Simply force purchasers to hold stock for at least 6 months, or some other long period, so that fundamentals will have to be carefully looked at. Buying a stock signals confidence in a companies stock price for the duration you expect to hold the stock. If you make people hold it longer, the signal becomes more meaningful. Finally, market manipulation becomes much less rewarding, since you can only flip your money twice a year (profit from manipulation is % gained each time * capital * number of manipulations), and you can't foment at all really.

Perhaps it would also be helpful to put a 5 (or more) day delay on any sell orders. I would personally be in favor of a 2 year delay or more. Currently, if you get really bad news (like a companies only drug was not approved, making the company worthless) you can sell the stock immediately via a market sell order, and get whatever the highest offer is. This is no different than collecting pre-signed contracts to buy your house, then signing the best one when you see smoke coming out of the windows. The person offering to buy the stock has obviously not had time to adjust their order based on the news, and so you are selling them something they weren't bidding on. If you give buyers time to adjust, selling on a panic would be completely retarded, since you will either lose all value (selling into a market with buyers who have adjusted their offers way down), or the panic will subside and you will get a fine price, but then could have just held it as you were planning before the panic anyway. Discouraging panic selling makes prices more stable (does anyone honestly think that the best estimate of the value of a large company could possibly vary 50% in a few days??) Also, automated trading triggers would be eliminated, which would be great. If a firm can setup computers to sell a stock if it drops 5% in 1 minute, then they are taking much less risk than someone who has to hear news, find a computer, put in login information, etc. However, the firm's buy order signals the same confidence as the careful stock researcher, while in reality they can buy stock with far less confidence since they are taking less risk.

Both of these measures would reduce market volatility, if not effectively eliminate it over short periods. This would mean that corporations could borrow money on much better terms, since their stock prices would be more stable, meaning that stock is better collateral. It would also mean shareholders would insist on things like dividends and long term profitability and planning, since they are going to be holding the bags if things aren't good in the long term.