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. Just as hackers search for and exploit operating system and application shortcomings, high frequency traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade or the rebate they are getting from the exchange because they provide liquidity to the market.
I recognize that one is illegal, the other is not. That isn’t the important issue.
The important issue is recognizing that Wall Street is no longer serving the purpose what it was designed to . Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days ?
I started actively trading stocks in 1992. I traded a lot. Over the years I’ve written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.
Over just the past 5 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.
So back to the original question. What business is Wall Street in ?
Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), than flows into companies in the form of equity.
My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.
And solutions won’t come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.
Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the US and World Economy nearly enough for the risk of collapse they introduce into the system.
Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The Government needs to create simple and obvious incentives for this business and extract compensation from the traders/hackers for the systemic failure risk they introduce.
There will be another flash crash, and probably a crash far worse than the May 2010 flash crash simply because there are too many players looking for the trillion dollar score. They can’t all win, yet how many do you think wouldn’t risk everything, even what is not theirs, for that remote chance to score big ? Put another way, there is zero recognition of the moral hazard attached to every trade. So why wouldn’t traders take the biggest risk possible ?
There is value to trading automation. It is here to stay. There is absolutely NO VALUE to High Frequency Trading. None. We need to bring our markets back to their original goals of creating capital for business. It’s impossible to guess how many small to medium size companies have been held back from growing and creating jobs and wealth because of lack of access to capital from the stock market. It’s not impossible to know that our economy has suffered because Wall Street equity markets are no longer a source of equity for helping companies grow, it is not a platform for hackers and that needs to change. Quickly.
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traders, predatory loans ,defense attorneys,same dam thing
Comment by Local Hustle -
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We fix bad credit, come check us out, http://Www.wefixbadcredit.org
Comment by wefixbadcreditdotorg -
High Frequency Trading is about to ensure that wall Street’s Bonus pools are off the charts, which will trickle down to all the “little people”. High Frequencly trading…the KEY to the next big bull market, foreign exchanges wish they traded 5Billion shares a day….we own the world, embrace it people…
Comment by Pied Piper$$ (@Fandango36) -
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Mark Cuban’s ideas for curbing HFT are very valid – don’t outlaw it, just disincentivize it. The problem with HFT, and the dark pools it’s spawned, is two-fold. 1) Prices are distorted when much of the actual liquidity/trading is hidden and many “orders” aren’t really reflections of interest to trade because they’re canceled milliseconds later and just being used to move prices and 2) HFT algorithms trading with each other, millions of times per second, can cause “market” prices to go totally nuts very very quickly leading to things like the flash crash and the Knight debacle – HFT has made the markets extremely unstable. Mr. Cuban’s comparison of high frequency traders to hackers is, IMHO, very apt.
Comment by Margaret Dolly Tharp -
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great share bro, thank u
http://go-bisnisonline.blogspot.com/2012/09/sepeda-motor-bebek-injeksi-kencang-dan.html
Comment by Dayoo II -
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The system may change after a few more stock market crashes.
(Looking to sell NBACorner.com to anyone who is interested!)
Comment by Jay Patel -
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I agree that there are some scary changes taking place. It might be easier to create an exchange with ‘risk-averse’ regulations including the ones mentioned. Thus, HFT traders can steal money from each other’s pockets with companies that agree to be listed on these exchanges while other companies that care about shareholders and real investing can be listed on the ‘old school’ exchange.
1.Create an exchange that doesn’t allow short-selling. Why? First, regardless of the studies carried out, I simply don’t trust traders with the tools to pound share prices down, induce fear, and cover while creating lasting harm to the credibility and image of the company. It seem unethical to profit from anothers misery, especially when creating suspicion becomes a profiteering business. Second, consider what the market will do if there were an equal amount of short and long positions simulataneously. The market would be a zero-sum game like FOREX trading and no wealth creation could occur. In fact, tip the balance the other way and wealth could be created by a permanent bear market…that’s a scary thought.
2.This exchange should also encourage dividends as it is the only method I know of that transfers wealth from company to investor. If the link between company profit and investor is lost (discontinuation of dividends), the market becomes a playground for traders. Think about it, if a company will never pay a dividend ever – the stock could have $100 per share in cash but what would stop it from trading at $1? I wrote a 5 part blog called Wall Streets Exposed that covers some of these same points. http://www.portfolio-cafe.com/4207/wall-street-exposed-part-1-the-almost-worthless-stock-market
3.The exchange should discourage the use of unregulated stock options. These are opaque tools used by traders and hedge funds that can destabilize the market in ways that most cannot comprehend. A lack of options (or limiting it somehow) will discourage speculative trading.
I agree, get Wall Street back to its roots. I’m doing what I can to help. Currently working on a new type of hedge fund alternative open to small retail investors with 100% transparency, they have total control of all holdings, and without all the ‘asset management’ and performance fees. Right now its a labor of love for the little guy – but we can all pitch in and do what we can.
Comment by stock0market0investing -
Mark Cuban has a good streak of ethics and decency regarding his opinions of HFT
Opinions like his could actually redeem Wall Street despite itself. Wall Street doesn’t deserve people like Mark trying to save it, but the people of this country do. I’m tired of greedy assholes destroying our country
Comment by Steven Goldstraw (@EphremSteve) -
Interesting blog about something I’ve long felt about the “markets”. As a long-time worker in the business, on both the execution and trading sides, I’ve often wondered how much value was added by many of the innovations to the markets. I spent all my time in the business in the options market and I believe these derivative markets have value as risk management tools. But there are weaknesses to these markets that are technologically driven and HFT is merely the latest manifestation of vulnerability seeking technology. As a market-maker on the CBOE, I saw off-floor trading operations use technological superiority to take advantage of my own vulnerabilities. No surprise that with the ever-increasing computing power these vulnerabilities would be exploited in innovative ways. From my perspective it has always been the regulators who are behind the curve of innovation. They couldn’t protect me from being exploited and the same thing is true of HFT’s. Regulation is typically reactive and not proactive and by the time they address vulnerabilities the exploiters have moved to the next advantageous innovation.
