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Stocks B / Berkshire Hathaway


Subject:  Re: OT-High Frequency Trading Date:  4/23/2013  7:40 AM
Author:  mungofitch Number:  201129 of 253439

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.

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