a hard to justify tool with, as we can all see, some very significant abuse potential.

Sat, 09/15/2012 - 12:14 | 2798610 superflyguy
superflyguy's picture

they can keep the options and short selling as long as they 1) ban naked short selling 2) require written consent of every actual share owner to allow lending out of their shares

 

Sat, 09/15/2012 - 12:40 | 2798666 JPM Hater001
JPM Hater001's picture

Why does no one get this.  They will just game the system another way.

Dont play the game.  You want to own a company call them up and buy in.

Not as efficient but it removes the disease spreading elements.

Sat, 09/15/2012 - 16:55 | 2799207 AldousHuxley
AldousHuxley's picture

ICE in Atlanta

CME in Chicago

Tehran Stock Exchange in Iran

Shanghai Stock Exchange in Communist China

 

 

New York banksters hate capitalism and competition....

 

 

 

 

Sat, 09/15/2012 - 21:45 | 2799668 RockyRacoon
RockyRacoon's picture

Along with all the new proposed bank rules in the article I'd like to add that everyone should play nice, share their toys, and not run with scissors.   There... that should make things just peachy.

Sun, 09/16/2012 - 10:46 | 2800438 0z
0z's picture

This "regulated" stock market (Regulated by whom?) sounds like something Hitler would have come up with.
Which reminds me of a good text. Ahh, here it is.

"Whenever you hear someone saying, "We need to..." or "If enough people..." (relating to the quest for freedom), you are observing the fallacy of "collective emancipation" being propagated." 

Just save yourselves. Save your kids and save yourselves. The collective is the smoking mirrors. There is no such thing a world freedom, only freedom of the individual. So go ahead, open your stock market, and see how much business you get. You might get some if you go to bed with the State, and use legislative powers to eliminate your competition.

Fucking Fascist.

Sat, 09/15/2012 - 14:48 | 2798978 blunderdog
blunderdog's picture

Long-only markets aren't "markets."  Price can't be discovered when you only have an "ask" and no "bid."

Sat, 09/15/2012 - 11:22 | 2798551 CH1
CH1's picture

A $0.25 Federal tax on all trades.

Fix a problem by rewarding the central cabal? Why the hell would you give money to them?

Sat, 09/15/2012 - 11:25 | 2798555 amadeusb4
amadeusb4's picture

DING DING DING!

 

That's precisely what would put a stop to all this nonsense. You can toss in bid/ask transparency as well if you want but this really isn't rocket science. Pretending that the solution is hard is another way of saying that there's no alternative.

Sat, 09/15/2012 - 11:30 | 2798560 malikai
malikai's picture

Why $.025? Why not $.50? Actually, since we have a budget defecit problem and a lot of poor people, let's make it $10 so we can fund welfare with it. It will only hurt those evil speculators anyway. While we're at it, we'll need to set up another regulatory agency to ensure rigid compliance of the overbearingly complex law we create to define it. We'll stock said agency up with Goldman alumni since they know the markets best.

Sat, 09/15/2012 - 13:12 | 2798753 partimer1
partimer1's picture

That's what a smart legislation looks like. One simple sentence.

Sat, 09/15/2012 - 10:15 | 2798433 Imminent Crucible
Imminent Crucible's picture

So it puts day traders out of business---so what? What do day traders add to the real economy? Zilch. Oh, yeah--now I remember; they "add liquidity". Bullshit. Any entity that doesn't really want to own a stock is false liquidity, the same as HFT quote-stuffing is false liquidity. HFT "orders" are not real orders to buy or sell, because they're flash quotes designed only to locate the stops of the competition. Likewise, day-trader "demand" for stocks is not real demand since the trader does not want to hold a single share, not even overnight. This is all gambling, and all ultimately destructive to markets.

We have FAR too many people doing paper-shuffling and other bogus jobs that add ZERO wealth to the country. Day trading for a living is no more useful than hustling poker for a living. In fact, it is exactly the same thing; trying to get wealth out of other people's pockets and into your own without providing any useful service.  We already have GOVERNMENT trailer trash for that, chumps. Losing the "benefits" of day traders to get rid of the algos is a very cheap price for fixing our markets.

Go get a REAL JOB. One potato farmer in Idaho is worth more than a thousand lazy-ass money shufflers.

Sat, 09/15/2012 - 10:20 | 2798444 malikai
malikai's picture

I don't see anything wrong with daytaders when they risk their own capital. I don't see why anyone else should either. If you believe in freedom, you don't care what other people do as long as they don't hurt or steal from you. And as best I can tell, not one single daytrader working with his own money has ever caused any problems in the market.

