Message Font: Serif | Sans-Serif
 
No. of Recommendations: 12
I'm always amazed at the amount of press that HFT gets.
It's really not a very big business, for all its frenetic activity.
Current latest central estimate is that all the HFT players combined had aggregate
profits of about $1 billion last year, down more than 75% from 2008's total.
(figures from the Economist)

As for flash crashes, don't worry, be happy. Prices can do anything in the short term.
That was always true, and presumably always will be.
I find one quote in that article telling:
"Most agree that computer trading is good for the average investor
because it's inexpensive. But it also triggers unpredictably large price swings —
causing widespread Maalox moments. It's breeding distrust in the market."


That last bit hits the nail on the head: nobody with the intelligence god granted
a pound cake can lose money to these guys because we always use limit orders.
Nothing is broken because prices never were fair.
The issue is one of making the rubes feel comfortable with investing in stocks.
Perhaps a little more distrust would be a good idea. Bring on the volatility.

Jim
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement