A Tax Everyone Can Stomach

Bye bye REAL economy.

Such practices should (with some conditions/exceptions) be encouraged, since they mean that the stocks of the companies are going to be more accurately priced.

How original...tax and spend. Here's a novel idea for you: Governments shouldn't spend so much and try cutting costs..

Now let's delve into your un-researched "solution". Sounds wonderful, unless you're the little up-start company trying to raise a little capital to expand your business (Oh, that's right liberals hate business), hire more workers, or modernize equipment. Won't some people be happy until there are no businesses left.

Now let's talk about who these mean old stockholders are: Of course there are people like Warren Buffet who own stocks and can easily hide or shelter their wealth. So we'll focus on the people that can't. The 40+ million folks, according to the N.Y. Times, that own 401K (yes these are composed of stocks), average people that might own a few shares, including many of your evil day traders. These are the people that will be hurt the most by your plan. It will either force them out of markets or lower their potential earnings by reducing the amount they can invest.

Perhaps you haven't heard of the capital gains tax. This tax is paid on dividends that one earns over the course of the tax year. Let's say you have 1000 shares and these are worth $10 per share on Jan 1. Though out the year you earn $1000 in dividends, but the stock loses value and is worth $5 per share on Dec. 31. How much taxes do you pay? I'll tell you. Even though your stock is now worth half, $5000, you still pay the 35% capital gains tax rate on the full $1000. What a bonus you're add little tax would be. Please keep that gem of idea north of the border.

While what aeortar and Nitro say makes good sense, I would like to make this much more simpler.

Why another tax at all? Does the Govt not already take enough in taxes? Why do we not simply revert back to what taxes where meant for? You know, to pay for that which individual people could not that our cities and towns needed. Why does the Gov't need so much money? Why do we pay for useless projects such as why prostitutes in some other country do what they do or why are we building statues of any kind for what ever reason or why are we considering roads to nowhere? What i want to know is why the solution is always more money when more money is what got us in this dilemma in the first place?

Why does the Govt need more money? Why? They have failed with what they already have, why do they need more?

Nitro, are you sure about that?  I'm pretty sure dividends are taxed on a completely different form than capital gains.  Capital gains is for when you sell the stock for more than it's worth.  Dividends are taxed just like interest.

aeortar-

Actually, it's the other way around. The real economy is already in shambles while the masters of the universe are toasting each other over a job well done. Time to even the playing field!

Nitro-

And how, exactly will this hurt these small start up businesses? Here's the thing- a 0.25 % tax is a miniscule portion of your investment AND is incentive to keep your money in a particular stock for at least a while, as opposed to the ridiculous shenanigans today where people have developed sophisticated software that looks for trends and makes the buy or sell decision on a split-second basis, moving massive sums of money around in the blink of an eye. Without getting into the derivative headache (which should be criminal by the way) we have ultimately created a financial system in which we believe we can create wealth out of thin air by playing the market. The real-world rammifications of this type of magical thinking have been illustrated by the wonderful state of your economy today!

in regards to this;

Again, how would it force someone out of the market? If I have five thousand dollars to invest in a stock, at the time of purchase I would pay a tax of 12 dollars and 50 cents, hardly "forcing" me out of the market.

Who this would affect, of course, is anyone moving massive sums of money multiple times in a single day, and this type of activity is done primarily by the sharks employed by the big financial firms as well as major corporations or ultra-rich individuals. For example, an investment of 100 million dollars would be a tax of 250,000. This would be major incentive to leave that 100 million where you invested it as opposed to "pumping and dumping" or all sorts of other shenanigans.

Remember back when oil was creeping up on 150 dollars a barrel? Or when certain food-stuffs almost doubled or tripled in cost overnight? That was due mostly in part to major investors that had been heavily burned by the derivatives game and wanted to make a quick buck for no actual work on their part- so, they did things like buying up all of Brazil's Soy harvest in one fell swoop or poured money into oil and other commodity stocks like it was no one's business, then of course got out while the gettin' was good.

You might think that this would be a sound financial tool, but what was the real-world impacts of this? During the time when all of these commodities were getting "pumped", there were food riots around the globe, from Asia to Africa to the Middleast, not to mention major protests in most of the industrialized countries. While magical wealth creation is going on in the stock market, people starve in the real world.

