The stock market of the past month has had unprecedented volatility. Swings of hundreds of points in less than an hour have not been uncommon. This is not good for one's equilibrium, financial composure or even the economy. It indicates a certain degree of panic and excessive uncertainty. Robert Schwartz of CUNY has an idea to minimize the volatility, but it require companies to be concerned with the long term health and market for its stock.
Schwartz's idea is to have companies reserve a certain amount of cash to minimize the volatility of its stock and to establish 'standardized' highs and lows for its shares. If the stock hits the low, the company would buy a certain number of shares. If the stock hits the high, the company would buy a certain number of shares. The idea is not as far-fetched as you would think. Germany has a similar system.
1 comment:
The thing is controlled by fear and greed. I always laugh when people gambling on it defend the practice as "having your money work for you" instead of what it is - a big crap shoot (the suckers game).
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