It’s not pouring in the arsenic to accurately describe your statements.
You outright denied even the possibility of these people’s existence. Repeatedly. In this latest post, you have finally qualified your position, talking about “demographics” of the people who need most help, which is a way to soften the previous absolutist comments. That’s good. That’s a big improvement. Your implication now is that there aren’t many such people I’m referring to. My guess is that your implication is that their concerns and need for liquidity are sufficiently unimportant to not make a difference in the decision of whether to keep markets open, since the “demographics” implies there aren’t many of them. That’s a potentially plausible belief.
Your post here is much better all around.
It still depends on the details, tho.
Would people who genuinely need money be better off if the prices of these stocks went even lower in the time taken from away from them?
Suppose markets open again, and there’s another big drop right as they need to sell. Is that genuinely not a possibility? Price movements don’t just go in one direction. Prices can keep going down. They don’t have to rebound immediately in the counter-factual where markets are closed for whatever period you had in mind.
You have an apparent certainty that the price depreciations here are definitely the results of evil speculation rather than semi-sorta-okay-best-guess-available-ish appraisals of value of these companies. Now, you could be right about that. I don’t know. It was dead clear the market was going to drop, but I’m not certain in the slightest about how far the drop will be, or on the period for recovery, or if the market would rebound after a weeks-long closure, or drop for another two weeks after re-opening. I don’t know any of this.
But you’re just asserting here. There’s no strong reason to believe this.
It’s hard to say how a market closure helps if it leads to another price drop at exactly the moment when people who need money finally get a first chance to dip at the trough. If values were to sharply drop again at market opening after a cessation, it hasn’t really helped anyone. Another point here is that if investors in the market have no liquidity needs right now – as you seem strongly to believe – then it simply does not matter of prices are temporarily depressed by speculators. If that’s the case, then prices will eventually go back up, market closure or no.
That leads into another essential point:
I don’t disagree, not in the slightest, that most people in the most dire financial straits don’t have much if any financial assets to sell. (In a way, this whole discussion about a market closure is about a side issue, as I said before.) My point from the beginning has been that “most” is not “all”. I know some people with extremely strange financial decisions, people with not much savings who nevertheless like to keep money in markets.
But here’s where things are curious. The argument here is potentially working at cross purposes.
If speculators with large holdings have the ability to “exploit” major market swings… then who are they exploiting those price swings from, exactly? Subtracting any benefit from improving the information content of the market, speculation tends to be zero sum. Every buyer has a seller. But according to you, and the demographics of this country, they’re not exploiting these price swings from people who most need the liquidity, either because (in previous posts) those people flat don’t exist, or because (this post, much more accurate) the demographics of people who need liquidity most lean away from holders of financial assets. Not entirely, but mostly.
There is a potentially problematic circle here.
Either (previous posts) nobody with financial assets has pressing liquidity needs, in which case the speculators are only exploiting themselves so who cares, or (this post) the speculators with “massive holdings” are able to “exploit” price swings from… the demographically insignificant number of people who need the money? But in this case, we have trade-offs. If they’re demographically unimportant, then why worry about their exploitation? There’s not enough of them to matter. But let’s say we take the position – which has been my position from the beginning – that there are enough of these people to matter. Obviously we don’t want an unfair price, but that immediately raises the question of what the fair price would be. If it’s your contention that the market is much more depressed than it should be, and that it will rebound soon, well, you know more about future prices than I do. But I’m not going to take your word on it. It might not happen.
Again: if you deprive people of a chance to sell before prices drop even further, then you haven’t helped them. You just intensify the “exploitation” you’re talking about. You have to know future price swings to know who you want to help. And if you know that, you are most likely in the wrong line of business.
Sure. Absolutely. Right there with you.
I continue not to see the case for this, for the reasons laid out above.
I see potential damage, but no obvious gain. But you have a better post here, that definitely has the sketch of costs and benefits. If you want to flesh it out more, I’d be happy to read it. But it seems to me you’d need to address how temporary market fluctuations hurt people who have no need to tap their investments right now, since that’s the “demographics” of investors.
I’ve laid out the case why it’s not “obscene”.
I think closing the market has an excellent chance of doing more harm than good. You’ve made in this post the beginnings of trying to address my concerns, but I hope you can see where I fail to be convinced.