April 28, 2009
It is generally agreed that public corporations sell stock in order to raise capital for businesses that could not be financed by individuals or partnerships. With this fundamental purpose in mind I would like to offer the following with regard to short selling and options/futures trading.
1) Corporate boards of directors be empowered to set a minimal holding period for any stock purchase. For instance purchase of shares of XYZ corporation cannot be sold for 60 days following their purchase.
2) Corporate boards of directors be empowered to disallow options or future trading in their company's stock. Example the board of XYZ corporation can declare no option trading in their company's stock and CBOE et al must comply
3) Corporate boards of directors be empowered to disallow short selling of their stock.
Under such circumstances, a corporations share price would reflect fundamentals such as sales growth, profitability, successful ressearch, market share etc. Volatilty would be less and management could take a longer view of the business. As it is now, corporate shares are merely chips in huge casino where the business of a business is given very low priority.