Hey, I agree with you. But then again, my country doesn't have a 3 trillion dollar VISA bill from invading Iraq -or- have to shell out close to a trillion dollars a year in defence and related costs for maintaning a global network of 700 bases outside of it's borders (Yes, I know the official defense budget was 600 billion but when you throw in all the other costs that are defence related it's creeping mightly close to the 1 trillion mark)

Regardless, this financial transactions tax would provide your country with at least 140 billion per year if not more, the majority of which would be paid by those most able to shoulder the burden- the major corporate investors moving massive sums of money on a daily basis.

Why would they be able to shoulder this burden? Because again, the proof is in the pudding. While the average american citizen aint doing too great financially, what with debt load, stagnating or falling wages and unemployment, most of the major corporate players, including those that got billions of your tax dollars in bailouts, seem to be churning out these 'surprise' profits with increasing regularity

I'd have to day this is just silly, Arty.  Careful what you wish for.

Jythier you are correct. I had my wires crossed. Capital Gains are taxed when stock is sold. Dividends are taxes like income, according to the owners tax bracket, and may rasie said bracket. Good eye (I get all my info yearly on one form). My basic argument still stands however, that being, one pays on the stocks earnings (dividends). One pays if the stock value goes up and they sell (capital gains, 35%). If the stock goes down, the buyer absorbs the loss whatever that maybe. Additional taxes will make this unattractive to the small investor.

First, not all shares are expensive. Many small companies issue stock @ < $1 per share. Many more investors would pass these up. Since the OP suggested a per transaction tax, it would be more cost effective to buy one share of Microsoft ($29.63) than 29 shares of Mom & Pop, Inc. for $1 per share, a full 1/5th of that share is lost in tax.

Sounds like moving masses of money around aggravates you. That's no reason to put an additional tax on it. If the person makes money they pay their capital gains (which goes to the government). This should be make the "tax the rich" people smile... more successful trades the better for the government coffers. On the other hand, holding a particular stock (unless they pay substantial dividends, some stocks do not pay dividends) might not be a good strategy for the small investor. An additional tax would penalize the investor for extracting themselves from a bad or worsening situation.

Do you really believe there is a "magic" piece of software that will pick winning stocks? I wish. Truth is not beats good research and sound investment strategies. Let the traders trade, and don't worry Uncle gets his cut.

Well if it was only the cost of your added tax, probably not much. But now add brokerage fees, maintenance fees, and other costs (current taxes for example) and now it's adding up. If you want to keep/put small investors out of the markets, no problem right? Remember the small business with the penny stock? Well now it's much harder to find someone to take a risk for a chance on a small or modest profit, eaten up even more with your coming and going tax.

The OP states "Every time a share of stock  is bought, we should put a 0.25 % financial transactions tax on it." which seems to indicate a per share price., But then seems to define it further by a dollar amount. I'll assume he means a tax on the dollar amount. What if the value is less than $100? It will cost the government more money to recover the $.25 than it would earn!

Point is you want to tax, in addition to substantial existing taxes, on buying, holding, and selling stocks. Right now the government wants to cash in when the investor makes some money. You want the government to cash in regardless if the investor makes money. Wrong IMO.

 Where do you get your figures from? Not even close. Here's a LINK for you so you might sound half-way informed. You do realize 1 Trillion is a 1000 Billion (if such a term exists). Maybe you should look up and see the break down on defense spending, instead of pulling basing costs out of thin air. It's tough when your allies don't step up to the plate and pay full cost for their own defense. Don't worry folks like you and our president want to see US military power castrated, then when the world asks for help we can say no.

The only US program with a Trillion $ (+) price tag is this health care ponzi scheme currently in the works (6 years of benefits, 10 years of taxes, then what) and being force fed to the public by the Democrat Party. Cap and Trade might be the next one. But shaking the loose change out of taxpayers (because they are the investors) pockets will not curb the monster in DC's appetite.

BTW which Canadian Prime Minister was it sent their mother to the US for medical treatment? Come talk to me when any country, including Canada surpasses the US in discovery medical treatment, equipment, and drugs. That may be even more difficult if many of these nations had to pay for their own defense including R&D. I'm with you though cut the freebies for the hanger ons, and we'll see what the parasites can do for us and the world for a change.

Remember where the problems with the real economy started though - it was with the financial sector (that is, they suffered problems, and then those fed through to the rest of us).