Comment by Jack Regan -
Mark,
Call me naive.
I understand your point that High Frequency Traders have changed the focus of general market research from evaluating company core strengths to tracking market anomalies, but I don’t understand the second part of your argument, that HFTs are somehow hurting the returns of the traditional value investor. Why is it “increasingly difficult to invest in companies you believe in,” as you state above?
At its core, the market is still moved by company performance and macro-economic trends that affect all businesses. What is stopping a value investor from making macro-economic decisions based on his/her own research and picking a long bet? Do you believe that HFTs are the only guys making money on Wall Street? Let the HFTs perform irrationally, the value investor should still be able to put money to work based on fundamentals and a long hold strategy.
What’s stopping you from being a value investor in a world of HFTs other than a need for price stability and liquidity? If HFTs are driving prices down periodically and undervaluing assets, isn’t that creating an opportunity?
From MC> The problem with HFT is that it introduces systemic risk. Its the stock market equivalent to sub prime mortgages. It doesnt seem lke a big problem to lend money to people with no money to pay it back, but then all of the sudden the models dont work as planned. IN the case of HFT, its a battle between algorithms to gain an edge. When those algorithms try to outsmart each other, you dont know what will happen. Problems may only happen one in a billion events, but because there are so many “events” (As opposed to trades), you see mini crashes every day. There is a far greater than zero likelihood that another flash crash type event will occur. THat greater than zero risk has a cost to all traders, just as sub prime mortgages didnt seem like it created risk to you and me, until it did
And to your point of creating opportunity, true. THats why i keep a lot of cash handy. BUT, to the person who’s stock got sold to me, that is not what they got into the market to see happen
Comment by Andy AndLisa -
If we go back to the gold standard, we will need the pennies…..Medium of exchange.
Comment by Sam Koviak -
Mr. Cuban I often have started to create a study that would determine the “house edge” in Wall Street. I feel that gambling has a very defined house edge while the Wall St. house edge is mysterious. What you’re saying about creation of capital and the change in the tone of the Street is wonderfully accurate. I would love to interview you on Camera for “Regular Guy Economics, Optimize to Zero” my documentary about the death of the middle class and how that broke capitalism.
Comment by John Flynn (@rgeconomics) -
You are right on target!
Comment by saltaiym -
Marc, as usual you are spot on. I believe that the abatement cost of being caught by regulators, stopped by investors, or being driven out by the market is so high that traders or those companies who provide the service could really care less. Do regulators really have the means to go after large companies or HTF traders to make a difference in the their actions? No. No matter how you slice it, it goes back to government policy. I agree with the tax idea, only if you can actually make it so violators will pay/deter the actions. Government policy unfortunately is being made by those who are to connected to the hand that feeds them. We need a way to spur productivity and create capital which will equal growth on a micro level, thus effecting the macro economics of the market.
Comment by Ryan Phelan (@Ry_Phe_13) -
Hi, Mark I totally agree with you, businesses needs investors that not only invest in business but who also care about the people who they are investing in, last year I opened a small fish fry restaurant I put in all of my 401k and took out multiple loans, banks are not lending I had to rely on credit unions, but what I don’t understand is that when a individual want to go to school financial aid is just given to them, but when a Entrepreneur who is seeking to build business and create jobs they have to jump through so many hoops, so many obstacles, I had to close my business last year because I lacked working capital, but I was able to savage my most valuable asset which was the actual fish batter which is manufactured and sold in local stores and expanding in Erie, Pennsylvania where I was born and raised, you may have had your share of public rebuttals, but I follow SHARK TANK and I notice one thing your real and you genuinely care about the entrepreneurs, I would love for you to invest in my product called D’Lish Fish Coating Mix it is well known as the BEST tasting fish ever, not only great tasting but having health benefits also, this is a Gluten -Free product, low sodium, no fat if baked, low low calories, applies with water, delicious and crispy baked or fried, my main goal was to try to get this product into schools and colleges across the country but it is very difficult to break through the iron wall but I know it can be done, it has to be done because youth obesity is on the rise and I want to do something about it. Thank you visit http://www.dlishfishcoatingmix.com for more info. Sincerely Rich Davis redluvrd7@verizon.net
Comment by Rick Davis (@ricker777) -
Admirable perception Mark Cuban. I refer to this blog entry in my “picture of an associative, entrepreneurial Economic Administration in America”: https://sites.google.com/site/threefoldnow/us-economy
Comment by Travis Henry -
Hey mark i dont try to take you any second but i read your blog about wall street and tink it´s really accurate, im only a Argentinan empreneur but i want to leave you this thought. I think we are in economics worlds troubles because always be a line whit inteligents, succesfull, emprenneurs, people and other line whit people more simple. The people in the first line realized they can have more stufs being smart, and thats is when capitalism born (this its a simple opinion about a more extensive subject but i try to make only a flash observation for no make you lose more time). This people (capitalist) tried to be less for have more money for themselves and creat more people whit a tendency for buy, and least notion of the reality,( the ideal persons for the capitalism). Now are we here whit 100 more years of capitalism and having lot of people whit the caracteristics of “the buyers” whit a lot of money but they cant think in busines, they cant think about the cash flow and only use their money for pleasure and leaving the money stagnant. I think we need to creat more awareness about that, i think if you tell someone if you make your many move with a busines you can make more money for you!! because the money is flowing !!,and explain a little bit maybe we can do some change i think this is one of the reasons for the crisis but i think you can do more then my self about this. This is only part for a more huge topic but like a said before i dont want to make you lose time. So if you have a little interest we can talk more about this thanks for your time and sorry about the writing but its my firts letter in english.
Good Luck!
