tag:blogger.com,1999:blog-8152901575140311047.post7836381028781641139..comments2024-03-29T05:33:33.027-04:00Comments on Musings on Markets: A tax on financial transactions: Good or Bad Idea?Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger56125tag:blogger.com,1999:blog-8152901575140311047.post-65146055546664688252013-05-08T03:37:33.323-04:002013-05-08T03:37:33.323-04:00I enjoyed reading it. I'm supposed to be somew...I enjoyed reading it. I'm supposed to be somewhere else in a minute but I stuck to reading the story. I like the quality of your blog: D<br /><a href="http://www.shadiservice.com" rel="nofollow">pakistani matrimony</a> | <a href="http://www.shadiservice.com" rel="nofollow">pakistani matrimonial</a> | <a href="http://www.shadiservice.com" rel="nofollow">pakistani matrimonial sites</a> | <a href="http://www.shadiservice.com" rel="nofollow">pakistani dating</a>Anonymoushttps://www.blogger.com/profile/02702281998031324213noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-22973768739378039822013-05-08T03:36:51.395-04:002013-05-08T03:36:51.395-04:00Wonderful post. This is the most inspiring post. I...Wonderful post. This is the most inspiring post. I love to read such kind of material. Blogger did a great job here.<br /><a href="http://www.creativeinstinct.com.pk/ceo/index.html" rel="nofollow">maqbool mirza</a> | <a href="http://www.creativeinstinct.com.pk/ceo/index.html" rel="nofollow">mirza maqbool</a>Anonymoushttps://www.blogger.com/profile/02702281998031324213noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-33370848186213415932012-06-01T03:43:31.018-04:002012-06-01T03:43:31.018-04:00It's really beautiful work. Thanks for this ki...It's really beautiful work. Thanks for this kind of stuff.I mean I am totally impressed.Hope to see more updated work here.I have to say, it is very informative.<br /><br /><a href="http://www.kazoolee.com/" rel="nofollow">Buy sell on iPhone</a>Knox Karterhttps://www.blogger.com/profile/09529605912425314220noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-56011723350435874972012-05-25T04:06:11.838-04:002012-05-25T04:06:11.838-04:00This comment has been removed by a blog administrator.Knox Karterhttps://www.blogger.com/profile/09529605912425314220noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-69260624221841465322012-04-19T06:18:12.988-04:002012-04-19T06:18:12.988-04:00Awsome blog! I will for sure drop by it more often...Awsome blog! I will for sure drop by it more often!Custom Facebook Fan Pagehttp://www.avenuesocial.com/facebook-fan-page.htmlnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-86117224123405723492012-04-09T06:04:28.701-04:002012-04-09T06:04:28.701-04:00"Nice post amazing information and attractive..."Nice post amazing information and attractive..<br />I like your way of thinking... "<br /><br /><a href="http://www.logodesignuniverse.com/23/cleaning-logo.html" rel="nofollow">Ready-Made Cleaning Logo</a>Knox Karterhttps://www.blogger.com/profile/09529605912425314220noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-7265552281512577182012-03-09T08:33:00.310-05:002012-03-09T08:33:00.310-05:00It's really beautiful work.Thanks for this kin...It's really beautiful work.Thanks for this kind of stuff.I mean I am totally impressed.Hope to see more updated work here.Ihave to say, it is very informative.Sports Logo Designhttp://www.logobench.com/portfolio/sports.htmlnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-25980137666971057562012-03-07T04:04:50.462-05:002012-03-07T04:04:50.462-05:00"Hello,
This is really great information foun..."Hello,<br />This is really great information found here, I really like your blog. Thanks very much for the share. Keep posting."Affordable Social Media Optimization servicehttp://www.ebrandster.com/social-media-optimization.htmlnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-56149837831129584502012-02-11T00:29:03.710-05:002012-02-11T00:29:03.710-05:00This is such an interesting line of content very i...This is such an interesting line of content very informative one ,Thanks for sharing this educational stuff here with us,Good work keep it up....Template Designhttp://www.webdesignbizz.com/noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-66217784482999934572012-02-01T02:28:47.260-05:002012-02-01T02:28:47.260-05:00Marvelous!! What an amazing content....subject is ...Marvelous!! What an amazing content....subject is very good. Such beneficial information you have provided that proves it as a golden summary about the topic...thanks.PSD To Wordpresshttp://www.webdesignbizz.com/categories-wordpressnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-83114717708400473212011-11-18T05:56:54.297-05:002011-11-18T05:56:54.297-05:00Good to know someone I could share my ideas. Looki...Good to know someone I could share my ideas. Looking forward to know and learn some more from you.