61 replies to this topic

[tommyt]

the markets (not government) always take care of the excesses themselves...including speculators. Just a short while ago I heard "speculators" were causing oil to skyrocket to over $140/brl...where did all that talk go after oil dropped to $35? Just a bunch of nonsense to try and fill the holes of the dam bursting.

[IndexTrader]

I agree that "active is a relative word". However, in this context, perhaps Green and Co could shed some light on what "active" means. 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.

I'm not concerned if you disagree and think this tax is a good thing. But one thing it is going to do is reduce liquidity in the markets.

By the way, your blog doesn't appear at your link, or in the list of blogs on TT.

IT

Just to follow up on this...an example. A trader who trades 1000 shares of a $50 stock in and out each day trades $50,000 in and $50,000 out. $100,000 per day. That's $2,000,000 per month. That's $24,000,000 per year. Apply the transaction tax of .25% is $60,000 per year.

By the way, SPY is around $83 per share. QQQQ is just under $30.

You could trade 1000 shares of a $50 stock with $25000. In other words, with a transaction tax you would need to make $60K with your $25K just to break even....before commission.

With numbers like that I think the day trade business dies a very quick death.

IT

[IYB]

You guys aren't doing the math.

If they do this, I'm moving. Period.

That's my conclusion on both parts, too, Mark. How in the world can people who trade for a living look at 1500% transaction cost increases**, and act as though this is just a "sacrifice we need to make in return for living in this great country"?

I'm as patriotic as any, probably more than most-- but as you say, folks do the math! Trading as a career will cease to exist in America. Period.

When I am forced to choose between my country and my career - then something has gone incredibly wrong in America!

**{Using IT's earlier example of an added $200 on a round trip of 1000 shares at 40- cost without the tax = $14 round trip, with tax $214 round trip.}

[PrincelyM]

Here's an article that was in the NY Times today. A 1/4% tranaction tax perhaps levied when you buy and when you sell. So if you bought and sold 1000 shares at 20, it would cost you $100, win or lose. This would also be levied on futures and options. As I see it, it would end active trading as this cost would become prohibitive. I would suggest that you speak against this, and resist it vigorously at every level, to include with your Congressmen and Senators. This could potentially become a popular idea amongst non-traders, and uninformed "economists".

http://www.nytimes.c...rbert.html?_r=2

IT

IT, for whats its worth, here are my 2cents on this...From someone who has been there before...I dont trade the US mkts...emerging ONLY...Indian markets only because thats the way I am set up..I visit TT mostly to learn more and to get ideas coz other mkts essentially follow US no matter what anyone says...Some time ago, the Indian market authorities did something similar to this....Sure volumes decreased and sure day traders were screwed..but overall it did not make that much of a difference..I mean to say ppl continued trading as is...sure there are downsides but if the authorities want to do this, they WILL no matter what...and we will trade no matter what....just my 2 cents

Let me just say that I know next to nothing about the Indian market. Perhaps NAV will weigh in. But in your own post, you say volume decreased. But for some reason you then go on to say that it didn't make much difference. Huh? Volume decreased, meaning liquidity decreased. That probably means execution cost went up. So something definitely changed. Money moved elsewhere. And people were left paying a cost that in a sense was hidden because they could not compare the new higher execution cost with what existed before. If they could they might have complained more. And, with due respect, the Indian markets really don't compare to the US markets do they?

If the politicians do this, people will change their trading habits. In fact, the article at the link says this is a goal. You won't have a choice because you won't be able to trade actively with that type of overhead. Let me see if I can compare. When I first got into the business I was a stock broker. Commissions were huge. Commissions were such that it might take $1-$2 move to cover them in and out. In those days, in the mid-70s no one day traded at all. You couldn't. And at that time, on a heavy day, we traded 30 million shares. Compare that to today.

Let's forget for a moment about the impact on individual traders. Again, active traders will simply cease to exist. But further, the brokerage industry as it existed will cease to exist too. You think Ameritrade will charge $10 a trade, or IB will charge $1, when trading activity dries up. Of course not. Commissions rise. That's just a start of what will change.

IT

Hi IT, you may be right..ppl might move elsewhere..what i meant to say having been there before is that ppl who had to trade, did(ppl who did not have much of an option continued as before)....but volumes did decrease...so you may be right..I guess ppl who have options will move on..ppl who do not might change their trading habits...bit of a grey arey I think....

[OEXCHAOS]

New Zealand is the freest country in the world, and they want folks like us. I'm just sayin'. Of course, if this gets any traction, watch some of the "demonstrations" that Wall St. puts on. The average joe might oppose this when his pension falls another 30%. M

[zoropb]

You guys aren't doing the math.

If they do this, I'm moving. Period.

I'll deal with inferior markets that I and those like me can improve. They can run this country into the ground. Stock up on shotgun shells fella's. I'm outta here.

Seriously. TT will go away, because there won't be a market for our clientele and there won't be a business for our better advertisers.

Sure, we'll have a community out of NZ, but it'll be a hobby. If that.

Think on it.
.25% is a lot when the average return might be less than 1%.

M

Have you given any thought to where you would go?

You can stay right where you are and trade from offshore where ever. Lots and lots of funds and privates do. >

I think once they realize that the bigger tax they receive on propped up asset prices is way more than what this proposal will bring in. The math says they will not do it. Unless they assume everyone will pay this just because it is the US. WRONG money is like water it finds the path of least resistance.

Z

[cgnx]

You guys are kidding yourselves. You will be paying whatever tax they bring. Heck, commisions use to be around $100 a trade or more. Today it is incredibly cheap to trade. Trade offshore? Yeah right. Good luck. All this scalping and such adds nothing. How much scalping and daytrading you think occurs with Warren Buffetts stock? It is useless trading except for the leeches that do it. It sure is nice to have cheap trading costs, we have been blessed. So you think your in and out daytrades contribute to society? Your fooling yourself. Society would get along just fine without you and all the rest of you.

[cgnx]

I'm not saying I want the tax. I hate all taxes just like the next guy. Just seems like they never listen to us anyway.

[cgnx]

the .25 % number may be on the high side. Imagine if you could get just 25 cents on every trade. Wow, that would be some toll booth. Cha Ching. I would buy those bonds.

[zoropb]

You guys are kidding yourselves. You will be paying whatever tax they bring. Heck, commisions use to be around $100 a trade or more. Today it is incredibly cheap to trade. Trade offshore? Yeah right. Good luck. All this scalping and such adds nothing. How much scalping and daytrading you think occurs with Warren Buffetts stock? It is useless trading except for the leeches that do it. It sure is nice to have cheap trading costs, we have been blessed. So you think your in and out daytrades contribute to society? Your fooling yourself. Society would get along just fine without you and all the rest of you.

Lot$ of reasons to trade off shore. I wont talk about them here do homework...no offense of course.

Z