The odds of this passing strike me as extremely low. So far the government has been extremely supportive of the financial sector ... is there any evidence of a change in the winds?
I would think this trader tax might hurt momentum investors rather than traders (especially counter-trend traders).
Reason being that the momentum investors tend to count on the counter-trend traders to provide liquidity. Of the two, the countertrend traders have the shorter holding period and smaller gains so the tax will hit them most heavily.
So what will happen is that the countetrend traders will become more selective to offset the tax. Pre tax the countetrend trades will become more profitable although after tax it won't make a difference.
The momentum investors will take a bath, because there will be fewer countertrend traders on the other side.
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