USA Today View on High-Frequency Trading Gives Insight into Simpleton Thinking

A USA Today editorial offers:

In today’s stock market, there are two types of trader.

One, the traditional investor, places a buy order based on a belief that a company will prosper and that its price will rise, or a sell order based on the opposite belief.

The other, the high-frequency trader, deploys massive computer capacity and complex algorithms to buy and sell individual stocks multiple times in a fraction of a second, all in search of micro-profits with each trade. This trader cares not a whit about a stock’s fundamentals.

Trying to scare a public into a fix (whatever that might be) by slamming the use of something other than fundamentals to make trading decisions, especially a public by and large clueless to Fed rate manipulation, bailouts and entitlements that can’t be paid from broke pension funds, is especially Goebbels-esque.

Of course, I know battling the beast is futile:

Note: There are issues with incestuous unions across Wall Street that should be fixed, but are you really waiting for that?

2 thoughts on “USA Today View on High-Frequency Trading Gives Insight into Simpleton Thinking

  1. USA Today say’s that investors buy and sell based on belief. How many times has belief been proven wrong over the centuries in all areas of human history? We don’t need more belief. We need more doubt, and more testing , measuring and thinking systematically.

  2. I just want to tear my hair out when I read this crap. It doesn’t help when you have people like Warren Buffett and Mario Gabelli calling for a trader tax. It’s so funny that one type of trading – value investing- is so revered and everything else is somehow unacceptable. Try value investing on growth stocks like Netflix or Green Mountain. See how well that strategy works. If everyone followed Graham and Dodd, companies like Facebook would never be able to raise capital. Not too mention there would be a lot less liquidity for the mutual funds that are so revered to get in and out of stocks.

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