Sincerely Facundo Espinosa
Comment by Facu Espinosa -
I really did read the Blog but go a great idea and would not only love your interest but love a real response by someone who knows about the market and what sells and what doesnt sell. So i have a product and it is a container that you put your chip dip in and its like a push up pop. you push it up and you will never leave anymore chip dip on the sides and you will get all the dip that you paid for. Not only am i looking for help and an investor but if you not interested i would love a true opinion on my product! Thank you and you can email me at radioman50@msn.com if you would want to respond to me. Thank you and truly appreciate you reading this.
Comment by Tom fritz (@tho4mas) -
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Wallstreet could learn a few tricks from Walmart. they acrtually have a secret that Mitt Romney may capitalize on if elected President. Check this out to find out more:
http://bizjetway.blogspot.co.uk/2012/09/mitt-romney-private-jet-paradigm-shift.html
Comment by Fabrizio Poli -
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Mark, Thank you for underlining the difference between efficiently creating and allocating capital for business and investor use and Trading. I think what you are getting at is a new stepped scale for capital gains tax for the various terms held. Right now we have 2 steps. Perhaps it needs to be an exponential curve at a near 100% tax rate for split second holdings down to the minimum acceptable number for the longest term. If we can accept that concept than it’s just negotiating the numbers. It even could be positioned as revenue neutral to include the pledge zombies.
Mark, you have the megaphone, lead the parade.
Comment by Chris Kerins (@YoChrisKerins) -
Speaking of leading the Parade…
Mark, why not just start a new stock market that follows new rules, and anyone trading on that particular stock market agrees to those new rules?
I bet there would be more than a few companies that would want to be a part of an intelligently designed stock market.
Comment by alexlogic -
What business is Wall Street in?
Rent extraction! and Wall Street damn sure knows it, even if investors don’t and regulators pretend not to know.
Comment by chris9059 (@chris9059) -
Really enlightening stuff Mark. Thanks for the great insight. – Len
Comment by lenmwilliams -
Mark – I hope somebody listens up. Glad you have a “loud” platform that might catch the ear of some politicians although I’m not hopeful that they will do anything. Politicians can’t get the easy things done that both parties even agree on. I will be voting everybody out and hope that new blood enters our government and things can get done.
Partisan politics have now gone to far on all sides and the only way to end it and get things done like making HFT less rewarding using your suggestions is to get new people in there. If not I fear just more of the same and we create our own path to destruction.
Anyway I think the suggestions you made to solve for this problem are very good ones. You may need to run for office to bring some common sense to Washington.
Comment by beatstockmarket -
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How could any sane person (except ft) fail to agree with you?
Comment by M.T. Frances -
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Check out this FOX Business News interview with David Weild, former Vice Chairman of Nasdaq on how to limit high frequency trading blunders. David, an expert on market structure and frequent speaker at NowStreet events, has been very vocal about how larger tick sizes will bring back capital formation, jobs and investor confidence. http://video.foxbusiness.com/v/1851881283001/how-to-limit-high-frequency-trading-blunders
Comment by nowstreetjournal -
2012 New Season of Shark Tank, lots of good articles, http://www.examiner.com/topic/shark-tank
2012 Emmy Nominated Shark Tank lost out to UnderCover Boss for the Emmy in Reality TV Programming this year.
There tends to be an Emmy bias towards location driven reality TV such as The Amazing Race, which had won seven years in a row up until 2010, but UnderCover Boss definitely created a lot of heartwarming moments.
However, being one of the final five nominees is still a pretty big deal.
Comment by alexlogic -
Mark,
This is your best blog that I have read. I work for Morgan Stanley and have been in the industry for 18 years. You are spot on…the solutions are so simple. I hope your ideas gain traction. Please continue to speak about this, because regulators and officials are far more likely to listen to you than me!
Shana Tova, Jason Parker
Sent from JP’s iPad ⛳
Comment by Jason Parker -
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Without the secondary market, and all the traders, the point of listing a stock disappears. If you can trade at a penny spread, should you really care if HFT is able to make money off of short term trades? If you are actually a long term investor do you care about the flash crash (I bought, adding liquidity and making a profit, not sure if I held everything for an hour, shame on me). The reason macro has entered the picture is political and no less the fault of the average voter than Wall Street folk. Idiots and governments levering up, and governments incentivizing it via low rate policy and dumb tax policy makes macro an issue. If high frequency trading has made it so you can’t use stop orders, were you really a long term investor in the first place?
Comment by Unrelated Nonsense (@Nonrelatedsense) -
Spot on! Another brilliant piece!. Check out http://nowstreetjournal.com/2012/08/10/good-knight-public-markets/ I think you might like this one too.
Comment by nowstreetjournal -
I love reading all this stuff about people worrying about money..Screw the wall street headache…simplify your life ….take a look at this article:
http://prakashchand.tumblr.com/post/32075459690/mexican-fisherman-meets-the-harvard-mba-know
Comment by Prakash Chand -
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I agree with whatshisname above who says Wall Street’s function is/oughtabe allocating capitial rather than creating financing for business, there is a difference.
Unfortunately it’s true function is fleecing Main Street.
Making bids and offers stand for some reasonable period of time and requiring identification of the source of bids and offers would solve a number of problems including those associated with distortions of price discovery resulting from activities of “Plunge Protection” and “Algos”.
The real solution is to break up the banks into separate brokerages, proprietary trading houses, insurance companies, retail deposit takers/mortgage lenders and analysts.
There is far too much money in the hands of far too few people, simple anti trust legislation and action against the banks would benefit the entire world beyond imagination.
Comment by David Zorn -
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Excellent commentary.
Comment by Melinda Augustina (@powerhungryfilm) -
I completely disagree with this post. Wall Street’s function is to allocate capital where it performs best not to “create capital for business.” Allocating capital is a very important part of capitalism and is made more efficient via high-speed trading, as opposed to humans on the trading floor shouting out orders.
