A Simple Rule for the Stock Market

The Stock Market is where the wealth of America is stored. As such, it is best when the stock market faithfully reflects the ups and downs of the economy. Stock market corrections are how the stock market reflects setbacks to the economy. This is good, as far as it goes, but in fact, when a stock market correction occurs, it is not well understood where the value of labor, goods and services stored in the stock market goes. 

The whole idea that rising stock prices reflect improvements in the economy, is that this is the result of good investments.

Investing is an act of devoting time, effort, or energy to a particular undertaking with the expectation of a worthwhile result. An investment is proven to be a good one, when it pays off after a duration of time.

If you buy a stock, you wait for it to rise in price, and sell it at the appropriate time. "Buy low, Sell high," is how stock brokers explain their craft.

How long should you hold a stock? This has always been up to the owner of the stock to decide. 

However, these same investors live night and day in fear of a stock market collapse. Black Monday, in history has shown that the value in the stock market can disappear like the economy of the Netherlands did back in the day of Tulip Mania.

This theory is introduced to temper the market against this failing, and secure it against a crash.

The foundation of the solution is encapsulated in the question, "If a broker buys a stock and holds it for less than three (3) seconds before selling, can this legitimately be called 'investing?'"

The solution is surprisingly elegant: Make a rule that a broker has to hold his stock for three (3) times the number of shares in seconds.

That way, if you buy one (1) share, you have to hold it for three (3) seconds.

If you buy ten (10) shares, you have to hold them for thirty (30) seconds.

If you buy one hundred shares, you have to hold the for three hundred (300) seconds. This is only five (5) minutes.

The rule holds true for any chosen number - it doesn't have to be a multiple of ten.

36 shares - 108 seconds, for example.

This makes a large investment meaningful. If you buy 1,000,000 shares, you are committing to hold this block for 3,000,000 seconds: 833 1/3 hours, or 34.72 days. Just over a month.

This would bring a new sense of commitment to investors, and secure our stock market against a crash. 


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