Now, institutional daytraders working with OPM on the other hand, now that's a different story, sometimes.

Sat, 09/15/2012 - 10:33 | 2798459 Imminent Crucible
Imminent Crucible's picture

It's probably true that no retail day-trader has ever done significant market damage, but that fact dodges the real issue. It's day traders in the aggregate, including institutional players, that severely damage the markets. How? By giving a grossly distorted picture of market depth. Look at it this way: If all the orders from algos, round-tripping scalpers and retail day traders were suddenly flushed out of the order queue, what would real market depth look like? It would look hellishly thin, and frighteningly insubstantial, with air pockets everywhere.

Then would-be "investors" could see what kind of a market they were actually buying into, before they put their savings at risk. That would be a very good thing, and probably save a lot of retirements from the HFT chipper.

Sat, 09/15/2012 - 10:43 | 2798478 Bobbyrib
Bobbyrib's picture

So your answer to problems with the stock market is to restrict day traders? I have no clue how you have so many up arrows from a website that supposedly supports the free markets. I can see restricting HFT to actually have to purchase a stock they put a bid on and not being able to pull it back within seconds, because making a bid on a stock you have no to little intention of buying shouldn't be legal. To tell someone how long they have to hold the stock once they buy it is nonsense.

Junk away, I really don't care after seeing the posts about the middle east protests at this point.

Sat, 09/15/2012 - 10:51 | 2798492 Spastica Rex
Spastica Rex's picture

To tell someone how long they have to hold the stock once they buy it is nonsense.

No, it's a proposed rule. You don't like the rule? Cool. Game rules are arbitrary, not written into the fabric of the universe.

Personally, I don't play - and won't ever play - so you can call me a socialist fag and I'll just laugh - having seen all the Randianisms a million times over at this point.

Sat, 09/15/2012 - 11:02 | 2798511 Bobbyrib
Bobbyrib's picture

Go to page 2 to see my response to the article.

Sat, 09/15/2012 - 11:18 | 2798542 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

How about making all trades even? Carbon based traders trade by the penny while silicon based trade on fractions of a penny. The playing field is not level at this point.

Sat, 09/15/2012 - 11:10 | 2798531 BooMushroom
BooMushroom's picture

A day trader is a guy who stands around the supermarket and when he sees someone reaching for a box of cereal, runs up, grabs all the boxes of cereal, and then says "oh, I'll give them to you, so you can buy them, for 10¢ each."

HFT is a guy who beats the supermarket lurker to the shelf and demands a penny from him, only HFT is so light on his feet, he manages to get between every shopper (and every day trader) and each item every shopper tries to buy.

Sat, 09/15/2012 - 12:28 | 2798635 superflyguy
superflyguy's picture

I think to put the day trader into a better perspective, it's a guy who buys up the movie tickets ahead of the regular crowd without the desire to actually watch the movie and then re-sells it to them for a higher price. Also known as scalping.

HFT is what you said.

 

Sat, 09/15/2012 - 10:49 | 2798486 malikai
malikai's picture

I think I see what you're saying. And I have to make it clear my distinction between retail daytraders and institutionals/hfts/etc. That line is clear, with those on the retail side being genuinely benign, while those on the other side being occasionally malignant, some chronically malignant (hft's/bank prop desks/etc).

I'll have to think about your market depth argument; it is a good one.

I think the difference between our views is that you see 'trading' as the problem when the market is supposed to be about 'investing'. I tend to agree, but in practice, unless you're buying for dividends, isn't any purchase or sell, regardless of how long you hold it, a trade?

Sat, 09/15/2012 - 14:27 | 2798933 Imminent Crucible
Imminent Crucible's picture

I agree generally, malikai, but it's a bit more complicated than that. I don't really care at all about retail day trading, I just think it's an unproductive vocation, something like the people who made a living writing "Linda Green" on endless affidavits for $10 hr. at LPS. If people want to spend their days staring at a stock streamer, trying to beat out the sub-penny algos, it's their choice. All I was saying is, "If we have to shut down day-trading to kill the algo trade and restore functioning markets, it's no great loss." That's all, nothing less, nothing more.

The difficulty with classifying a "Buy And Hold For Retirement" stock purchase as a "trade" is that it implies that duration has no price or cost. This can't be true, or the 30 YR Treasury bond would have the same yield as the 1 MO T-Bill. The guy who adds a few shares of WMT to his IRA every month has a very different goal than the guy who buys WMT thirty minutes ahead of the retail sales report, hoping to scalp a quick pop. The former is trying to protect his retirement savings from the inflation bite by converting it to equity in a large stable corporation. The latter is looking for quick easy money.  And then there's the GS tradebot who frontruns the day-trader's ask by offering to sell for a tenth of a penny less. That tradebot needs to get hit by a freight train, as does the company behind it.