Comment by BN Kausik (@bnkausik) -
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Thank you, Mark. As always you are a beacon of reason in this otherwise ridiculous world. Bob Marquette
Comment by bobbo103@comcast.net -
Hie,Wall Street is just a cartel for big business,lobbyists and politicians to control as much money as they can.
calendar
Comment by Derrick (@babicare) -
have written about this a lot for the last two years at pointsandfigures.com. Too often though, ideas get lost in the murk. There are clear reasons WS exists.
Comment by Jeffrey Carter (@pointsnfigures) -
How about writing about a worse evil…companies going IPO simply to cash in at the expense of share holders..”FACEBOOK”..two sides of this wooden nickle.
Comment by Bryon Franzen (@bkfViking123) -
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Speaking of “unintended consequences”, today’s HFT and the ruin of the stock market would not have been possible if Arthur Leavitt (SEC Commissioner, Clinton) not zealously pursued decimalization as a way to reduce the profit to market makers ostensibly helping the “little guy.” And, who would think that Ronald Reagan is at the root of the 49% of the people don’t pay taxes (see Earned Income Tax Credit). The road to hell is paved with good intentions!
Comment by Bob von Pentz -
Mark,
Good column, I agree with just about everything you said except for the zero percent tax on cap gains. It’s not that I think its a bad idea (its not) but I don’t think any cap gains taxes should be lower than income taxes. In my mind a lower cap gains tax implies that we place a higher value on investing than earning a wage, and would rather see people doing the former than the latter.
Comment by stefanich -
Other ways to achieve the same goal:
1. Institute a fee (a tenth of a cent?) for every cancelled order — HFT algos only execute one order in a thousand that they enter.
2. Require every order to be ‘live’ (uncancellable) for 0.2 seconds. The HFT arbitrageurs will be gone.
Comment by Immemorious (@immemorious) -
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The stock market is nothing but a scam. It’s just another way to transfer wealth from the middle class to the upper classes.
Contrary to popular misconception purchasing stock (shares of a company) is not investing.
.
Comment by Eric -
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If you subscribe to the view that over the long term it’s still the best companies with the strongest fundamentals that rise the most in stock market value, then the more noise and non-fundamental trading there is, the better it should be for astute investors capable of correctly pricing those fundamentals.
With all the noise and nonsensical price moves the chances of getting good companies at really low prices should go up.
I personally agree that this view might have pitfalls these days though. One caveat that comes to mind off the cuff is to avoid companies whose fundamentals could be affected by trading activity in their stocks. Highly leveraged companies like banks for instance could be pretty sensitive to the confidence hits they might take from massive stock price drops.
Comment by Alex Bugeja -
Couldn’t agree more. Great Blog!
Comment by David Yaron Nik -
This is all great info for the lay person who has no idea how far off point wall street has become, it makes perfect sense and I agree with most of it. the real question is HOW do you make these changes, WHO can we really rely on in a broken Washington D.C. where money directly from wall street controls the vote. These are the real questions that need to be answered.
Its troubling knowing that our elected officials are in the pockets of their parties and the lobbyists, and they treat their positions like short term investments. People like Jim Kramer and Mark Cuban have such amazing insight to the market and understand things in ways lay people or even our elected officials could not grasp, and its them because of their independent wealth and popularity who if in office may could be the only ones to help get changes such as this enacted, or at least brought to light on the campaign trail.
Mark Cuban just passed the ball to all Americans with writing articles like this, but I say the ball needs to be passed back. For change like this to happen we the people need you and/or the few others in your position to run for office and make this happen.
Comment by B&B (@TebowCircus) -
I’ve always admired your willingness to tell it like it is. Thank-you Mark!
I think through tax policy the government has encouraged people to pour billions and billions of dollars into their company sponsored 401k’s mutual fund offerings. It looks noble because you are offering a tax advantage to people and its people’s “retirement” money, but in essence, your average joe is feeding the wall street monster and allowing mutual funds to rule the capital world with someone else’s money. Packing boards of directors of actual companies with their buddies. Pissing back a few percent (maybe) to fund holders who just keep mindlessly sending money in cause its tax deferred. Meanwhile, the people sending their money to mutual funds don’t really own stock in any company. They don’t get a say in the board of directors.
Its a shame that people who want to send their retirement funds to their company sponsored 401k or Roth IRA, or whatever get tax advantages, but if I want to take my income and invest it in starting a small business, or buying more rental properties I have to do all that with AFTER tax dollars.
If my retirement plan is to invest in real estate, or buy an ice cream shop, or start a small business I have to use after tax dollars, but the drone who is willing to give his income to wall street and mutual funds gets tax advantages. Once again the government tax policy gets to dictate how we plan our financial future and pick winners and losers.
I’ve significantly lowered my contributions through my company sponsored 401k forgone the tax advantages, told wall street and mutual funds to pound sand. I get far better returns on my money investing it in other things. I wish more people would do the same and these mutual fund companies and wall street would not get to move the markets and pack the BOD’s of public companies with their buddies thanks to all the average rubes mindlessly sending them their hard earned money to do it with. Sending your money to a mutual fund is like giving an employee a salary and company car only to find out he was using the time and transportation to run his own business. Every day he did a thing or two to make you think he was working for you, but the whole time he was using your resources to make himself rich.
People need to be their own investor. No one will have your best interest in mind except you. Manage you own investments, whatever those investments may be. Look outside the box to invest. Not in stocks and certainly not in mutual funds. Run a side business. Make a product, offer a service.
Comment by wisconsincarry (@wisconsincarry) -
Pingback: Mark Cuban on the Business of Wall Street « Books I Read
You know, you could have the same, actually probably a stronger effect on HFT by raising taxes so they’d have to pay a penalty for robbing the rest of us instead of proposing that capital gains should be lowered even more in order to further line your own pocket.
