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This Proposal Could End Active Trading


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#21 CLK

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Posted 14 January 2009 - 10:45 PM

I hope they don't. But unless the whole world adopts this the US will not be able to compete anymore. Money leaves, stocks crater, corporations have no more leverage to borrow against their stock to fund operations.

#22 hitoya

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Posted 14 January 2009 - 10:49 PM

[/quote] He says that many "active" traders trade in excess of $10,000,000 worth of stock per year. What that means is that a tax of $25K-$50K per year would be levied on these traders, depending on exactly how a potential new law would read. IT [/quote] I am one of them. Using IB, it costs me over $15k per year. With $50K more commission, I got to to move out of the country. The brokerage companies are going to be against this also.

#23 vitaminm

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Posted 14 January 2009 - 10:57 PM

Using IB, it costs me over $15k per year 15k/5=3000 trades/yr /52 wk=57 trades/wk !! based on trades/time what's annual return?

Edited by vitaminm, 14 January 2009 - 10:59 PM.

vitaminm

#24 Entropy3.0

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Posted 14 January 2009 - 10:58 PM

Talk about locking the door after the horse :lol: ...this tax would have been fine during the speculative frenzy of the last 15years (excluding 2000-2002)...you know, when the FED claimed there was nothing they could do to stop obvious excessive speculation that forerun this mess, of course they couldn't think of this idea until now right? during the worst kick off to a bear market since and including 1929/1930. :o :lol: ..perfect time to try to stop speculation! .. and THIS ladies and gentlemen, is yet another example of the great thinking of academic minds, the same ones who are behind most of the mess were in. I've read two reasons for the proposed tax - 1. To raise revenue. 2. To prevent speculation. Lets deal with (2) first as is beyond idiotic. The tax has been implemented before and was only repealed I believe in the 1960's, and plenty of speculative excesses occured with it, including the 1920's. It also currently exists in many other countries right now, and they have had the same crash as USA i.e. this is total nonsense. IT doesn't stop speculation, it just will alter the form of it - day traders/scalpers will find other instruements, or markets to trade where they can avoid it. For those that remain in equities, they will use much greater leverage, and a ton of ETF's of 10X or 100X indexes will emerge - so my 1K day trade, will be like 10K or 100K, but it will avoid the tax, we already have these funds emerging with high leverage now. What about (1) - There's a logical problem. To achieve less speculation it means less trading, which means less revenue, so goals (1) and (2) are in opposition. This is myopic thinking. The USA has a economic premium due to its position as world most prominent market atttracting foreign speculators. If foreign speculative capital decide to move out to another market, the economic costs will dwarf any revenue this might raise. Great, we will have little speculation, at the cost of high capital costs, lower assets values ( stocks, houses ), lost jobs etc Here's a novel idea (deep sarcasm implied), If the objective is to raise revenue, how about not spending 1Trillion on worthless non productive projects. Instead do the old fashioned idea of increasing productive capacity in the economy, and ween USA off the credit/debt fake reality govt/FED have been encouraging for 20years that led to all this, and who continue with the same one trick of debt creation as the short term fix for any problem knowing they won't be around long term to have to answer for their recklessness. best, Mark.

Edited by entropy, 14 January 2009 - 11:03 PM.

Pick a system, follow the system, ignore everything else.

#25 Rogerdodger

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Posted 14 January 2009 - 11:02 PM

I just want to puke. <_< Once this camel gets it's nose into the tent... "We need to raise the tax, but it will only affect the rich and help the poor. It's for the children. It's for the planet." They may also come up with an internet posting tax since the internet is causing global warming. I just hope it's not retroactive.

Edited by Rogerdodger, 14 January 2009 - 11:12 PM.


#26 IndexTrader

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Posted 14 January 2009 - 11:12 PM

For those that remain in equities, they will use much greater leverage, and a ton of ETF's of 10X or 100X indexes will emerge - so my 1K day trade, will be like 10K or 100K,
but it will avoid the tax, we already have these funds emerging with high leverage now.


Mark.


My guess is ETFs would not avoid the tax, if that's what you're saying. My understanding is that they would tax options, futures etc. Though they didn't specifically mention ETFs, why not?

IT

#27 pdx5

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Posted 14 January 2009 - 11:16 PM

I like this tax. It will get rid of ST speculators.
It is the Change You can Believe! :lol:

Edited by pdx5, 14 January 2009 - 11:17 PM.

"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule

#28 johngeorge

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Posted 14 January 2009 - 11:25 PM

All the arguments presented here against a transaction tax sound like a chicken little warning to me. People are still going to trade and, guess what, the institutiions will be paying the lions share of the tax. They are the ones doing the constant day trades with their computer programs. And guess what, they dont care about any tax............they play with opm. Trillions of dollars in debt have to be paid off somehow, duh! Transactions taxes are a start along with higher gasoline taxes, a VAT, and others. Wealthy people who want the security and protection of living in the greatest and strongest country in the world may soon have to pay a tiny portion of the expenses in operating it. The fun has been had, now it is clean up time.
Peace
johngeorge

#29 Entropy3.0

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Posted 14 January 2009 - 11:31 PM

For those that remain in equities, they will use much greater leverage, and a ton of ETF's of 10X or 100X indexes will emerge - so my 1K day trade, will be like 10K or 100K,
but it will avoid the tax, we already have these funds emerging with high leverage now.


Mark.


My guess is ETFs would not avoid the tax, if that's what you're saying. My understanding is that they would tax options, futures etc. Though they didn't specifically mention ETFs, why not?

IT


Oh no doubt IT, i'm sure it will include ETF's...but if its levied against the $ amount being bought/sold, then i'm going to put my 10K trade into a high beta ETF like oil, or like
emerging markets, or 2X leverage tracking ultra profunds etc

best,
Mark.
Pick a system, follow the system, ignore everything else.

#30 hitoya

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Posted 14 January 2009 - 11:32 PM

Using IB, it costs me over $15k per year

15k/5=3000 trades/yr /52 wk=57 trades/wk !!

based on trades/time what's annual return?


In bull market, I trade only breakout stocks. Annual returns vary sometimes over 100%, sometimes less than 50%, but always positive. In bear market, I trade less and mostly on ETFs and the return is a lot lower. Only single digit last year.