Sat, 09/15/2012 - 10:32 | 2798457 Paul E. Math
Paul E. Math's picture

Extremely well-said, IC. And 100% correct.

P

Sat, 09/15/2012 - 10:39 | 2798465 whatswhat1@yahoo.com
whatswhat1@yahoo.com's picture

I think you meant to say:   One potato farmer in Idaho is worth more than ALL the lazy-ass money shufflers.

Sat, 09/15/2012 - 14:04 | 2798875 Imminent Crucible
Imminent Crucible's picture

I stand corrected. That is exactly what I should have said. The potato guy is productive; the paper-shufflers are parasites.

Sat, 09/15/2012 - 15:50 | 2799090 Skyprince
Skyprince's picture

So...let's assume the potato farmer reaps  millions in farm subsidies.  Isn't that parasitic?  And as for "paper shufflers," what about most parasitic government workers who suck resources from the productive economy in order to promulgate and administer thousands of inane rules and regulations?  Shouldn't we throw all these useless parasites out with the day traders?  And while we're at it....well, hopefully you can see where this is going.  I suggest you consider that one man's passion is another's "useless" activity and who are you to decide which is allowed and which must go?  

Sat, 09/15/2012 - 16:40 | 2799178 blunderdog
blunderdog's picture

An important realization.  This also happens to be why any *completely* "capitalist" structure for society can't work long-term/sustainably/etc. 

In order for "society" to be worth HAVING, there have to be multiple and competing reward-systems, so that people whose passions and interests differ can live together. 

That's the only way you can be free to do your thing while I go do mine.  Once you start thinking that there's this ONE PERFECT RULE to guide EVERYTHING you guarantee your own failure.

Sat, 09/15/2012 - 12:50 | 2798690 LarryDavis
LarryDavis's picture

I was at one of those prop trading factories yesterday and I had the same exact thought. These fucking people are WORTHLESS. Fuck daytraders, FINRA, and all that. 

Sat, 09/15/2012 - 11:41 | 2798569 11b40
11b40's picture

Who cares about day traders, other than a handful of semi-pro gamblers?

Sat, 09/15/2012 - 14:42 | 2798593 whotookmyalias
whotookmyalias's picture

I have no issue with Day Traders but if they need to be eliminated in order to bring greater good, then so be it.  Doesn't matter because if it will benefit the common man, it will never happen.  Speculation is fun but real improvement won't happen in our lifetimes.

Sat, 09/15/2012 - 17:51 | 2799324 11b40
11b40's picture

I have no issue with day traders, either. 

The fact that they make no real contribution to society, other than to try and skim profits form some and provide profits to others, is rather immaterial in the scheme of things.  However, we can't have the rules catering to their benefit at the expense of the greater good.  When you dip the dog for ticks & fleas, there may be a few minor, non-threatening insects that get killed too, but so what.  If that's the price for killing the thicks & fleas, I wouldn't call it a problem for the dog - only the dead insects.

Sat, 09/15/2012 - 13:11 | 2798752 Papasmurf
Papasmurf's picture

"rule #3 negates the need for rule #1 and #2, which would kill human day traders"

So, what is the downside?

Sat, 09/15/2012 - 10:46 | 2798481 Urban Redneck
Urban Redneck's picture

Bitcoin has worse terms than the NYSE thieves, Corzine would be envious...

The Exchange assumes no responsibility or liability for any fraud committed on this exchange, but will do its best to prevent its occurrence.

The Exchange assumes no responsibility for the terms of assets that are traded or listed on the Exchange, or for the actions of any of the Users issuing assets that are traded or listed on the Exchange.

It is not the Exchange's responsibility to ensure that those trading, listing, or issuing assets on the Exchange are operating according to any kind of rules, regulations, laws, or standards those trading, listing, or issuing assets on the Exchange are subject to in any jurisdiction, beyond these terms of service.

The Users of the Exchange take full responsibility for their own actions, and any consequences resulting from those actions. It is the Users' own responsibility to determine the risks involved in depositing funds with the Exchange, creating assets, executing trades, or any other activity or action related to the use of the Exchange, or any of its current services.

The Exchange is currently beta release software, and as such the Exchange assumes no responsibility or liability for any losses that may be incurred if the Exchange is taken offline to deal with any problems that may arise. The Exchange makes no guarantees as to the correct functioning of its services until it is removed from beta release, although the Exchange will do its best to ensure it is functioning correctly. The Users use the Exchange at their own risk.