Comment by Ray Charbonneau -
Thanks to Mr. Cuban for a timely & useful “macroview” of one of the most pressing issues of our time. Market institutions use to be in the business of building wealth in all sectors of the economy, small & large. Since Reagan it’s about a coven of well placed sociopaths gaming a vulnerable system & getting rich to the detriment of middle class investors. Building wealth & getting rich are very different matters.
Why can’t someone of the heft & stature of a Soros or a Buffett create a new trading institution that returns us to our former aims & integrity? I think that businesses would flock to it & better market stability would result.
Comment by Ruff Gleeson -
brt has satellite knowledge to break wall street s&p 500 numbers concistently BY USING BIG DATA WALL STREET IBM COMPUTERS. TOP PRICE IS 25 BILLION TO IN NVEST IN BRT SATELLITE MUSIC LIVE NATION AND Dbut will ceo.s like oracle lawrence ellison,hp meg whitman all scared. CEO warren buffet, BRKA, CEO CARLOS SLIM AMERICAN MOVIL HAVE BILLIONS TO ONVEST BUT BOEING COULD DO IT! bill gates ceo,s top usa billionaires investors are scared to invest in the cloud COMPUTING TECHNOLOGY IN SPACE WITH NASA SPACE X AND VIRGIN GALACTI 1ST TO BREAK TRILLION DOLLAR MARKET SELLING DIGITAL SATELLITE EXPORTS IN SPACE FOR USPS.
THE QUESTION IS WILL CEO MARK CUBAN OF DALLAS MAVERICKS INVEST? WITH THE FACEBOOK MONEY I SAVED YOU SO WHY NOT INVEST IN BRT?
PLEASE CONTACT ME AT 13473402034.
On Fri, Sep 21, 2012 at 9:32 AM, blog maverick
Comment by ceoleonpearson -
Pingback: Brain, Patents and Trading | Zappable
I’ve been saying this myself for years and watching the rise of the ammoral robots on my trading screen and seeing company balance sheets becoming increasingly meaningless. There are already many other ways that companies finance and exchange shares (true ownership) than through the normal stock markets. New investment vehicles are needed that are not offered on NASDAQ et al. and we need to make those accessible to small (true) investors via a new era of mutual funds. If black pools can exist then alternate markets can exist. Smart companies will choose those for their financing needs.
Comment by timeblind (@timeblind) -
PLEASE CALL ME MARK CUBAN BEFORE MAGIC JOHNSON ENTERPRISES BUY UP ALL THE STOCK AND SHARES OF BRT THIS DEAL IS A 3 TRILLION SATELLITE GOLD MINE IN SPACE WITH BOEING DISH NETWORK ,VIASAT SATELLITE CO AND DIRECTV MERGING A SATELLITE CELLPHONE WITH STAR WARS TECHNOLOGY TO SELL USA EXPORTS, DIGITAL MAIL, MUSIC, FOOD, WATER, SPACE CRAGO ASTEROID TOOLS AND SATELLITE BANKING FROM SPACE IS A TRILLION DOLLAR CASH COW HOW CPOULD YOU LOSE WITH WALMART SELLING BRT SATELLITE DEVICES AND MCDONALDS ADVERTISING IT IN OVER 200 COUNTRIES, GOOD LUCK MARK SEEK SEEKING ALPHA AND COMMON SENSE THE CLOUD IN SPACE IS THE CALIFORNIA GOLD RUSH OF THE 1880.2 CALL ME AT 1373402034 WE LOOK TO CLOSE A DEAL WITH MAGIC JOHNSON ENTERPRISES OCT 7TH 2012 SO IT,S NOT TO LATE, BRT WE STREAM OVER 400 BILLION DOLLARS OF USA EXPORTS, SPACE CARGO,COMBAT GOODS USPS SATELLITE MOBILE BANKING THE USPS DIGITAL MAIL WITH DISH NETWORK AND VIASAT SATELLITE CO IN 48 MONTHS,
Comment by Leon Pearson -
Can anybody point me to recent research on alternative matching algorithms; auctions etc… ?
Comment by wtpayne -
DEAR MARK CUBAN
AS A NEW CEO IN THE SATELLITE TECH GAME I INFORMED YOU FACE BOOK WAS A BAD INVESTMENT DEAL THE SAME WEEK YOU INVESTED MILLIONS. SO WEEK AFTER WEEK YOU SEEN FACEBOOKSLIPPING YOU WITH DRAWN YOUR INVESTMENT. NOW I AM ASKING YOU TO INVEST 60 MILLION DOLLARS IN A USPS 3 TRILLION DOLLAR DEAL THAT BILL GATES GAVE ME 1/2 OF THE IDEA AND YOU ARE SCARED TO INVEST BUT NOBODY IS USING THE CLOUD IN SPACE IN WHICH YOU SAID IT IS A GOLD MINE,
MAGIC JOHNSON ENTERPRISES IS NOW STEPPING UP TO THE OKATE TO INVEST 1 BILLION TO MAKE 3 TRILLION DOLLARS SELLING USA EXPORTS, US POSTAL SERVICE DIGITAL MAIL IN WHICH JAPAN DOCOM TELECOM GENERATED 3 TRILLION DOLLARS ALREADY DELIVERING JAPAN MAIL TO THE UK USING SATELLITES,
BRT IS A NEW SATELLITE BUSINESS MODEL USING THE CLOUD IN SPACE WITH A NEW 4G LTE SATELLITE CELLPHONE WILL CORNER THE 31 TRILLION DOLLAR SATELLITE CELLPHONE MARKET SELLING EVERYTHING FROM SPACE IS THE NEXT TECH BUBBLE WITH VIASAT SATELLITE CO DIRECTV AND DISH NETWORK.