<br /><a href="http://hfeel.org/buy-drugs-arthritis-en.html" rel="nofollow">arthritis pills</a>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-33946100456883342582011-09-21T01:48:15.953-04:002011-09-21T01:48:15.953-04:00Great post, I just bookmarked your site and I will...Great post, I just bookmarked your site and I will share with my friends. Alots of information you put here in your article. thanks for sharing with us.<br /><br /><a href="http://www.logoonlinepros.com/" rel="nofollow">Cheap Logo Design</a>Alfred Alberthttps://www.blogger.com/profile/17923432750011810766noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-9787380990934309382011-09-02T00:54:53.539-04:002011-09-02T00:54:53.539-04:00Very informative blog i ever seen.
online marketin...Very informative blog i ever seen.<br /><a href="http://www.onlinemarketingtraffic.com" rel="nofollow">online marketing company</a>Anonymoushttps://www.blogger.com/profile/16218731415729211478noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-85628875886005788822011-07-01T12:33:25.027-04:002011-07-01T12:33:25.027-04:00I was just now searching for about this when I dis...I was just now searching for about this when I discovered your post. I’m just stopping by to say that I really enjoyed reading this post, it’s very well written. Are you planning to write more on this? It seems like there is more depth here for more posts.<a href="http://www.investors-center.com/3cSportsVillage" rel="nofollow">3C Sports Village Noida</a><a href="http://www.noidaproperties.in" rel="nofollow">Noida Properties</a>Anuhttps://www.blogger.com/profile/03387011673652630342noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-74789190498203773622011-06-29T08:01:24.353-04:002011-06-29T08:01:24.353-04:00tax on financial transactions is good dont say no ...tax on financial transactions is good dont say no to it <a href="http://www.altijdzon.nl" rel="nofollow">Dominican Republic Real Estate</a><br /><a href="http://plumberhoustontx.net" rel="nofollow">Plumber Houston</a>Internet Marketinghttps://www.blogger.com/profile/14376668719237795822noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-27513258375135854152011-04-20T01:47:35.844-04:002011-04-20T01:47:35.844-04:00i am passout be student i want to pursue mba in fi...i am passout be student i want to pursue mba in finance is it good for me to do mba in finance instead of mba in it.<br /><br /><a href="http://www.theseoportal.com" rel="nofollow">SEO Services Company</a>Internet Marketinghttps://www.blogger.com/profile/14376668719237795822noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-44344649701441539942010-07-31T04:26:41.490-04:002010-07-31T04:26:41.490-04:00Excellent stuff with wonderful information! I'...Excellent stuff with wonderful information! I'm new here and loving the post! Thanks for sharing this great info!<br /><br /><br /><br /><a href="http://borrowernews.com" rel="nofollow">borrower</a>Unknownhttps://www.blogger.com/profile/12907386565506920634noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-42373062969879726832010-04-13T08:57:11.721-04:002010-04-13T08:57:11.721-04:00Very nice idea. I think it is useful for many clie...Very nice idea. I think it is useful for many clients. Thank you for this blogs.<br /><br /><a href="http://www.westernsoftwares.com" title="Internet Marketing Company" rel="nofollow">Internet Marketing Company</a>westernsoftware10https://www.blogger.com/profile/13925725607325062119noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-18219419396237112532010-02-24T15:54:55.890-05:002010-02-24T15:54:55.890-05:00i would suggest to be at bad point if the producti...i would suggest to be at bad point if the productivity suffers due to this tax , we should apply this at up to reasonable amount so than no one suffers or feels bad for the tax <br /><br /><a href="http://www.seoservices77.com" rel="nofollow">Seo Services</a><br /><a href="http://www.worldnowtravel.com" rel="nofollow">Best Tour and Travels</a><br /><a href="http://www.beachhotelworld.info" rel="nofollow">Travel