Find a back issue

Mark Cuban Asks What Business Wall Street Is In

I’m as surprised as anyone to find myself citing Mark Cuban’s blog for the second time this week, but he published a post this morning that hits upon something that’s long bothered me. Our stock markets have come to resemble casinos more than what it seems they should be: a means of bringing capital to good businesses.

The high frequency trading that’s been going on – like the automated computer transactions designed to exploit tiny, short-lived fluctuations in the market and which caused that crash in May 2010 – make it plain how much Wall Street is a just a big game, set up to feed the financial industry itself rather than the businesses that make tangible goods or services.

Anyway, Cuban discusses these matters more expertly than I can, and I like his proposal. He compares financial traders to computer hackers:

My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business.  Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years.  However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy.  It won’t come from traders trying to hack the financial system for a few pennies per trade.

Read This Next

6 comments on “Mark Cuban Asks What Business Wall Street Is In

  1. Nice try, Cuban. Perhaps you could show some statistics to back your nebulous claims. I am willing to bet you can’t find one study asserting that HFT has any long-term impact on stock prices or investor confidence. HFT doesn’t change the fundamental values or long-term pricing of stocks. The impact of HFT, which caused the two flash crashes, was reversed very quickly. A long-term investor wouldn’t even have noticed the crashes, nor cared. Small investors shouldn’t care about daily, weekly or even monthly changes in prices, let alone intra-day changes.

  2. I wonder what affect Mark Cuban’s idea of “changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years” would have on Mark Cuban’s future tax burden? Probably increases it given how selfless Mark Cuban’s public policy ideas are, right?

    It reminds me of Ross Perot, when he ran for president twice, saying that the deficit was by far the most important issue facing the country. Selfless public policy position in the public good, right? Coincidentally, Perot was one of the biggest (the biggest?) bond-holders in the United States at the time. I bet he had no idea that his number one policy priority, if addressed, would increase his fortune extravagantly.

    It also reminds me of the selfless Koch brothers advocating less regulation of the industries in which, coincidentally, they own companies. How could one doubt that more oil pollution is worth it when an oil producer tells us it is so?

    If they want any credibility at all, these guys should say, “Disclosure: My policy priorities are decided, first, by how they affect my fortune and, second, how they help the United States. In that order.”

  3. We need a whole lot more informed discussions on this topic….come on financial guys….get that REAL information out there not just the facts you think we want to hear.

  4. I have not one problem with a micro-term tax, if we are going to have different time levels for taxation purposes, why not have a third tier.

    But I don’t see how this would necessarily shift the capital to business startups. If the tax break for holding the shares were the same for both startups and existing businesses, it would be more prudent (less risky) to invest in existing businesses with a proven track record and hold those shares for 5 years.

    “Wall Street”, ie, the money that never sleeps, is moving into small business lending. Just last week we received several emails from American Express letting us know our business is welcome to take out a loan on our credit card receivables. Just a year ago, smaller, independent loan companies were filling this need within our industry, as written by DMagazine http://www.dmagazine.com/Home/D_Magazine/2011/August/Brad_Woy_Can_Get_You_100_Grand_This_Week.aspx