Also the financial economy does perform a very valuable service of making sure money is invested where it is needed. That is, the good business investments are sorted out from the bad ones, allowing them to flourish more, and thus benefitting the economy as a whole. With stocks+shares it means making sure that they are accurately priced and there is a minimal buy/sell spread to allow the strong companies to do better than the weak ones. The main problem with the financial economy is that it's benefits aren't as obvious or tangible as say a manufacturer, and hence it is simpler/more popular to say manufacturing good, financial sector bad.

No, since for every winner there's a loser with what you described (that is for everyone who buys a share when it's undervalued there's someone who has sold it when it's undervalued), and it's like most businesses out there who look to buy something for less than they intend to sell it.

The impact of your tax is to make prices much more sluggish and less realistic. You might know that a share is overpriced and isn't worth a particular amount, but with such a tax you have to wait for it to be significantly overpriced before it might become worthwhile to sell your shares. That then means that resources are no longer going to the best candidates as much as before, since some shares will be more overpriced and others more underpriced. The trade off of more accurate prices is increased volatility, but it's generally a worthwhile one (especially since there are ways of avoiding such volatility with the right derivative combination).

Aren't most day traders losing money anyway?

LOL.  When will people learn higher taxes are not the solution to anything?

Sounds to me, based on Nitro and aeortar (dam thats such a hard name to remember), that artisym is not well versed in the US economic system. Actually, his argument stems more from a person who is agry that someone else made more money without breaking a sweat.

Short of breaking the law, if I could double or triple my check while do less work, I would not hesitate. These days our entire lifestyle depends on money and to a certain extent we always need more than what we currently get. It's one thing to cheat people out of their money, it's another to legitimately make a huge profit out of some kind of venture, such as buying and selling stocks. This mentality artisym has goes against everything this country stand for. People have the right to make money so long as they do it legally and last I checked there is nothing illegal about turning a profit in 1 hour.

How about we quit letting Congress get away with refusing to regulate what they have already been tasked with regulating before giving them more to be incompetent with.

I get my 'figures' from multiple sources. As I already stated earlier, the official DOD budget is only 651 billion (only!), but when RELATED defense expenditures come into play, for 2009 you're spending an absolute minimum of 925 billion dollars on defence, with the possibility of creeping up to 1100 billion. Or more. This information is easily attainable but let's take a little look-see here;

http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#cite_note-CRS_FY2009-0

In regards to your cute website with it's little scrolling counters, those costs are actually indeed valid! That is the cost both Iraq and Afghanistan have incurred -ALREADY-, which is going to hit the 1 trillion mark very soon.

So why did I say 3 trillion?

1) That 1 trillion dollar was not payed for with cold hard cash, it all went to your national debt, aka VISA. As you know anything you put on credit ends up increasing thanks to interest until you start paying it off, which aint gonna happen anytime soon.

2) VA and healthcare costs (long term) remember 35,000 physical casualties, over 100,000 cases of PTSD or other psychological trauma, not too mention the several hundred thousand other servicemembers.

3) Replacement of gear and personnel- This is the longest duration the United States Military has seen combat deployments in it's history. An Army's strength needs to be husbanded, not continuously thrown into the grinder. Pretty much everyone agrees (both civillian consultants and military planners) that U.S forces will need down time of at least a few years to re-organize, replenish, retrain, re-equip, etc after such a long deployment.

4) Civilian contractors. Wha? That's right, thanks to your old' pal Rumsfeld half the stuff that used to be done by folks in uniform is now being done by private 'defence contractors' for double, triple or quadruple the price (mostly given out on no-bid contracts) that would be paid for a fellow in uniform to do it. Heck, there's an armed 450 man battalion employed by a company called Armorgroup North to provide embassy security in Kabul and they don't come cheap!

Anywho, a decent summarization can be found here (written in March of 2008 but little has changed since then)

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702846.html

Yes, your health system does offer some of the best care in the world. If you're rich. I'm not, and am quite content with the healthcare system here. Statistically speaking I will live longer and suffer from less ailments during said lifespan than an American. I will never, ever have to worry about a hospital bill in the tens of thousands of dollars or having to declare bankruptcy or take out a second mortgage just for medical bills. And I remember earlier you pulled out the demographic card in the argument, well you'll be suprised at how multicultural Canada really is!