Agency</a><br /><a href="http://www.popbarlaw.com" rel="nofollow">Personal Injury Lawyers</a>ck.seoexperthttps://www.blogger.com/profile/10912568238212786921noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-12350332690610163972010-01-21T23:44:22.625-05:002010-01-21T23:44:22.625-05:00Dead-bang-on-correct,sir. Unless said tax is unive...Dead-bang-on-correct,sir. Unless said tax is universal,the activity will simply move where the tax is not. The result will be illiquidity where the tax is. And these transactions can be moved in a heartbeat. When the regulatory arm for US forex imposed new onerous regulations, virtually overnight the larger US brokers made accounts in Britain available to their clients to circumvent the regulation. If they hadn't done that, they'd have lost business to Switzerland, the Seychelles, or wherever. It's sad the US Government has spent its people into a hole, but yet another tax isn't the answer. Never will be either.Sandmanhttps://www.blogger.com/profile/09824220698724494807noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-22209432865681419842009-12-29T11:05:31.937-05:002009-12-29T11:05:31.937-05:00In your post, you talked about the difficulty of m...In your post, you talked about the difficulty of making a distinction between "Speculators" and "Investors." However, I don't believe this is the right distinction, with regard to the tax. More appropriately would be to look at the difference between "Hedgers" (people who produce or consume the commodity) and "Speculators" (anyone who does not, which would include an Investor).<br /><br />According to CFTC analysis of energy and agricultural Futures markets (May 20, 2008, pg16 e.g.), Hedgers generally lead market movements, and then Speculators amplify those initial movements, creating both liquidity and volatility. Therefore, given that we want to create liquidity without excess volatility, it seems *possible* that a tax on "non-hedging transactions" could allow regulators to achieve the optimal mix they desire.<br /><br />(That is, if you tax too high, you restrict speculators, and the costs of hedging increase; if you tax too low, you risk excess volatility, which regulators prefer to minimize.)Michaelhttps://www.blogger.com/profile/14061180005471119419noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-69127283380423224912009-12-29T11:04:08.307-05:002009-12-29T11:04:08.307-05:00This comment has been removed by the author.Michaelhttps://www.blogger.com/profile/14061180005471119419noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-7726651294009933972009-12-17T15:31:35.035-05:002009-12-17T15:31:35.035-05:00Hi Thomas, this was an excellent post which gives ...Hi Thomas, this was an excellent post which gives a lot of insight about the trading world and i for sure am not a trader. I liked the example you used of the widget manufacturer, the macro and the micro trader. In my earlier post i seemed to have completely missed the trading from the point of view of the micro trader. Though i do understand your prespective when you speak about algorithmn based trading and to point out companies like DE Shaw and other hedge funds do a lot of these algorithmn based tradings. <br /><br />If this is the case then i don't think a financial tax will come into existence and if it came into existence it would be a much reformed version of the one doing the rounds presently.Gaurav Mehtahttps://www.blogger.com/profile/06728937525354512495noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-40767126323064973302009-12-16T11:48:03.651-05:002009-12-16T11:48:03.651-05:003. Regarding your contention that the trades on a ...3. Regarding your contention that the trades on a small time frame are artificial volume, I would disagree. I believe a healthy market requires a diversity of market participants and it is very difficult to draw a dividing line between volume that is “natural” and volume that is “artificial” (or, as the Professor puts it, volume that is “investing” versus “speculative”). Perhaps you meant “artificial” as a euphemism for “useless”. If that’s the case, let’s consider a simple thought experiment.<br /><br />We’ll think about a simplified market for widgets (you can insert the name of your favorite product here). We’ll define two kinds of traders: <i>micro</i> and <i>macro</i>. The distinction between them is simply one of time scale. The micro-traders will provide liquidity in the manner that I indicated in my first post. The macro-traders will act as you suggested (i.e., taking positions for longer periods based on whatever informational edge they possess). Both participants operate in the market in a well-thought out capacity.