The "distortion" in the market is people buying and selling stock as if it's a real thing, instead of a convenient proxy for the company that issues it. This has to be completely beaten out of the market, and if making it illiquid is what it takes for people to actually pay attention to the companies they invest in, rather than the market being a legal casino, what's wrong with that? It would avoid crap like people buying GM when everyone knew they were circling the drain, in the speculative hope that some greater fool would come along.
We agree upon the problem. It's your "solution" I disagree with.
If you want people to start treating stock less as a commodity to be traded, and more as a fraction of a corporation, we need to reform corporate governance in our country. Right now, people treat stock as very loosely connected to the underlying corporation, because it is loosely connected. Stockholders have very little power, relative to the management or board of directors.
If we restructure the way corporations are run, giving stockholders more power and control, you'll see people begin to treat stock itself as an instrument of such.
Your "solution" only addresses the symptoms, not the underlying problem.
What a lying piece of bullshit! WHERE have I said that I want to "implement the same strategy to stocks?"
You want to ban trading of stocks outside of specified windows, and would be willing to resort to excessive punishments for those who violate your rules.
Let's see: Ban something that people want to do? Check. Implement draconian punishments for those caught violating the ban? Check. How is this not the same strategy used in the current prohibition on drugs?
Your solution would make criminals out of normal, law-abiding, middle-class people who need to liquidate their stock quickly. You would force them to turn to some sort of organized crime. You would lock them up for years if you caught them selling their stock early, even if they were just doing it to pay grandma's nursing home bills.
Regulate both adequately, TAX both adequately, and you'll see better results.
See, I agree. But, your proposal is too onerous a regulation. Like I said earlier, if you regulate something to such an extent that it is more profitable to go underground, that's what will happen. You'll lose all control. This proposal is that kind of regulation.
So you agree that, to control them, drugs should be regulated instead of the current war on drugs?
Yes. But, remember my Oxycontin example. There's a drug that is not banned, but is regulated. Still, there is a sizable black market for it. That's a sign that the regulations upon it are too restrictive; you've lost control. I'm saying that this type of stock regulation is also too restrictive.
However, WRT business, the regulatory environment can impose restrictions that make it better not to flout the law. Jail sentences for polluters, for example. Or as they did in China, death for the people behind the tainted milk. Sure, it's still more profitable to produce tainted milk, but somehow I think people won't be looking solely at making a few bucks when they have real skin in the game.
You underestimate people's willingness to risk punishment to make money. Just look at all the drug dealers doing 20+ years in prison today.
Learn from history. We currently regulate booze. Prohibition created a huge black market, not regulation.
Bingo. That's because our current regulation of alcohol is not so restrictive as to create such a black market.
And the same goes for stocks - minimum hold periods, no shorting, etc. Get people to pay more attention to the company issuing it than to the daily fluctuations / fucktuations. The biggest losers would be the companies handling the trades, since their trade volume (and commissions) would drop by 95%. Boo hoo, cry me a fucking river.
The biggest losers would be individual investors who don't know anyone in the newly-created underground stock market.
Like I said, I agree with the goal, just not the method. If you want people to treat stock as something with some intrinsic value, we should give stocks some intrinsic value (by increasing stockholder power over corporate governance). Your proposal simply doesn't do that.