I never said there was a piece of software that will pick winning stocks. If you go back and read what I actually posted, I said that programs have been developed that look for trends and try to time a buy or sell order at the perceived peak or trough value for maximum impact. This kind of market activity has no concern with whether or not the stock is legit or the company behind it, but rather an attempt to maximize profit by taking advantage of micro-fluctuations that come and go as fast as a matter of seconds.... quite often so fast that in the intermediate time it would take for a human being to analyze and make a decision, the opportunity would already be lost.

Actually, that's not how it would work. Whether an investor purchased one share at 29 dollars value or 29 shares at 1 dollar value, the tax would be 0.25 % of the total sum, meaning the investor would pay the exact same amount whether they bought one share of Microsoft or 29 dollar stocks.  By the way, I don't know how you reached the 1/5th of total share price- 0.25 % on both deals would come out to just over a whole whopping 7 cents out of a 29 dollar investment.

aeortar-

Yes, exactly right. But, why exactly did the financial sector run into problems? Because years ago it decoupled from the real economy and built a nice little house of cards that recently tumbled down when the scam (things like CDO's and derivatives) were exposed as the utterly toxic and worthless shit they really are.

What was the solution to the financial sectors problems?

Conservative ideology states that they should have "pulled themselves up by their bootstraps" and sank or swim on their own credit.

But that didn't happen!

Instead, the private sector received a massive bailout of public tax dollars. They used that money, largely to rebuild their little house of cards and start up the predatory casino all over again. As soon as they got back on their feet, they told the unemployed, debt-ridden average joe to go fuck himself as they were now ok, thank you very much.

You are right, the point of the financial economy is supposed to be to make sure that money is invested where needed. But the current financial system has gotten away from that and moved into a nice little world of make-believe.

These mooks have already screwed over the average American citizen once and you can be damned sure they'll do it again if given half a chance.

As my favorite quote from George W Bush goes:

"Fool me once, shame on you.... fool me twice....we can't get fooled again!!!"

[quote]This information is easily attainable but let's take a little look-see here; http://en.wikipedia.org/wiki/Military_budget_of_the_United_States#cite_note-CRS_FY2009-0[/quote]

Wonderful link... I especially really appreciate how the pie chart shows those liberal entitlement programs (Social Security and Medicare) strangling the GDP by almost half. I recall a similar chart when I was a kid in high school. Back then Defense accounted for 45% while SS and Medicare accounted for 20%. We can now definitely see what will sap any wealth the US has in the future. And those loons in Congress want to add another massive money pit to the budget. More Americans should see a comparison to see how the entitlement monster is growing.

Another interesting chart there was the map that shows the world military expenditures by GDP percentage. It clearly shows who in the alliance are slackers. Perhaps if they paid their share, Americans could save some of their hard earned cash. I guess it's easy when you have a "rich" uncle. It will be an interesting world when the US can't and the rest won't. BTW China has no social health care, you don't pay you don't go to the hospital, even the emergency room. They have no entitlements to tie up their resources. It will be fascinating to see what occurs when their austerity clashes with western sensibilities. Who knows maybe Canada will be the leader then, and we can just go for the ride. Maybe Obama will take some of their advice over there and learn to do more than bow like their trained circus pet while begging for scraps.

No doubt the US is in debt. You stated "it all went to your national debt" (referring to every cent spent on defense including special funding). Since you apparently have an accounting job with the US government, maybe you can tell me were the $2.52 trillion in tax revenue collected (2008) went? You seem to think we charged everything. I'll make it easy for you, just tell me one military program that was put on what you like to call, the "VISA" card.  LOL So I guess China is paying for our SS and Medicare too, or do they just take loans for military spending? More wishful thinking on your part? Maybe if the debt payment consumed the entire tax collected, you'd have a point. You foreign liberals will have to wring your hands in anticipation a little while longer while your US president tries to make that happen for you.