<br /><br />Now let’s consider a commercial participant (like a widget manufacturer) who needs to use the market to hedge. In a market where the micro-trader is active, the commercial participant will always be able to find a micro-trader to take the other side of his trade. The micro-trader does so because he knows he will be able to offset that trade in short order (i.e., a few seconds or minutes later). This ensures that the commercial user will have good liquidity when he needs it.<br /><br />If this micro-trader is forced into extinction through the imposition of transaction taxes, then the only participants left to provide liquidity are the macro-traders. Like the micro-trader, the macro-trader will only take positions when he believes that he can offset the position at a profit to himself. However, the difference lies in the time frame of offset. The macro-trader will be looking to close out his positions over much longer time periods since this is where his informational edge lies.<br /><br />This ensures that the commercial participant will get worse prices when dealing with a macro-trader than with a micro-trader. To make this completely clear, a micro-trader will deal with a commercial participant basically all of the time. The hedger will lose, on average, in these dealings but it might only amount to a few cents per share. The macro trader, on the other hand, will only deal with a commercial participant when he has a good inclination that he will make considerably more than that (i.e., dollars per share). The hedger will thus lose much more, on average, when dealing with a macro-trader than a micro-trader.<br /><br />Furthermore, since the number of opportunities dwindles with increasingly larger time frames, this ensures that the macro-trader will not provide liquidity to anywhere near the same extent as the micro-trader would and that this liquidity will be available only when it is highly disadvantageous to the hedger.<br /><br />A nice picturesque way to think about this is to ask yourself this question: <i>Would you rather get in a swimming pool filled with remoras or with sharks</i>? <br /><br />Anyways, thanks for the comment. Take care.<br /><br /><br /><a href="http://save-us-from-world-improvers.blogspot.com/" rel="nofollow">Save Us From World Improvers</a>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-15271171093399635222009-12-16T11:35:40.594-05:002009-12-16T11:35:40.594-05:00Thanks for the reply, Gaurav. Just to clarify some...Thanks for the reply, Gaurav. Just to clarify something, I am a full-time trader so I am well aware of all the different market participants. I just thought I would shed some light on how the participants who work on the smallest time frame operate since this seems to be a very misunderstood group. I didn’t really want to comment on the longer-term participants since I think this is better understood.<br /><br />Just some points on your reply…<br /><br />1. A bank has many different trading desks (as do the large hedge funds) and the profitability of each varies depending on what particular strategy happens to be in favor with the market at any given moment. Some of these desks will hold positions for long periods whereas others will hold positions for seconds only (algorithmic trading desks, for example). There is no uniform way to say what kinds of profit a bank looks for since it varies between desks. There are many different ways to structure a desk, ranging from high-volume / low margin business to low-volume / high margin business. I would not classify any approach as inherently better than any other.<br /><br />2. As for Goldman and the other banks closing down on the spreads, I have my doubts about that in the event this tax does go through. I could make an argument for the banks maintaining wide spreads in an effort to restore margins back to the days prior to decimalization (in the US) and the advent of ECNs. I think it is safe to say that however this turns out, it won’t be the banks that pay for it. In one manner or another, it will be the public that pays for it and they will have the populist politicians to thank for it.<br /><br />To be continued...Anonymousnoreply@blogger.com