investing in stocks for the future
investing in stocks for the future
How does everyone feel about investing for your future retirement, kids education, health expenses, etc. in a corrupt system now run mostly by computer trading? Does this not sound fundamentally wrong to entrust your future in this casino of the 21st century.
- Taylor Larimore
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A corrupt stock market system ?
Hi AM:
Thank you.
Can you support your accusation with evidence that the stock market system is corrupt?"A corrupt system now run mostly by computer trading?"
Thank you.
"Simplicity is the master key to financial success." -- Jack Bogle
In a July 15 article by Jeff Sommer in "The New York Times," Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania, says everyone should invest in the stock market and keep their money there as long as they can. The article also notes that some bears think Siegel is too optimistic. Whatever, definitely worth a read.
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Re: A corrupt stock market system ?
I'm not exactly sure what am is talking about, but I think the reference is to high frequency trading:Taylor Larimore wrote:Hi AM:
Can you support your accusation with evidence that the stock market system is corrupt?"A corrupt system now run mostly by computer trading?"
Thank you.
http://www.nytimes.com/2009/07/24/busin ... ading.html
As long as high frequency trading exists, I think the stock market is "corrupt" (as in "unfair") where short term traders are concerned. Long term investors are perhaps less affected, but the problem is that I think nobody really knows exactly how High Frequency Trading affects mutual funds and EFTs.Powerful algorithms — “algos,” in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.
High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there.
Don't kid yourself. Even before high frequency trading, fundamentals did not matter. Remember US 1929? Nifty-fifty 1972? October 1987? Japan 1989? Nasdaq 2000? The more things change, the more things stay the same.am wrote:yes high frequency trading. ... Seems like fundamentals do not matter anymore.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
And the latest I've read is that the SEC is still trying to figure out exactly what caused the May 6 crash and is still working on ways to approach high-frequence trading.atomiclightbulb wrote:
Long term investors are perhaps less affected, but the problem is that I think nobody really knows exactly how High Frequency Trading affects mutual funds and EFTs.
You'd need to be high enough frequency though. The flash crash prices showed you some true prices that people were willing to buy at. A month later, those are the prices we trade at regularly.livesoft wrote:I want more flash crashes like May 6th to happen. It is easy to make money on such days even if you are not a high frequency trader.
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Thats funny, I thought these were evidence that fundamentals do matter.bob90245 wrote:Don't kid yourself. Even before high frequency trading, fundamentals did not matter. Remember US 1929? Nifty-fifty 1972? October 1987? Japan 1989? Nasdaq 2000? The more things change, the more things stay the same.am wrote:yes high frequency trading. ... Seems like fundamentals do not matter anymore.
Didnt 1929 have a crash thingy and a depression thingy?
The Nasdaq would have never corrected.(let the party roll on)
Japan would be going thru the roof.
(cause thats what makes folks happy)
Their inflation/defaltion stuff is just noise.
Forget that "lost decade stuff".
Enron would be a fine, sound, strong company.
(who cares if the guys are liars, fundamentals dont matter)
Hey lets forget all this dollar,credit,spending stuff.
Lets send our market off to 20,000, 30,000, hey what the heck,
50,000 (fundamentals dont matter)
Thanks
SP-diceman
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Re: A corrupt stock market system ?
Vanguard Total Stock hit $15.91 on 3-9-09.atomiclightbulb wrote:As long as high frequency trading exists, I think the stock market is "corrupt" (as in "unfair") where short term traders are concerned. Long term investors are perhaps less affected, but the problem is that I think nobody really knows exactly how High Frequency Trading affects mutual funds and EFTs.Powerful algorithms — “algos,” in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.
High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there.
It was $30.27 on 4-23-10.
Its not clear to me if I had purchased it why I would care about
"spotting trends in milliseconds".
I think this is just a bunch of noise.