You apparently like to count the same figures over and over . Whatever proves a point, right? There is no separate fund to replace military equipment. There is no separate fund for military contractors, which have been in use long before Rumsfeld BTW. I really like your VA figures for PTSD. According to your figures about 1 in 10 men and women in the military suffer from PTSD (that's assuming the entire US Army, Marines, and Air force participate in combat...they don't). In Iraq their are 142,000 and 31, 000 in Afghanistan. Since you like Wikipedia . They must be barely functional (I guess Al Quaida propaganda films are popular on Canadian TV) especially those on their 2 or 3, or more, tour of duty. The US wounded since 2001 until October is  4434 (Link can also find the numbers for those doing the fighting for the talkers back home, by country). 35000 might be your hope, but fortunately not true (Weren't you one of those a few years ago saying Iraqi civilian casualties were over 600,000? I seem to recall, but could be mistaken.). Yeah, as for the "several hundred thousand" other service members you speak of - I myself have a 20% VA disability, yet I've never step foot in a VA hospital, no need to. I pay for my own disability from my military pension (as does every retired vet with less than a 50% disability). They take my small disability payment out and give it right back to me. Military retirement comes out of defense spending by the way.You throw around your "facts" but in reality your an outsider looking in, don't have any real clue and it shows. Your article is proof positive of that.

BTW Here's some bad news for you, both the Army and Marines have  met their recruiting goal for the fiscal year months before it ended. Guess these young Americans want their shot at PTSD.

As for the OP, one last thought on this silly topic. The Bush tax cuts go away next year (35% will be 38%) this includes Capital Gains tax, which is taxed at the highest bracket. So no need for your little nuisance tax, they will haul in much more cash that way, at least in the interim. Obama knows taxes, never fear for that. You can float your idea in those countries where people expect the government to take care of them and personal choice is not a big deal.

Hmm, sounds like you describe perfectly a "magic" piece of software that will pick winning stocks" to me. How exactly is your concept different?

It's funny how 2 people say the say thing yet see 2 different meanings.

I know how to save the economy. It involves other people paying more.

That seems to be the current level of thinking.

Nobody ever comes up with some new revolutionary way of making things better for everyone that involves spending their own money.

I'd agree there, what should have happened is the companies who got themselves into such a mess should have been left to go under, and bailing them out means such financial institutions has a great incentive to repeat their behaviour (since they benefit from the upside and get bailed out if things go wrong). Since the bail out has already happened the next best solution is to ensure that no financial institution is allowed to be 'too big to fail', meaning that they can no longer be as confident of that bail out, and a few of them can be allowed to fail without causing the whole system to come crashing down. It also means I'd be happy with the government imposing various painful things upon any banks/companies being bailed out such as an additional tax just for them, since that would also encourage them to avoid such behaviour in the future. My problem with a tax such as you proposed though is that it punishes everyone - banks, individuals, other businesses - regardless of whether they were bailed out or engaged in reckless behaviour or not, and as such you lose the positive behavioural influence that a 'bail-out' tax would have(/have had since the bail out has happened).

Wow! We can finally agree on this point.

Um, Nitro..... U.S wounded in Iraq alone is 30,182 wounded and 4,280 killed. Put the two numbers together, and you get 34,462 casualties (that's wounded + killed)

http://www.globalsecurity.org/military/ops/iraq_casualties.htm

The 4,434 number you quoted sounds suspiciously like the Afghanistan wounded total, which is officially 4,471 wounded and 844 killed, and -if- you add casualties from Afghanistan and Iraq, present total is 39,777 U.S killed and wounded.

Yes, presently at this exact moment there are 142,000 servicemembers in Iraq and by the end of 2009 there will be 68,000 in Afghanistan. But, U.S troops have been deployed to Iraq longer than the duration of all WW2 and troops have been deployed to Afghanistan longer than your involvement in Vietnam.

Surely you don't need me to split hairs and get into the sheer number of bodies are needed (Albeit many of them the same ones on recurring tours) to keep the deployed force at strength for such a long time as people rotate in and out of country?

Well, I guess you do. It works out to be 1.6 million bodies deployed to both Iraq and Afghanistan since 2001.

Of those 1.6 million deployments, several studies conducted estimate that the number of mental-health injuries comprise approximately 300,000 returning servicemen, a far higher number than the 100,000 I quoted. Take a look-see here.... the primary organization behind this study was the RAND corporation, CLEARLY they and the various health organizations they worked with to corroborate their findings are all liberal front groups right?

http://www.msnbc.msn.com/id/24183188

No arguments, military contractors have been around for a long time. However, they're usage under rumsfeld quite literally skyrocketed to never before seen proportions. Since you're such an expert, Nitro, about the military, why don't you recount to me the speech Rumsfeld gave to the Pentagon on Sept. 10, 2001?