MY SATELLITE CO ALREADY HAS A ARMY,MARINES NAVY US AIR FORCE CONTRACT DELIVERING TELECOMMUNICATIONS TO SOLDIERS IN IRAQ NOW WE WILL DELIVER THEIR DIGITAL MAIL COMBAT GOODS ANS SUPPLIES TO NASA TO MERGING STAR WARS TECHNOLOGY AND THE CLOUD WIT AMAZON,COM ,ORACLE IS THE FUTURE TRILLION DOLLAR IDEA,
ONLY TRUE BILLIONAIERS LIKE BILL GATES INVESTS IN BILLION DOLLAR STARUPS AND WARRNE BUFFET AND MAGIC JOHNSON ARE YOU A TRUE BILLIONAIRE?
THE TIME FOR TALKNG IS OVER THE NEXT GREAT BULL RUN IS SATELLITES IN SPACE WITH CLOUD COMPUTING TO DELIVER ISA SOCIAL MEDIA COMMERCE GLOBALLY WITH SATELLITE DEVICES ALL THE WAY TO MARS BY 2020 WHEN S[ACE X GOS BACK TO THE MOON,
BRT AND MICROSOFT AND MAGIC JOHNSONE ENTERPRPISE ARE ABOUT TO BREAK WALL STREET NUMBERS AND BILL GATES JUST INVESTED 12 MILLION IN A SATELLITE START-UP BECAUSE THE NEXT GREAT BULL RUN MARKET IS STAR WARS TECHNOLOGY AND BTY S[ACEX AND VIRGIN GALACTIC AND SIERRA NEVADA CORPORATION ARE THE NEXT PIONEERS IN THIS MARKET, THE KEY IS USING THE CLOUD IN SPACE WITH NASA AND THE US POSTAL SERVICE TO DELIVER GOODS FROM THE USA GASTER QUICKER, SIMPLER THAN ANY OTHER COUNTRY IN THE WORLD AND BRT HAS THE TECHNOLGY SO WHY NOT FOLLOW ME AND BILL GATAES WITH THE MONEY I SAVE D YOU FROM LOSING WITH FACE BOOK?
GOOGLE, IBM SUPER FAST WATSON CLOUD COMPUTERS WILL BREAK WALL STREET 500 S&P NUMBERS CONNECTING THEM TO NEW SOLAR POWER RELAY SATELLITES TO DELIVER ASTEROID MINING PROPOELLANT TO EARTH FOR SPACE VIYAGE AND BRT HAS THE SATELLITE MOBILE DEVICE FOR DEEP SPACE TRANSMISSIONS TO DELIVER THE GOODS FROM SPACE TO CHINA.
AS A SMART CEO IF YOU SEE CHINA EXPORT IMPORT BANK REQUESTING TO GIVE BRT 6 BILLION IN ECA SATELLITE FUNDING IT MUST BE FOR A REASON BECAUSE THEY KNOW THAT SATELLITE MOBILE E-COMMERCE IS THE NEXT TECH BUBBLE .
READ SPACE NEWS ARTICLE OCTOBER 17,2011 AND SEE THAT JP MORGAN FRED TURPIN MANAGIG DIRECTOR SAID THE SAME THING WHO EVER PRESIDENT BARACK OBAMA AND THE ADMINISTRATION GIVS THE SATELLITE EXPORT LICENSE TO SELL USA GOODS THEY WILL ALSO INVEST 6 BILLION DOLLARS.
SO MARK CONTACT JPM MORGAN CHASE BANK IN DALLAS AND INVESTIGATE MY SATELLITE EXPORT CLAIM BEFORE YOU INVITE ME ON SHARK TANK AND THEN ASK YOURSELF AGAIN IS INVESTING IN THE CLOUD IN SPACE IN A GOV,T HOSTED PAYLOAD SATELLITE WITH BOEING AND THE US POSTAL SERVICE CAN REALLY MAKE TRILLIONS WELL CHINA THINKS SO AS SO DOES FRED TURPIN IN JPM MORGAN CHASE DALL GOVT EXPORT IMPORT BANK CALL HIM UP AND READ THE SPACE NEWS ARTILC IN OCT 17TH 2011 NEWSPAPER IT TALKS ABOUT SATELLITE EXPORT DELIVERY IN SPACE.
TRILIONS CAN BE MADE BY INVESTING IN BRT, CONGRESS, U S SENATE, HILLARY CLINTON AND PRESIDENT BARACK OBAMA ALL BACKED MY SATELLITE IDEA AND BILL GATES INVESTED IN KYOMENTS A SAETTLE BASED NEW SATELLITE START UP MARK SO I MUST BE ON TO SOMETHING.
LIKE MARTIN LUTHER KING SAID JUDGE A MAN BY HIS CHARARTER AND INTELLECT NOT THE COLOR OF HIS SKIN.CLOUD COMPUTING IN SPACE WILL CHANGE THE GAME DELIVERING MAIL, FOOD, WATER, COMBAT GOODS AND NON COMMERCIAL COMBAT GOODS INTO 215 COUNTRIES AND DOUBLE THE USA GNP IN 2013 GUARANTEED. AS A TECH CEO YOU KNOW COMPUTERS AND WHAT MICROSOFT AND FACE BOOK DID USING THEM AND.
I READ YOUR CRN MAGAZIN STORIES YOU PERSONALLY RAN 6 TECH COMPANIES YOURSLF WITH 25 SALESMAN, WELL I AM USING 215 SOCIAL MEDIA SALESMN AROUND THE CLOCK 24 HOURS A DAY TO SELL USA GOODS WITH DISH NETWORK AND DIRECTV, COMCAST AND MAGIC JOHNSON ENTERPRISES WITH WALMART STORES SEAR TARGET VISA AND 7 ELEVEN CVC GE ,
BRT IS SLATED TO BEAT THE REVENUE OF MICROSFT, FACEBOOK GOOGLE AND COMPAQ. . ADDING SPECIAL CHIPS IN A SATELLITE CELLPHONE FROM NASA FOR DEEP SPACE TRANSMISSION WILL ENABLE BRT TO DELIVER SATELLITE MUSIC COMCERTS ANYWHERE, ANYTIME,ANYPLACE PLUS FOOD WATER, SATELLITE BANKING.
