Not even sure where to begin on the issues this poses for our economy, so it will be a list for now:
- Only the rich are allowed to fund "the Next Big Thing"
- Sarbanes-Oxley makes it too painful to be a publicly traded common stock issuing company
- Private companies are trading on shadow markets to avoid public company requirements
- or private US companies are closed to US investors to avoid going public
- Hyper short holding horizons push managers to juice returns and reported growth rates at all costs
- 80% of CEO's would cut Research & Development to goose returns.
Here's a free market solution to short term market vultures: Contractual holding periods with leaving penalties, just like most mutual funds. If the purpose of the market is to raise capital for building long term growth companies, then we can let companies determine whether they're in it for the long haul, and provide investment opportunities that reflect that view.
Three months is a common mutual fund hold time. Make dividends contingent on renewing the stock contract, just like a CD. Sure, this won't make as much money in churn fees for Wall Street, but it can let companies fulfill their vision and benefit society.
