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24/7 trading sounds like a nightmare. “Your retirement savings crashed 30% because there wasn’t enough liquidity to cover a 3am panic over non-news”.
by clickety_clack 7mo ago
24/7 trading sounds like a nightmare. “Your retirement savings crashed 30% because there wasn’t enough liquidity to cover a 3am panic over non-news”.
- gottorf 7mo agoHonestly, stocks should trade for three hours a day. 24/7 trading sounds like a win for exchange operators and a loss for anyone else.
- clickety_clack 7mo agoMaybe even just a single auction in the afternoon.
- logicallee 7mo agoone per week should do it.
- wholinator2 7mo agoHonestly what would happen if the stock market didn't exist. It seems like these days the price of stock is so disconnected from lived reality that genuinely confused if it would be all that catastrophic
- stogot 7mo agoI hypothesize all dividends, no share value. How would that world look
- fsckboy 7mo agothat makes no sense. companies need capital, that's why there is a stock market. dividends are paid from past earnings, never capital (earnings are only a %age of the value of the capital) and not from higher expectations of the future.
- cluckindan 7mo agoIn a perfect world… reality is different, however. Plenty of companies take on debt to pay dividends, e.g. just before going public.
- fsckboy 7mo agogrowing companies generally have capital needs that exceed retained earnings, so paying dividends would by definition increase capital need.
- deleted 7mo ago[deleted]
- nightski 7mo agoWell we’d go back to an era where private capital owns the world. The public would not be able to participate or benefit from the ownership of companies and share in the prosperity.
- idiotsecant 7mo agoYes, hard to imagine this crazy timeline where private capital rules the world. Totally inconceivable.
- vasco 7mo ago"It's not good so let's make it worse"
- cluckindan 7mo agoCryptocurrencies everywhere.
- bmitc 7mo agoPrivate capital doesn't own the U.S.?
- michaelsshaw 7mo agoBREAKING: Countries other than "U.S." found to be members of so-called "world" Although I'm not sure what he's on either. Capitalists definitely own and exploit pretty much the entire world, with few exceptions.
- nightski 7mo agoI should of used the term "equity" instead of "capital". I meant that the worlds largest companies would no longer be able to be owned by public equity and would only be available to those in the exclusive club of private equity.
- AngryData 7mo ago
- bluecalm 7mo agoIt's not disconnected from reality. You just don't understand it. If the stock market didn't exist you would have less opportunities to invest in well priced companies and people would be manipulated in investing in opaque, often ridden with accounting shenanigans things like private equity. The more companies are public and subject to price discovery done by sophisticated players the better it is for uninformed players like normal investors but also less sophisticated informed players like pension funds.
- bmitc 7mo ago> people would be manipulated in investing in opaque, often ridden with accounting shenanigans things This happens even with the stock market. See every financial crisis.
- bluecalm 7mo agoLike which one? 2008 crisis was caused by reckless lending by banks as a result of silly regulation (government guaranteeing loans), implicit promise of bailouts and you could argue corruption. What does it have to do with the stock market? It's a nice dismissing soundbite but you're just missing the broader point and real issues coming with people's money being invested in non public entities. Besides, just because some problems also happen with solution A doesn't mean they wouldn't be worse with solution B. You are not really making a point just dismissing the idea of a public market without understanding the value of it.
- colechristensen 7mo agoI'd settle for once per second. There's a lot of very fast trading nonsense which I've only heard defended with the "liquidity" bogeyman. A sealed-bid uniform-price batch auction seems like the right action.
- jjmarr 7mo agoIt's your God-given right as an American to get millisecond level price discovery. Trading delays sounds like Communist bureaucracy.
- fc417fc802 7mo agoEven once per second seems like overkill. That interval would still largely just facilitate the weaponization of exceedingly low information latency. 30 seconds seems reasonable, 1 minute better, and 5 minutes still better. In all honesty even going as long as 30 minutes should still facilitate all legitimate purposes.
- gzread 7mo agoI saw this as a serious proposal somewhere but I can't remember where. There are exchanges out there that run continuously but with delayed information feeds.
- clickety_clack 7mo agoIt feels like something Matt Levine would have talked about.
- chucksmash 7mo agoHe has
- bmitc 7mo agoAny references you know about?
- bostik 7mo agoOne easy pick: https://www.bloomberg.com/opinion/articles/2024-02-28/trading-stock-takes-time https://www.bloomberg.com/opinion/articles/2024-02-28/tradin... Note that his half-jokey proposal for a total of 30 minutes of trading time a day is at this point a running theme. If my memory serves me correctly, he started talking about this phenomenon in the pre-plague years.
- mlyle 7mo agoRun continuously, non-delayed, but only sweep the order book at a random time every [1,2) seconds. Run for something like our current extended market hours. Everyone gets the benefit of fast-enough execution and strong liquidity. Crazy high-frequency gamesmanship goes away. Smart quantitative plays are still possible.
- bostik 7mo agoThe best known (at least in the tech circles - in good part thanks to HN and Matt Levine) is probably IEX. The exchange guarantees that every participant is behind the exact same time delay. And they do that by having a sufficiently long spool of optic fibre between the exchange "broadcast switch" and the market maker computers. Simple and effective. Relies only on laws of physics to create the delay. There are also exchanges that run with "frequent batch auction" principles.[0] 0: https://econpapers.repec.org/article/oupqjecon/v_3a130_3ay_3a2015_3ai_3a4_3ap_3a1547-1621.htm https://econpapers.repec.org/article/oupqjecon/v_3a130_3ay_3...
- terminalshort 7mo agoIf that were true then nobody would show up to trade during the extended hours and therefore absolutely nothing will change.
- AngryData 7mo agoAnd even that seems kind of generous to me. I see absolutely zero value in stock trading continuously for any length of time. Businesses don't make purchasing or investment decisions in that time span, nothing of significant value can even be created or sold or shipped in those time spans.
- jandrewrogers 7mo agoThe beauty of it, though, is that it would recover almost immediately as systems arbitrage an obviously stupid situation.
- plussed_reader 7mo agoBut on what time scale? Before a few connected entities make a profit or after?
- colechristensen 7mo agoIf you're not trading overnight and there's a flash crash that corrects itself overnight... it's the people who are trading overnight taking money from each other.
- bastawhiz 7mo agoMost Americans who invest money don't trade at all. They pay some guy at a bank to do it, and the guy at the bank is exactly the kind of guy who is trading at 3am.
- gzread 7mo agobut you just don't sell and wait until the liquidity comes in and prices return to normal at 9am, no?
- dragonwriter 7mo agoSignificantly large fluctuations, even if largely irrational themselves, can cause effects which have durable impacts on value.
- vasco 7mo agoGive an example don't leave us hanging. I'm really curious how you can find an example of a temporary market liquidity move turning somehow into a long term adverse event for a company. Never heard of it
- prodigycorp 7mo agoThere's already a huge futures market Liquidity will just migrate.
- yareally 7mo agoWe already have 23/6 trading with index futures. The S&P500 (ES), NASDAQ 100 (NQ), DOW (YM) will sometimes gap up or down on open just to match overnight trading.
- barbazoo 7mo ago> “Your retirement savings crashed 30% because there wasn’t enough liquidity to cover a 3am panic over non-news” I don't understand what that means so I'm guessing it doesn't apply to retirement savings in general. Does "liquidity to cover" imply that one made a bet that didn't work out?