The Middle Class Deserves to Trade
We are a long way from any formal tax proposals, and you can be sure lawmakers would try to shelter most middle-class families and 401(k) plans from direct exposure to any Robin Hood tax. But let’s get real — 401(k) accounts offered by many employers have very limited options, and the fund administrator has all the power. What’s more, many active mutual fund managers can’t even beat their benchmarked indices.
So why do we want to discourage investing options for small, individual investors? We should be doing more to open up investing access to normal Americans, not making it harder.
The idea that only fat cats at investment banks trade stocks is naïve — and commonly an excuse for people too lazy to take control of their financial future. Online brokerage platforms and smartphone apps allow regular Joes to trade stocks with ease and flexibility — even while at their day job. Sites like InvestorPlace.com and cable news networks provide a host of free information and — hopefully — insight into the opportunity and risks of the markets.
The playing field is more level than ever before. Now Europe wants to take a step back, and possibly prompt similar action in America? That is a big mistake.
Stock Options Are Just Rewards
Sure, there are some CEOs out there who want taxes to stay small so they can keep more of their cash. Oracle (NASDAQ:ORCL) CEO Larry Ellison owns 1.1 billion shares (yes, that’s billion with a B) worth almost $35 billion right now — so a few percent off the top means a lot to him.
However, let’s acknowledge that stock options are perhaps the only just compensation for many top executives. What would you rather have — golden parachutes and guaranteed money? The early frontrunner for the “Soulless Bank of the Century” award, Bank of America (NYSE:BAC), managed to offer a nice parting gift to CEO Ken Lewis after the financial crisis. Lewis never has faced criminal charges or jail time, and waved goodbye with a jaw-dropping $125 million severance package.
I don’t know about you, but I would have much preferred him holding onto 10 million Bank of America shares. Maybe then he would have blinked as BAC shares tumbled from $40 apiece to bottom out at less than $4 in early 2009, since he had skin in the game.
Jeff Reeves is the editor of InvestorPlace.com. Write him at firstname.lastname@example.org, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.