Like the real estate brokerage business, the form of the stock market continues to change.  But the human factors that drive the market — such as greed, self-delusion, and emotion — remain the same from century to century.

One of the most dramatic changes in form is scheduled to be finalized about the time you’ll be reading this article:  the elimination of “seats“ on the New York Stock Exchange.  A seat on the Big Board has been one of the greatest mechanisms ever devised for shafting John Q. Public.

Not that John Q. hasn’t deserved to lose trillions of dollars to the guys who have owned the 1,366 Big Board seats over the years. On the contrary, it’s his self-delusive belief that he can actually compete with insiders that has allowed seat holders to perpetuate the greatest transfer-of-wealth program invented since the NYSE was founded back in 1792.

I’ve always wondered if the amateur stock buyer isn’t at least curious as to why someone would pay millions of dollars for a seat on a stock exchange. In 2005 alone, the price of a seat on the Big Board increased more than threefold, from about $1 million to more than $3.5 million.

I think it’s safe to assume that the people who pay that kind of money might be privy to just a bit more information than you and me.  A Buddhist would surely draw the inference that the deck is stacked against the average investor.  (More on this in a future issue.)

Now, however, the form of the game is changing, because the sweet-seat setup is over. The NYSE is in the process of merging with Archipelago Holdings Inc., which means it is shedding its last vestiges of privacy.  Members will receive $4.3 million per seat in cash and stock in the new company … and you can bet they are going to profit handsomely.

If you doubt me, consider that Thomas Caldwell, a Toronto money manager, bought about 50 NYSE seats in 2005 alone.  Do you think he just might have an inkling that this new publicly traded company is likely to be extremely profitable?

Given that market insiders eat little kids for breakfast, it’s wise to steer clear of them if you want to protect your chips.  Instead, invest your money in bettering your skills, your knowledge, and your business.  Who knows? — someday, you may become so successful that you’ll be able to sell seats to people who want to be insiders in your deal.