Let me do it for you. He basically stated that the number 1 enemy facing the U.S military was the U.S military itself. The military bureaucracy, he stated, was so massively cumbersome and ineffective that he was essentially going to privatize every single function of the military that he could, with the exception of course of the front line combat troops.

Now you know very well that for every uniformed man in combat, you need several in the rear (I was always told a ratio of 10:1 or 6:1 depending) doing everything from maintaining vehicles, cooking food, shuffling paperwork and a thousand other tasks. What Rumsfeld did was tap into a massive amount of the rear-echelon stuff and put it in the hands of the private sector.

You want to know a funny statistic?

During GW 1, there was 1 contractor for ever 100 soldier

At the start of 2003, the beginning of GW 2, the ratio was one contractor to 10 soldiers.

By 2006 the ratio was 1 contractor per 3 soldiers

By 2007 the ratio was 1 contractor per 1.4 soldiers

Keep in mind these are all purely "defence and defence related" contractors, all getting paid a lot more than what a counterpart U.S serviceman is getting. A report from the GAO in 2006 stated that of all the defence contractors in the country, approximately 48,000 were armed security services, essentially hired guns like Blackwater, Triple Canopy, Custer Battles and so forth.

Then of course you had the ever famous Halliburton which took on dozens of the army's traditional functions like repairing and maintaining vehicles and radios.

I could go on and on. Entire books have been written on the subject.... "Blackwater" by Jeremy Scahill is a good one you should read, but suffice it to say that "this man's army" sure aint what it used to be and has had many of it's traditional roles outsourced entirely, all being paid for by top taxpayer dollar!

Indeed. I think that social security and medicare in the U.S should be abolished entirely. While you're at it, why don't you get rid of the public education system too? I mean, it's not like the U.S has a bunch of retirees that are depending on any of these programs. Let's let granny smith freeze to death and lower the surplus population!

And that fellow who gave 15 or 20 years of service at Ford or Chrysler and just lost his job, how dare the slacker expect a handout, let him pull himself up by his bootstraps!

Hi Chuck,

Well, I thought I spelled it out pretty clearly earlier. Here goes:

A "winning" stock is something that is backed up by a solid company, that's doing good business and has a decent future, in fact quite possibly a much, much brighter future than it's current state. The only way you can find a "winning" stock is, as Nitro said, doing your homework, lots of research, and of course knowing general market trends. For example, if you were to purchase shares of Microsoft in the early to mid 80's, or stocks of Google a few years back are good bets.

Up where I live there are several diamond mines that opened up shop just outside of town and during their start up were penny stocks. Some of the folks that invested in them when they were penny stocks became millionaires and have since retired.

Then, a lot of people got it in their heads that if you invest in any new diamond mine you're sure to become rich. A few years later another diamond mine opened up in the area and everyone poured money into it, but it turns out the mineral people hadn't really done their homework and built the mine on an area not nearly as good as they thought it was. The mine folded and the investors basically watched their money go up in a puff of smoke.

Now, the first mines were what you would call a "winning" stock because if you did your homework you'd find that their business case and position was a sure-fire deal. They had done their homework and had all the results from all kinds of test and surveys to show that they were building on a very rich deposit, AND they had several major customers lined up before construction had even started.

The mine a few years later was not a winning stock, because if you did your homework you would find that their tests and surveys weren't nearly as ironclad or complete as the previous mines and their business case was more improvised than planned.

In this case the mine basically said "the tests aren't 100% conclusive but they're good enough that we feel confident we'll get a lot of high grade diamonds!"  and folks, remembering the people who went from rags to riches overnight by investing in other mines, gladly threw their money at it without really checking it out first.

So, the above is an example of what is, and isn't a winning stock.

The software programs that I was talking about don't care or need to know what stock they're trading. It could be a winner stock or a loser stock, it really doesn't matter one little bit. So long as it's something that's being bought or sold in volume (lot's of people buying up stock for a company and hoping it'll rise or lots of people unloading their stock from a company they think is doomed) there are going to be thousands of micro-fluctuations over the course of a day when the stock is either rising or falling by miniscule amounts.

These programs look for these little micro-peaks and troughs to issue the buy or sell recommendation at the opportune time and day-traders will often place multiple buy and sell orders over the course of a single day as they move money around in larger and larger increments to try and make a profit off of very small margins.