The Exchange will make its best effort to ensure that all data on the Exchange is properly backed up in the event of a system failure, or any other event. However the Exchange makes no guarantees. The Exchange is a best effort service and will remain so until it moves beyond the beta stage of development.

The Exchange may at its discretion ask asset creators to provide proof of identity, address, phone number, or any other information as deemed appropriate. Said information will be held securely offline and not shared with any third party.

The Exchange reserves the right to suspend trading of any asset, or suspend access to an asset creator's account, for failure of an asset creator to provide requested information, or in the event of suspected fraud.

The Exchange reserves the right to deny listing, or suspend trading, of an asset if such asset is deemed to be of a nature that potentially exposes the operations of the Exchange to unacceptable risks.

By using the Exchange, and any of its current services, the Users agree to be bound by these terms of service.
These terms of service are subject to change without notice.

Sat, 09/15/2012 - 10:56 | 2798491 malikai
malikai's picture

+1

Caveot Emptor. Ala Free Market.

I love it.

Sat, 09/15/2012 - 09:47 | 2798392 withnmeans
withnmeans's picture

There once was a time when individuals actually invested in a company or companies that needed money to have capital to help build the business into a stable thriving entity.

Ah, those were the days. 

Then, the shysters got their fingers into the pot, making sketchy investment vehicles, you know the crap you can buy "but most people don't understand how they work". Wouldn't it be nice to turn back the clock to a time when you bought stock, held it, and you were rewarded. These companies today are also part of the black hole problem, they are not transparent and the bottom line is normally bogus.

I have often found it interesting that if AAPL is the BIGGEST, RICHEST, company in the world, why would they need anybodies money invested in them.....

Don't get me started on banking and all of their phony derivatives.

Good Day Gentlemen and Ladies!

Sat, 09/15/2012 - 10:20 | 2798445 Seer
Seer's picture

That "time" was in the early days of the Ponzi.  Just because things were rolling then doesn't mean that it STILL wasn't a Ponzi.

Perpetual growth on a finite planet IS a Ponzi.

Sat, 09/15/2012 - 10:40 | 2798470 Urban Redneck
Urban Redneck's picture

Private Equity (and held privately companies in general, regardless of whether they are held indefinitely, or eventually flipped) by definition & function are not part of the Ponzi, since their paper is non-eligible.  It is the eligible, marginable, and LEVERAGEABLE characteristics which create the Ponzi.  The Facefuck IPO was a perfect example of what happens when a company decides to join Ponzi scheme and starts believing the hype they shovel to sell their souls.  Finding the next bigger fool is not in and of itself a Ponzi scheme, ask any Arab rug dealer if he's heard of Ponzi.

Sat, 09/15/2012 - 11:13 | 2798536 francis_sawyer
francis_sawyer's picture

Ants & grasshoppers... (& oh yeah ~ fuck the grasshoppers)...

Sat, 09/15/2012 - 14:27 | 2798932 billsykes
billsykes's picture

I have a diferent view. PE could be totally legit and things get muddy with tons of debt, but catorgoizing all transactions as sucker deals or finding the next idiot shows that you have misanthropic views and maybe you just hate people- the transaction may be secondary or a rationalization of your people hating views.  I think everyone feels that way some time, but all the time is harmful.

If I buy an apple from a farmer at the farmers market, do I say "that dirty farmer is makeing a profit, and I am paying for his venue here at the market?" No, I want an apple and to get one I need to either have an apple farm or buy an apple from someone who produces one.

Without a transaction there is no economy.

Sat, 09/15/2012 - 15:10 | 2799026 SmackDaddy
SmackDaddy's picture

I guess that depends on what that farmer is charging.  (and for some around here whether or not he's Jewish... j/k)

Sun, 09/16/2012 - 06:14 | 2800149 Urban Redneck
Urban Redneck's picture

My interaction with the PE market is different than most professionals since exit via IPO is not generally part of the strategy (vs. capturing the ongloing cash flow).  Overall, I think PE is critical to economic function, but the focus of the institutional PE industry on a 5-7 year exit via IPO (which recycles liquidity and assets right back into the monetary ponzi) is unhealthy and misallocates significant excess capital towards whatever the "hot" sector is, according to current Wall Street group think.

Sat, 09/15/2012 - 14:59 | 2798999 blunderdog
blunderdog's picture

I understand what you're saying, but I think you've got an error there.

The *monetary system* is the ponzi--any financial contracts which can be impacted by the expansion or contraction of the money supply are, therefore, "part of the ponzi."  ALL equity valuations have a natural tendency to rise as the money supply expands. 

*Any* financial instrument is "leverageable" because two parties can make whatever agreement they like about some given instrument.

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