WALMART SENT ME A BROCHURE FROM MR GOLD IN CHARGE OF WALMART INVESTORS TEAM HE PERSOMALLY ASKED TO SELL MY NEW 4G LTE CLOUD COMPUTING SATELLITE DEVICES LAST MONTH .
BRT SOCIAL COMMERCE SATELLITE NETWORK WILL CRUSH FACEBOOK MARK ZUCKENBERG SUBSCRIBERS NUMBERS IN CHINA ALONE 2 BILLION PEOPLE AM DINDIA 1 BILLION PEOPLE WILL ALL BUT BRT NEW SATELLITE DEVICE TO BUY USA GOODS AND GET THEIR MAIL FROM THE US POSTAL SERVICE.
WALMART REALIZES THIS AND SHOCKED WALL STREET YESTERDAY AND DROPPED AMAZON KINDLE TABLET YESTERDAY. WHY WALMART DID THAT READ MY BUSINESS PLAN AGAIN MARK SATELLITES COVER ALL 7 CONTINENTS SO PEOPLE IN CHINA INDIA, EUROPE,JAPAN SOUTH KOREA MEXICO, BRAZIL AFRICA EUROPE CAN ALL GET USA GOODS 7 DAYS A WEEK VIA SATELLITE.
EVERY TEN YEARS NEW TECHNOLOGY CHANGES THE GAME AND BRT IS USING STAR WARS TECHNOLOGY MEANT FOR THE MILITARY IN MOBILE DEVICES TO ASSIT PRESIDENT BARACK OBAMA CREATE 10 MILLION NEW JOBS FOR MINORITIES BY OPENING UP THE INTERNET FOR FREE ENTERPRISE.
GOOGLE,FACEBOOK ALL TRIED TO BLOCK MY SATELLITE INTERNET DEAL BECAUSE NOW POOR PROPLR CAN COMPETE AGAINST THEM OVER THE WORLD WIDE WEB AND THAT IS WHY AND HOW BRT 3 TRILLION DOLLAR SATELLITE IDEA WAS APPROVED BY THE US GOV,T AND F.C.C.
I MIGHT BE THE SMARTEST TECH CEO AFTER PRESIDENT BARACK OBAMA REELECTION FOR SENDING MY SATELLITE IDEA TO HIM 1ST. AFTER CONTACTING BILL GATES FOR 5 MILLION HE INVESTED IN ANOTHER SATELLITE START-UP MARK WHY BECAUSE HE TOLD WASHINGTON DC CONGRESS SATELLITE EXPORT DIVISION MY SATELLITE FINANCIAL NUMBERS ARE REAL.
BRT IS USING 20 SATELLITE OR MORE CONNECTED TO BRT DEVICE TO SELL USA EXPORTS ABROAD FROM SEARS,IKEA,DEERE AND OTHER US CORPORATIONS .
THIS SATELLTE DEAL WITH THE US POSTAL SERVICE AND WALMART IN CHINA WILL BOOST AND DOUBLE USA EXPORTS ABROAD IN 2012. NOW THE ENTIRE GLOBAL MARKET EUROPE AND USA GNP WILL GO UP ONCE WE LET WALMART SELL OUR DEVICES IN 215 STORES WORLDWIDE.
SO MARK DO YOUR RESEARCH AND LOOK WHERE FACE BOOK IS AT AND EXXON WKO MADE 221 BILLION LAST YEAR. BRT 60 MILLION DOLLAR INVESTMEN FROM YOU COULD BRING IN 6 BILLION BY THE END OF 2013 OR 2014 IF YOU INVEST NOW.
SO BE SMART ACCEPT MY BUSINESS PLAN TODAY I WILL SEND IT IN TOYOU OVER YOUR BLOG AND CONTACT MAGIC JOHNSON.ENTERPRISES AND TELL HIM I SAVED YOU MONEY ON THE FACE BOOK IPO AND YOU PULLED YOUR MONEY OUT NOW YOU ALSO WANT TO INVEST INTO BRT.
THIS WILL GIVE YOU A HUGE GLOBAL STAKE IN THE NEXT TECH BUBBLE JOINING NASA USPS IN SPACE TO DELIVER USA PRODUCTS FROM YOUR ENTIRE PORTFOLIO GLOBALLY WITH DISH NETWORK AND VIASAT SATELLITE CO AND DIRECTV COMCAST AND CABLEVISION ADVERTISONG ALL OF YOUR INVESTMENT STORES YOU OWN CAN NOW SELL YOUR PRODUCTS VIA SATELLITE AND THE US POSTAL SERVICE WILL DELIVER YOUR MERCHANDISE TO 5 BILLION NEW USA CUSTOMERS BY 2018.
LIKE THEY SAY BULLS MAKE MONEY, BEARS MAKE MONEY AND PIGS LIKE FACE BOOK GET SLAUGHTERED BY NOT UPGRADING THEIR TECHNOLOGY TO THE CLOUD IN SPACE WITH STAR WARS TECHNOLOGY IS THE NEXT TECH BUBBLE.
THIS IS PRESIDENT BARACK OBAMA NEW SATELLITE INTERNET MOBILE E-COMMERCE STRATEGY TO GET BACK TO WORK AND HE GOT IT FROM ME AND SECRETARY OF STATE HILLARY CLINTON AND PRESIDENT BIILL CLINTON WITH CEO BILL GATES OF MICROSOFT ENDORESED SO I MUST BE ON TO SOMETHING TRILLION DOLLAR BIG.
