...taking away the gains of others (or making their losses bigger), thereby reducing their taxes and making them less prone to be charitable, and less able to provide a good life for their families... Whichever way you look at it, it's just a wealth transfer. The middlemen, and the financial system do befenit, but the participants, except for very few who either are talented/very skilled or very lucky lose.
The specialists are only supposed to provide liquidity, not take directional bets to try and profit from the others. The are only after the spread, actually a small portion of it only, the bulk of the spread goes to cover the overhead and losses to those who are more informed... I don't think the argument that daytraders are sit-at-home specialists is very valid. If the specialists were daytrading, we'd be screwed. I'm not saying they aren't doing it on occasion (which sucks and which screws us quite a bit at times), but that's not the way they are supposed to make their money.
There are three stages of life. Birth Reproduction Death All the other things we think are important, are trivial. This is our actual purpose in this world. Makes me stop and think.
Partially true. But, trading does not create money out of thin air. The money already exsist, it just gets passed from one trader to another, eventually ending up in the best traders account.
Chas, I have to say you are one of the ET members I respect the most, but what you said up there is 99% inaccurate. If you mean that religion was squelched in the former USSR and that it was a bad thing for the country, I couldn't agree with you more. But as far as the "moral compass, rule of law" etc you have no idea. I have lived there before it collapsed and afterwards. It's day and night. NOW, even with all the supposedly "devine" doctrines of private property (don't see anything devine about it, the things on this planet don't belong to us, we are just visitors here. - why should someone who happened to be sitting on an oil reserve, like Saudies, reap the benefits from exploiting the gift God gave us all???, that's a different point though) - anyway, even with all those doctrines of private property, the countries that comprised the former USSR are much more a mess than they used to be during the soviet regime, social order - wise, rule of law-wise etc etc. The rule of law USSR had is undescribably better than what is there now - I know of some people who have committed horrible crimes but are free b/c they are in power and or are very rich - that wouldn't have happened before, not on such a scale. Heck, our Ukrainian president has been proven to have ordered an assassination of a journalist who opposed him, during reelection there were grenades thrown in the crowds of his opponents etc etc - he is in power and nothing will happen to him before or after his term is up. A mafia guy in my home town drives a Lamborgini, which my former school teachers who used to be living OK are impoverished. Everything is up for sale. And social order??? Man, it's a joke. Anyway, I respect you but it was a bad example, don't get me started
The best traders will have a share of it, I agree, but don't forget the uncaught Martha Stewards of this world... That is where a big chunk of it will go.
Specialists aren't supposed to be day trading their own accounts? Did you read that out of a book? Most of my trades are based on the fact that specialists DO day trade. The most frustrating part of the day is fighting with the specialist for the shares he wants for himself. There are ocassions when he appreciates my participation as it mitigates his risk, but most of the time he knows where the stock is going and wants every share he can get. Which answers the question of the value daytraders provide. Without us, specialists and market makers would have free reign to rape everyone. (more than they do already). We keep them (somewhat) honest. For providing that service, I deserve to be paid. But I'm sorry I forgot... the NYSE rulebook says we already have a "fair and orderly market".
Yes, the specialist do that. But if it was all they did (or the main thing they did), the intervention of a multitude of small daytraders wouldn't have made much of a difference. They aren't supposed to do it and if they overdo it, they'll be in trouble. At least that's my underinformed understanding. It's the rules that prevent them from exploiting their advantage too much, not a bunch of small day-traders.
I partially agree with bungrider, chasinfla and others who maintain the liquidity argument. However, I can't help drawing the following analogy to daytraders: We put out a garage sale one time and there were people out early in the morning driving trucks to load up junk and then turn around and sell it at the local flea markets. Presumably, you can claim that what they do is to take advantage of inefficiencies in the market and hopefully make a buck or two in the process. But I'm still not quite convinced that they are producing anything substantial to society. Daytraders seem to be like them--in a way, taking advantage of micro-inefficiencies while not producing things of substance. Again, I have nothing personal against daytraders, it's just an issue I want to have a clear stand on. And I'm prepared to further change my mind about this. stock.