(folks enjoy being victims)
Thanks
SP-diceman
Clearly, investors were not concerned with fundamentals. Else, stocks would never had gotten so out of whack for the events I cited.SP-diceman wrote:Thats funny, I thought these were evidence that fundamentals do matter.bob90245 wrote:Don't kid yourself. Even before high frequency trading, fundamentals did not matter. Remember US 1929? Nifty-fifty 1972? October 1987? Japan 1989? Nasdaq 2000? The more things change, the more things stay the same.am wrote:yes high frequency trading. ... Seems like fundamentals do not matter anymore.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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With respect, I disagree with this on both technical and substantive grounds.sscritic wrote:Computerized trading should be banned. The more time it takes a trade to complete, the safer we will be. I would recommend at 30 to 60 day delay from order to completion. That would prevent any crashes.
Tehcnical issues: The longer it takes to process a trade (i) the greater the cost to all involved (ii) the greater the risk of investors being caught out should one of the brokers become insolvent.
Substantive issue: the absence of computer trading didn't prevent crashes. 1929, 1919 etc.
I think sscritic was joking. The housing market (in the U.S., anyway) behaved very strangely even without computerized trading.traineeinvestor wrote:With respect, I disagree with this on both technical and substantive grounds.sscritic wrote:Computerized trading should be banned. The more time it takes a trade to complete, the safer we will be. I would recommend at 30 to 60 day delay from order to completion. That would prevent any crashes.
Tehcnical issues: The longer it takes to process a trade (i) the greater the cost to all involved (ii) the greater the risk of investors being caught out should one of the brokers become insolvent.
Substantive issue: the absence of computer trading didn't prevent crashes. 1929, 1919 etc.
Most of my posts assume no behavioral errors.
- White Coat Investor
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I think you're mistaking the car for the used car dealer.
Stocks are cars. The stock market is the dealer.
How do you beat a used car dealer? First, by understanding a little about his business and his motivations. Second, by avoiding him as much as possible (avoid frequent trading.) Lastly, when you do have to interact with him, be sure you don't pay any of the bogus fees like loads, commissions, high ERs etc.
In the end, stocks represent ownership of a company. I would worry a lot more about the employees of the company screwing you over than the market where you bought it doing so. How do you protect against the employees (CEOs etc)? Don't put too much in any one company.
Stocks are cars. The stock market is the dealer.
How do you beat a used car dealer? First, by understanding a little about his business and his motivations. Second, by avoiding him as much as possible (avoid frequent trading.) Lastly, when you do have to interact with him, be sure you don't pay any of the bogus fees like loads, commissions, high ERs etc.
In the end, stocks represent ownership of a company. I would worry a lot more about the employees of the company screwing you over than the market where you bought it doing so. How do you protect against the employees (CEOs etc)? Don't put too much in any one company.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: A corrupt stock market system ?
Amen !!!SP-diceman wrote:
Vanguard Total Stock hit $15.91 on 3-9-09.
It was $30.27 on 4-23-10.
Its not clear to me if I had purchased it why I would care about
"spotting trends in milliseconds".
I think this is just a bunch of noise.
(folks enjoy being victims)
Thanks
SP-diceman
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If you think the stock market is corrupt, it's probably best for you to stay away from it. Buy some insured CDs or short-term bonds if it'll help ease your concerns. Just don't complain if, over the long term, the stock market delivers higher returns than you'll receive in these "non-corrupt" asset classes.
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It aint the bubble that kills you.bob90245 wrote:Clearly, investors were not concerned with fundamentals. Else, stocks would never had gotten so out of whack for the events I cited.SP-diceman wrote:Thats funny, I thought these were evidence that fundamentals do matter.bob90245 wrote:Don't kid yourself. Even before high frequency trading, fundamentals did not matter. Remember US 1929? Nifty-fifty 1972? October 1987? Japan 1989? Nasdaq 2000? The more things change, the more things stay the same.am wrote:yes high frequency trading. ... Seems like fundamentals do not matter anymore.
Its the revision to the mean.
Thanks
SP-diceman
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Re: investing in stocks for the future
am wrote:How does everyone feel about investing for your future retirement, kids education, health expenses, etc. in a corrupt system now run mostly by computer trading? Does this not sound fundamentally wrong to entrust your future in this casino of the 21st century.
Yes, its sounds that way.
However when one looks at the facts they should see that this casino has a long-term positive expectation.
(in the other casino the odds always favor the house)
They should also look back to when the casino was closed.
(the caveman never faced the horror of high frequency trading but
he did have a lot of other problems)
Thanks
SP-diceman