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View Diary: "79% of investors have no trust in the financial system." (154 comments)

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  •  Mark Cuban wrote about this in Sept on HuffPo - (8+ / 0-)
    Wall Street doesn't know what business it is in. Regulators don't know what the business of Wall Street is. Investor/shareholders don't know what business Wall Street is in.

    The only people who know what business Wall Street is in are the high frequency and automated traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It's a platform to be exploited by every technological and intellectual means possible.

    The best analogy for traders? They are hackers.

    And that's Mark Cuban, talking about Wall Street.

    "Its primary business is no longer creating capital for business. Creating capital for business has to be less than one percent of the volume on Wall Street in any given period."

    The Class, Terror and Climate Wars are indivisible and the short-term outcome will affect the planet for centuries. -WiA "When you triangulate everything, you can't even roll downhill..." - PhilJD

    by Words In Action on Wed Jan 16, 2013 at 08:37:10 AM PST

    •  Corporations no longer know what (6+ / 0-)

      business they are in.....

      The typical CEO in a publicly traded corporation no longer plans for long term success.  I no longer hear of "out year" planning with investment follow up.

      Instead, what the average investor sees is many corporations downsizing their labor and making workers take pay cuts based on trying to raise the value of the company stock.  And that reaction to the price of their stock is yearly, if not sometime quarterly.

      Investors can no longer look at publicly traded stock as long term investments since nothing is long term in the corporate world.

      Therefore, traders do the same.  They invest on shorter and shorter time periods.  Lack of corporate planning results in lack of trust.

      When corporations are run again by CEOs that have bottom up knowledge in that business and are more interesting in making widget X better than anyone else and lay out a 20 out year plan, then the market will react positively for the long run.   Young people with money will invest in a corporation for 20 years or more and sell when it comes to retirement.

    •  Cuban makes an important point here in that Wall (4+ / 0-)

      St is not about creating capital for business any more.  While it has always had a casino aspect to it, the advent of algorithmic trading has come to define the markets.

      The main idea of the market is to provide liquidity so that those who do actually put up capital for business have an easy way to cash out and keeps the cost of capital lower.  The speculative aspect of the market was secondary.

    •  Cuban has also said that if (0+ / 0-)

      you "own" a company, you should receive a salary or paycheck. If you're not receiving a regular dividend payment, you're taking a much bigger risk than the potential payoff.

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Wed Jan 16, 2013 at 09:16:23 AM PST

      [ Parent ]

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