The fight against HFT, and intraday speculation just got serious. According to the WSJ, Warren Buffett, together with John Bogle and 25 others, have endorsed a petition that focusing on speculative stock gains "hurts the economy and may require regulation." From the statement:
"We believe that short-term objectives have eroded faith in corporations continuing to be the foundation of the American free enterprise system, which has been, in turn, the foundation of our economy."
Some proposals endorsed by Buffett et al:
To encourage investors to take the long view, the statement suggests that the government could change the tax-code to reward long-term holders over short-term holders – by, for example, setting capital gains tax rates that get gradually lower the longer an investor hangs on to a companies shares. Additionally, fund managers should act in the long-term interests of the investors whose money they manage – something that, the statement argues, fiduciary duty stipulates they do. Finally, activist investors who take large stakes in a company should be required to disclose when they have entered into derivative contracts to hedge away risk.
Of course, proponents of all things angelic brought to you compliments of some 1,000,000 shares a second HFT algo, will, as always, scream against this proposal, and retort with the usual defense that no matter how many million dollars one stock of Citigroup may cost, the precious, precious liquidity would simply go away if anyone dared to tax away even one microcent of HFT's winnings.
Yet, for the good of this country, the opinions of investment luminaries such as Buffett may hold a little more sway in the grand scheme of things.
Zero Hedge is eagerly looking to perusing the entire statement.