...your idea just seems to me unnecessary and trying to fix something that's not broken. If investment fund managers are wrong about companies like Google then so what?
The "so what?" has to do with the sheer amount of money in play. The "madness of crowds" is economically destabalizing.
Just about every purchase is now more attractive and safer. There's no motive to take the risk that the stock might drop.
Sure there is. Under my proposal, there is simply less motive to take quick profits. There is still the risk of loss and the potential for gain, but this proposal would see the return of dividends as one of the motivating factors in investment.
I have to wait five years to capitalize on it; and the stock has five years - five years of potential war, pestilence, nuclear attacks, financial mismangement, crime, and god knows what - in which it can drop below my initial purchase price and leave me with less than I started.
Then sell, if you think you've made a bad investment. If you've made a good investment, you'll just need to wait five years in order to realize your profits tax-free. The longer you wait, the more profit you can keep; this enourages you to think about the tangible value of your investment, rather than the moment-to-moment feelings of the mob.
1) You're making investing in the stock market akin to investing in the traditionally safer but less volatile capital retreats...You're throttling the profit potential but without staunching the loss potential, effectively making investing in resources more viable than investing in innovation...
Perhaps so, in which case the same mechanism should be applied to commodities.
2) Your plan throttles innovation. People invest in what they see being the technology of tomorrow, and companies IPO to generate the capital required to do that R&D and bring that innovation to the market as quickly as possible.
You're buying into the myth, not the reality. People in fact, hand their pension funds over to money managers who mostly spend their time trying to out-guess other money managers. In other words, most investment decisions are made with an eye to what is sexy, not what might make good investments.
Your plan requires investors to be clairvoyant.
No more so than now. The only difference is they have to be better clairvoyants in order to make significant profits.
...If they want to realize the profit from their risk in investing in innovation fully, the investor has to be able to see five years into the future...All for an assumption you seem to have taken as a presupposition: that all stocks accrue value.
Don't be silly, I did not presume that all stocks accrue value. Nor did I assume or even imply that my proposal doesn't permit mis-steps. Quite the opposite. My proposal acknowledges that mis-steps sometimes happen, but encourages investors to take the long view and not (for example) dump their shares in Google its executive speaks plain sense.
3) You slash the population of stock brokers in half but unleash a trillion new lawyers on the planet...Now into the second year of my investment, where I finally stand to gain all of 25% of what I actually gained for my risk...- it is the management of the former fiscal year who is responsible for any fuck-ups.
And they are not now? The only difference between the current situation and my proposal is the time-scale.
It seems to me that erroneous financial statements or ambiguous press releases from any company now become litigable back into previous fiscal years.
And how is this different from the current situation?
...with such a long chronological gap forced upon me by a technophobic innovation-hating government in which I can finally realize the fruits of my five years of clairvoyance, companies now become accountable for their statements five years into the future.
This won't be a problem if companies don't lie. Incidentally, I used the 5-year model for sake of argument; I would be interested in hearing an economist's analysis of the most efficient way of setting up the basic structure - ie, at what point does the benefit of longer-term thinking get outweighed by the loss of investor interest in investing?
no subject
The "so what?" has to do with the sheer amount of money in play. The "madness of crowds" is economically destabalizing.
Just about every purchase is now more attractive and safer. There's no motive to take the risk that the stock might drop.
Sure there is. Under my proposal, there is simply less motive to take quick profits. There is still the risk of loss and the potential for gain, but this proposal would see the return of dividends as one of the motivating factors in investment.
I have to wait five years to capitalize on it; and the stock has five years - five years of potential war, pestilence, nuclear attacks, financial mismangement, crime, and god knows what - in which it can drop below my initial purchase price and leave me with less than I started.
Then sell, if you think you've made a bad investment. If you've made a good investment, you'll just need to wait five years in order to realize your profits tax-free. The longer you wait, the more profit you can keep; this enourages you to think about the tangible value of your investment, rather than the moment-to-moment feelings of the mob.
1) You're making investing in the stock market akin to investing in the traditionally safer but less volatile capital retreats...You're throttling the profit potential but without staunching the loss potential, effectively making investing in resources more viable than investing in innovation...
Perhaps so, in which case the same mechanism should be applied to commodities.
2) Your plan throttles innovation. People invest in what they see being the technology of tomorrow, and companies IPO to generate the capital required to do that R&D and bring that innovation to the market as quickly as possible.
You're buying into the myth, not the reality. People in fact, hand their pension funds over to money managers who mostly spend their time trying to out-guess other money managers. In other words, most investment decisions are made with an eye to what is sexy, not what might make good investments.
Your plan requires investors to be clairvoyant.
No more so than now. The only difference is they have to be better clairvoyants in order to make significant profits.
...If they want to realize the profit from their risk in investing in innovation fully, the investor has to be able to see five years into the future...All for an assumption you seem to have taken as a presupposition: that all stocks accrue value.
Don't be silly, I did not presume that all stocks accrue value. Nor did I assume or even imply that my proposal doesn't permit mis-steps. Quite the opposite. My proposal acknowledges that mis-steps sometimes happen, but encourages investors to take the long view and not (for example) dump their shares in Google its executive speaks plain sense.
3) You slash the population of stock brokers in half but unleash a trillion new lawyers on the planet...Now into the second year of my investment, where I finally stand to gain all of 25% of what I actually gained for my risk...- it is the management of the former fiscal year who is responsible for any fuck-ups.
And they are not now? The only difference between the current situation and my proposal is the time-scale.
It seems to me that erroneous financial statements or ambiguous press releases from any company now become litigable back into previous fiscal years.
And how is this different from the current situation?
...with such a long chronological gap forced upon me by a technophobic innovation-hating government in which I can finally realize the fruits of my five years of clairvoyance, companies now become accountable for their statements five years into the future.
This won't be a problem if companies don't lie. Incidentally, I used the 5-year model for sake of argument; I would be interested in hearing an economist's analysis of the most efficient way of setting up the basic structure - ie, at what point does the benefit of longer-term thinking get outweighed by the loss of investor interest in investing?