THE PROOF IS IN THE PUDDING, IBM MICROSOFT ORACLE ARE ALL INTERESTED JOINING ME IN SPACE WITH BOEING WHO JUST MADE ME A DEFENSE SPACE CONTARCTOR TO SELL USA COMBAT GOODS OBER THE INTERNET USING SATELLITE CDELLPHONES AND TABLETS IS NOT EVEN HEARD OF UNTIL I ARRIVED ON THE SCENE.
MY BRT SATELLITE ENTERTAINMENT PLAN SAVES THE US POSTAL SERVICE AND THE ENTIRE USA GLOBAL ECONOMY USING SATELLITES AND STAR WARS TECHNOLOGY THAT WAS MADE FOR THE MILITARY NOT FOR THE USE OF THE US ECONOMY TO GENERATE REVENUE BOY HOW TECHNOLOGY FLIPS AND SAVES AMERICA AND EUROPE IF THEY USE THE CLOUD IN SPACE FOR CROSS BORDER BANKING TRANSMISSIONS THEY WILL ALSO GET OUT OF THE RESCESSION TO.
GOOD LUCK MARK ON CONTACTING ABC TO PUT ME ON SHARK TANK AGAIN, THIS DEAL COULD HELP YOUR PARTNERS AS WELL SELLING THEIR INVESTMENT PORTFOLIO COMPAMY PRODUCTS COULD BOOST THEIR PROFIT MARGINS AS WELL.
BRT IS IN BUSINESS TO ASSIST THE POOR. RICH AMD MIDDLECLASS TO GIVE ALL USA CORPORATIONS A BOOST TO GET THEIR PRODUCTS IN CHINA AND SOUTH KOREA VIA SATELLITE.APPLE OR AMAZON,COM KINDLE TABLETS DOES NOT USE THE CLOUD AND SATELLUTES AND A GLOBAL WEB PORTAL TO REACH THE POOR,RICH AND MIDDLE CLASS IN EVERY COUNTRY LIKE WE DO AND THE US POSTAL SERVICE FEDEX, UPS AND DH WILL DELIVER IN SOUTH AMERICA JUNLES AND DESERTS IN DUBAI APPLE CELLPHONES OR SAMSUNG DOES NOT WORK IN THE MOUNTAINS OR DESERTS BUT BRT DEVICES DOES.
ADDING SATELLITE STREAMING SELLING COMBAT GOODS FOR BOEING IS A 1.5 TRILLION DOLLAR MARKET, PLUS CREDIT CARD SHOPPING GLOBALLY IS A 1 TRILLION DOLLAR MARKET THEN MUSIC DIGITAL MAIL FOOD, COMMODITIES, WALL STREET BANKING, TRADING WE CAN RAMP UP IVER 1 TRILLION MOBILE E-COMMERCE TRANSACTIONS PER WEEK.
Comment by Leon Pearson -
Dead on. I am in the fiber business and see/hear about the amount of money that is being spent to save on latency. Good for my business but not necessarily good overall.
HFT is more about the “haves” getting over on the “have nots” than most of the other examples usually given.
Comment by TE -
Pingback: Current Mortgage Rates for Friday September 21 2012 | Mortgage Rates & Trends: Mortgage Blog
Well said. This is a problem with any system that makes money that is left unchecked. It starts out serving a useful purpose and ends up being psycho-optimized to the point it becomes predatory and solely devoted to profit instead of serving the needs of people or businesses, except the people and businesses making money directly off the system (the house). Without a strong system of checks and balances in place the system becomes distorted. The government used to provide a regulating hand until that system too became distorted by profit.
Comment by Robert Oschler (@roschler) -
Good ideas, as far as I’m concerned–Mark, we need you in the Treasury or the Fed, getting things done!
Comment by Brade -
Commenting on an old post – http://blogmaverick.com/2012/03/18/dont-follow-your-passion-follow-your-effort
How do you decide where to place your effort?
Comment by Mullet Reeve -
Instead of trying to get bickering lawmakers to what is obviously broken, the market has created alternatives such as kickstarter and pro founder. Yes, these platforms pale in comparison to real stock exchanges in size and power, but who’s to say companies won’t be launching their IPOs on these types of platforms in 5 years?
Comment by Tom O'Dea -
Great article. Now can you run for president…like now?!!!!
Comment by Deborah Mayfield -
Hopefully the JOBS Act will change things letting smaller companies raise more money from private, non-accredited investors.
Comment by Dan Reich (@DanReich) -
Mark, I agree that the system no longer meets its original, intended purpose, and that change is needed. Your tax on “day trading” is a valid idea. I’m not sure you could ever get Congress to pass it, but I like it.
As for capital gains, going to zero rate would be good, but the left will cry that only the 1% will be helped by that (never mind that the 1% accounts for 37% of tax revenues already). I think you could reduce the time period for tax-free dividends to two years from five.
Capital gains rates don’t apply to active traders now. If you hold a stock for a short period, you pay regular income tax rates on your gains. Capital gains rates require that you own an asset for a minimum specified period already.
Some say that speculation increases gas prices significantly. I’ve seen arguments to support this, but I don’t believe that the impact is nearly as large as advertised. This is still an area where more could be done to ensure that trading that was initially intended to provide liquidity to commodities markets gets back to that purpose, rather than driving up the price of these commodities purely so that speculators can profit at the expense of consumers.
Nice job on the post. Keep up the good work!
Comment by Randall Parker Mba -
Good insight Mark but the Republicans and Democrats can’t agree which browser to use to read this blog post.
Comment by Enrico Laurente (@EnricoLaurente) -
I have written on my blog (www.moneybeagle.com) a number of times how I think HFT is a scam and basically skims off the top of retail investors, most of which are comprised of 401(k) holders and such, who are now watching these HFT traders essentially steal their money. This post might be the best I’ve ever seen written on the topic. Thanks, Mark.
Also wrote a post earlier in the week about you. Keep inspiring!
Comment by moneybeagle -
Reblogged this on And it's GOOD.
Comment by christopherlilly -