Case for 24/7 Stock Market

So recently I have been thinking about markets and how they operate. One thing that seems strange is why the stock market is not open 24 hours a day, 7 days per week, 365 days per day. You might think this is odd however in the financial industry many people are at work a little before the market opens 8:30 A.M. and are done by 3:30 P.M. Of course there is other work that has to be done by trading can only be done in these hours. This is odd considering currency markets are open 24 hours a day 6 days per week (has been going on since 1995 too). I found this article from 1985 that talked about 24 hour trading (commissions back then were over $100 and a far cry from the $4 now paid by investors). Also since 1985 trading hours have been from 9:30 A.M. to 4 P.M. Eastern Time. However despite this after-hours trading can go on between 4-8 P.M.

Simple economics should suggest that a 24 hour stock market is a no brainer  If we had a 24 hour market then we would have less volatility because we would have more transactions. For some odd reason I believe people might get worried about the market taking a tumble at 3 A.M... However, nearly every other market is open 24 hours per day. Wal-Mart, McDonalds, and IHOP, are a few that are open 24 hours a day. People buy goods online all day and night. So it is really strange how anyone would argue against a 24 hour market. As long as there is a willing buying and seller we should have there always will be a deal to be made. 

Billionaire Index: Outperforms S&P 500

Dr. Joel Shulman of Babson University has published a recent study in Institutional Investor’s Journal of Index Indexing which shows that an index of companies that billionaires managed by individuals on the Forbes billionaires list. I for years have been wondering how an index would have done. Dr. Shulman has done the research and the results. Let’s look at what he found.

When the “Billionaire’s Index” was compared to a benchmark of the S&P 500 the Billionaire’s Benchmark outperformed the S&P 500 over time. From 1996-2011 the Billionaire Index increased a staggering 400%. The S&P was up over 104% during this same period (dividends not included). If you started with $1,000 in 1986 and updated your portfolio every year to match the new Forbes billionaires list you would have ended up with $5,000 by 2011. If you had invested in other benchmarks like the Russell 2000, Russell 3000, or the S&P 500 you would have $2,500 or less. It should be pointed out the Billionaire Index is riskier than indexes like the Russell 2000 or S&P 500. As investors know you should never put all your eggs in one basket.

People often complain how the top 1% keeps getting richer. However, now there is a way to join them. In fact as a shareholder you are part owner in their business! The only problem is I haven’t actually seen a Billionaire’s Index listed on any of the exchanges. Right now Dr. Shulman works for EntreprenuerShares which has some funds yet doesn’t offer a Billionaire’s Index. One problem is that if people knew the Billionaire’s Index returns were very good they would start investing in it which might actually reduce the return. Since the index has only existed in theory and not in practice it is hard to tell how it would have actually done.