Hacker News Reader

Comment by gottorf | Hacker News Reader

Honestly, stocks should trade for three hours a day. 24/7 trading sounds like a win for exchange operators and a loss for anyone else.

View on HN

Maybe even just a single auction in the afternoon.

one per week should do it.

Honestly 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

I hypothesize all dividends, no share value. How would that world look

that 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.

In a perfect world… reality is different, however.

Plenty of companies take on debt to pay dividends, e.g. just before going public.

growing companies generally have capital needs that exceed retained earnings, so paying dividends would by definition increase capital need.

Well 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.

Yes, hard to imagine this crazy timeline where private capital rules the world. Totally inconceivable.

"It's not good so let's make it worse"

Cryptocurrencies everywhere.

Private capital doesn't own the U.S.?

BREAKING: 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.

I 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.

I mean the average person already barely has any participation at all, and certainly doesn't benefit from it when their money gets dumped down the toilet because of some widespread financial scams and grifts that repeatedly happen over and over again.

62% of adult Americans own stock.

And how many of those people are actively making decisions about what companies they are investing in instead of blindly putting money into a black box 401k account because they are financially punished for not doing so?

Does it matter? They could blindly buy an SP500 index and benefit greatly (as most Americans do).

Not by choice. Stocks are pushed onto Americans (as well as Europeans, and most people in the West) via their pension funds, advanced savings accounts, and sometimes even their salaries (via options). If normal savings accounts in their local credit union would offer adequate interest rates (and if paying in stocks was outlawed by their unions) stock ownership would plummet. I would be surprised if it would even exceed 2%.

That’s a good thing!

Anywhere else you put money as an investment will barely match inflation.

That feels like a disadvantage by design. In a different (and more fair) economy, investing in government bonds or a savings account in your local credit union would give you a better deal then leaving your money with a global hedge fund conglomerate which in turn invests your money into all sorts of unethical companies, including oil and weapons companies.

Why is it better? It’s not like your government couldn’t use the money to do something unethical. Same with a bank.

Your government is way more democratic then your hedge fund. And I would wager your are in a massive minority (perhaps among my hypothetical < 2% who would own stocks by choice in my hypothetical economy) if you desire your unused money to be spent by Canadian billionaires to further enrich them selves, instead of your government investing in infrastructure, health care, education, etc. or your local credit union lending it to somebody in your community buying their first house, or opening up a new business which you are likely to shop at.

It'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.

> 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.

Like 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.

I'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.

It's your God-given right as an American to get millisecond level price discovery. Trading delays sounds like Communist bureaucracy.

Even 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.

I 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.

It feels like something Matt Levine would have talked about.

He has

Any references you know about?

One easy pick: 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.

Run 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.

The 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_3...

More than tech circles - it's one of the key parts of Flash Boys (by Michael Lewis [of Big Short, Liar's Poker, etc])

And 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.

If that were true then nobody would show up to trade during the extended hours and therefore absolutely nothing will change.

Reply on news.ycombinator.com