On or around the time of the July-August 2011 debt deal negotiations in Washington DC and the Standard & Poor’s downgrade of US treasuries we watched the US stock market, and stock markets around the planet responding to what was going on a deal with extreme volatility. Under such conditions, are often times when investors lose big time or make incredible gains. Generally, it’s the marketplace professionals who’re in the overall game and understand the overall game, that ultimately ends up with all the prize winnings.
At one time the Dow Jones industrial average went down 632 points in one day. It was the greatest drop since the 2008 market crash in a one-day period. The quantity of volume being traded that day was in excess of the amount of small-time investors in the market. That’s to state, those numbers were impossible, roughly unlikely and highly improbable to produce one wonder. The thing that was going on? Well, it’s simple; the high-frequency trading computers using their sophisticated artificial intelligent algorithms were making trades in microseconds, and tens of thousands of them per every 10 minute period.
On Larry Cudlow’s “Free-Market Capitalism” show on CNBC Larry was conversing with a guest and suggested that it was getting a little unmanageable, and things weren’t fair to the little guy, the in-patient investor. Worse, it absolutely was completely eroding confidence within our stock markets. If the smalltime investor doesn’t feel safe or feels that the overall game may be the rig, just like a slot machine in a casino, then why would they play?
I laughed because I was in the midst of writing this short article when I listened to his condemnations of high-frequency trading schemes, and I completely agree in what he was saying บาคาร่า. Of course, this is not the first time, if you’ll recall this past year there was a substantial flash crash once the machines took over, and that also rocked investor confidence, and yes the authorities and SEC have investigated the situation, but obviously hasn’t fixed it yet. To possess 10% market swings within just a couple of days of trading keeps people up through the night, it causes stress and even heart attacks.
When smalltime investors who have their life savings and their retirement monies in danger, all that they’ve ever earned that uncertainty requires a toll. Not only to them, but in addition on the general confidence, and that’s bad for our nation because our stock markets are to help capitalize American businesses. If they are working, that produces a huge problem. It’s too bad no-one is addressing this problem or fixing it. Indeed I hope you will please consider all this and think on.