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Post by jeffolie on Aug 11, 2011 18:37:47 GMT -6
Big market moves like these are computer driven ... individual investors are turned off and play no significant part ================================= "...High-speed trading is turning the stock market is turning into a farce, and in the process is turning off an entire generation of investors. It’s speeding up a process — P/E ratio compression — that normally takes a grinding bear market a couple of decades to accomplish. Even after the wake-up call of the May 2010 flash crash, the SEC has done little to foster a healthier market ecosystem. It looks like computer-driven, high frequency trading shops, which now account for the majority of trading volume, hammers stocks much more quickly than human investors And there aren’t enough human value investors (at these prices) to absorb the supply of high-P/E stocks from high-speed trading shops looking to sell. These shops aren’t liquidity providers; they’re parasites that worsen volatility, extract economic rents from long-term investors, and make rational investors who aid the vital process of market efficiency want to throw up on their trading screens. As investment horizons have shortened, the market has gotten dumber — especially regarding the macro picture. Rather than doubt the sustainability of the economic stats in early 2011, the market didn’t ask any deep questions, and rallied mindlessly. Now that we get a cluster of terrible data points in the space of the past week (downward GDP revisions, ISM near 50, etc.), we take the elevator down in gut-wrenching fashion. Common sense dictates that GDP and ISM numbers would weaken when new supplies of fiscal and monetary stimulus drugs were cut off, so why was this a surprise? dailyreckoning.com/crony-capitalism-at-work/
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Post by unlawflcombatnt on Aug 11, 2011 22:55:30 GMT -6
Excellent assessment.
401K holders should be given an immediate, emergency option of pulling ALL of their money out of stocks and putting it into to 10-year Treasuries or precious metals. Government investment fund managers should be mandated to IMMEDIATELY put at least 1/2 of employees' retirement money into 10-year Treasuries, Gold, or Silver.
There is no excuse for allowing the money absconded from Government employees (or Government-encouraged funds) to be used like poker chips by Wall Street Bankster-Gangsters.
Obama needs to get off his dead ass and issue an executive order to exactly this effect.
High Frequency traders should not be allowed to steal the money of retirees without their express, clearly-understood written consent. And if takes and executive order to accomplish this, then it should be done IMMEDIATELY--as in tomorrow, Friday, August 12, 2011.
This is why we have a Government and an executive branch that has the power to issue Executive Orders.
It make no difference whosoever whether it "crashes the markets" or not. All that should matter is whether it destroys the wealth of average and middle class Americans. And if that can be prevented by an Executive Order, who gives a rat's ass whether it crashes the "markets."
These gambling Wall Street banditos--using other peoples' money--should have their financial asses handed to them on a platter.
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Post by fredorbob on Aug 11, 2011 23:15:39 GMT -6
Desktops taking over the job of capitalists. That should say something right there.
Looks like they're obsolete, and don't object or I'll call you a Luddite.
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Post by jeffolie on Aug 12, 2011 7:57:23 GMT -6
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Post by jeffolie on Aug 13, 2011 7:25:17 GMT -6
High Frequency Trading (HFT) is the main source of revenue, money for the stock exchanges operators now that HFT is overwhelmingly most of the transactions. Each transaction, sale, buy results in a small fee going to the exchange. Individual traders no longer have much financial influence now that their transaction fees contribute so little to the earnings of the exchanges.
Exchanges go out of their way to encourage HFT. Exchanges offer newly built space, buildings extremely close to the exchange to HFT companies hoping to get premium rents form HFT firms seeking to reduce the time it takes to transmit their trades by extremely small fractions of a second inorder to gain speed advantage over their competitors perform HFT. Speed, time matter alot to HFT success.
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Post by jeffolie on Aug 19, 2011 8:59:55 GMT -6
Individuals, average investors have been leaving stock mutual funds. Why? Because they hate the volatility which in large part comes for exagerate moves created by algorithm, High Frequency Trading programs which feed the exchanges with money from their transaction fees. The exchanges know where their bread is buttered ... where they get their revenues: HFT trading fees. Denninger does a fair job in this rant on HFT: =========================================== HFT Scammers Crowding Out Continues 2011-08-19 HFT Scammers Crowding Out Continues Oh this is beautiful: Computerworld UK - The New York Stock Exchange group (NYSE Euronext) has plugged into a 10 Gigabit Ethernet setup with new server adapters and application acceleration from Solarflare. .. NYSE said the move was vital as each data centre supported billions of transactions and quote requests every day. Many of the trades are generated at speed by algorithmic or high frequency traders (HFT) including hedge funds. Isn't that nice? Investors will continue to get screwed until these abuses stop. These vipers provide no liquidity to the market - only volume - and their primary tool of "profit" is to stuff quote channels so as to be able to arbitrage price dislocations that they intentionally create. Any honest read of the securities laws, incidentally, leads pretty much anyone to conclude that this sort of pattern of conduct should be against the law. But when it's profitable for a financial institution it suddenly becomes "not illegal", you see, just like it wasn't really illegal to robosign foreclosure documents despite that being perjury if you or I did it. The fix for this is very simple, if our regulators cared to do anything about it. All you have to do is deem the minimum order valid time for any bid or offer placed on an exchange to be two seconds (not milliseconds, seconds) beyond the time that the quote is disseminated to all exchanges such that any bid or offer is exposed to the possibility of a human hitting it. This prevents "quote stuffing" from being profitable. In addition require that each connected entity monitor for and be able to prove for each entity submitting orders that it has the margin capacity to clear each and every outstanding bid or offer that is outstanding at any given point in time prior to accepting the order. The latter, incidentally, is done for "ordinary traders" by every retail brokerage I've ever done business with. Those changes will happen when Hell freezes over. market-ticker.org/akcs-www?post=192603
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Post by graybeard on Aug 19, 2011 19:33:29 GMT -6
Tax every bid. Double the tax if there's a transaction.
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Post by unlawflcombatnt on Aug 20, 2011 9:16:19 GMT -6
Tax every bid. Double the tax if there's a transaction. Sounds like a good idea to me. In a broader sense, we should be more heavily taxing all types of purely financial transactions. Rapid movement of money from one investment to another--even if it's potentially a productive investment--doesn't help the economy at all. Money changing hands in financial transactions doesn't create any wealth. It extracts it. And re-routes it away from both productive capital investment and demand-creating consumer spending.
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Post by jeffolie on Aug 20, 2011 9:36:30 GMT -6
Tax every bid. Double the tax if there's a transaction. Sounds like a good idea to me. In a broader sense, we should be more heavily taxing all types of purely financial transactions. Rapid movement of money from one investment to another--even if it's potentially a productive investment--doesn't help the economy at all. Money changing hands in financial transactions doesn't create any wealth. It extracts it. And re-routes it away from both productive capital investment and demand-creating consumer spending. The French-German recent agreement to investigate proposed cooperation was a paper thin, issue strength trial balloon. Included was a financial transactions tax ... so far no such new tax has been enacted Financial and businesses quickly opposed the proposed transaction tax in Europe
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Post by graybeard on Aug 20, 2011 12:06:08 GMT -6
Stock buys should be taxed at the same rate as merchandise.
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Post by jeffolie on Aug 20, 2011 16:10:55 GMT -6
Stock buys should be taxed at the same rate as merchandise. Great idea
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