Entries Tagged 'Investing' ↓

Runaway High Speed Trading – Protect Yourself!

On September 28th, the New York Times’ Business Page published “Beyond Wall St., Curbs on High-Speed Trades Proceed“. It shows how Australia, Canada, the European Union, France, Germany, and Hong Kong are all leading the United States in cracking down on high speed trading.

High speed trading employs computers located as close to the stock exchange computers as possible. The fastest computers use private high-speed cable rather than the Internet. Then high-speed traders employ programmers to build special algorithms (computer code) that can execute each trade in one trillionth of a second.

These “algos” are invisible to others. Algos prevent trades made by institutional investors and retail investors from taking place until the high speed traders need to sell their shares of stock that are about to fall in price.

Are “algo wars” among high speed traders causing stock exchanges and other financial markets to crash? Are algo wars increasing volatility in the market? In America, thanks to the opaqueness of the Security and Exchange Commission (SEC), it’s anyone’s guess. But many active traders and financial regulators in other countries believe high-speed trading is the cause of flash crashes and excessive volatility. Continue reading →

Fat Finger? No Way!

Are you a “dumb investor”? Do you really think a “fat finger,” i.e., a typo, brought about the stock market crash last Wednesday morning? I’ve just finished a book called Dark Pools. It says NO WAY.

Have you yet realized that your pension fund or 401(k) is short, or likely to be short, of being enough to live on — even with Social Security? Do you have any idea that’s because wealthy traders are raiding your retirement funds?

Do you know that 70 percent of the stock market is now dominated by high-speed trading? These high speed traders are “gaming” stock exchanges around the world and and cheating both you and your retirement plan managers out of billions, if not trillions, of dollars!

This is much, much worse than the Libor scandal. Continue reading →

Wrecking Ball – Holding On While Letting Go

In “Fat Finger? No Way” I reviewed a book called Dark Pools. It explores how high-speed traders are siphoning off money from stock exchanges, institutional investors, and retail investors (“dumb money”).

Several people said my post made them furious, but what could they do about it? Before I share my thoughts about what might be done, I want to share a couple of personal stories and say a bit about Bruce Springsteen’s new album, Wrecking Ball. Financial reform, like the creative destruction of businesses, is going to take holding on while letting go of the past!

Two boys and a boat Continue reading →