Other Paul:
>>Too much cash chasing too few stocks.
That is a heresy here, are you implying inflation? 🙂
>>“nano-second” execution and prompt, dependable settlements? Yes
Dependable settlement?
The problem with settlement delays and defaults went epidemic some time ago, and has not been resolved, you find that reassuring?
to Nuno:
>>”If it was a human doing that..”
That’s one BIG “if”. No human ever has, none ever will. Your case is not even hypothetical.
Bob’s comment gives a great answer, as to the real issues.
One other point:
Like the fraudulent paper back and forth on the COMEX (where x-times the actual physical are traded daily), this hyperspeed trading has degenerated into something out of Star Trek.
In “A Taste of Armageddon”, two planets have been fighting a virtual war for 500 years, where the computers do all the firing and destruction calculations, no physical destruction takes place. Only the affected people must report to disintegration chambers, otherwise life goes on.
Other PaulFeb 26, 2010 @ 2:12
We’ll know when Congress is finished its work on the Bad Boyz of Wall Street when Rick runs a piece with grab from the movie “Trading Places.”
What comes to my mind is the scene of Aykroyd and Murphy calmly writing up trading tickets after financially destroying Bellamy and Ameche in the OJ Futures pit.
jjayFeb 26, 2010 @ 1:52
Bernanke said the Fed is “not going to monetize the debt”
Since when?
Obama wants to outlaw foreclosures unless they go through HAMP first.
As Homer Simpson’s first rule of success at work states, “Great idea boss!”
BobFeb 26, 2010 @ 0:08
Nuno — First of all there is everything wrong with co-location of computers at the exchange. It blatantly provides an advantage to only a few. Secondly, the black box guys are doing a helluva lot more than the specialists of the past. The specialists knew where the stops were and would indeed “run” them as they pleased, but they didn’t have algorithms to automate it across the spectrum of stocks, to “phish out” in 100 share lots whatever they wanted to do, be it run stops, paint the tape or otherwise affect the market. It is not efficiency or liquidity these people are providing. It is rather a hijacking of free market movements on a scale that has never been seen before for the benefit of a very select few. This whole affair is truly souring people on the markets as they begin to realize it is not really a public market after all, but rather a market only for the co-located few. What’s the HFT volume these days? 60%? 70%? Somewhere in that area. It’s a distortion, Nuno. A big distortion and it’s not healthy for any of us including the black box guys.
DougFeb 25, 2010 @ 19:16
Robert and Other Paul: When writing your congressman make sure you drop in a couple of those newly printed 100’s….it seems to be working well for the banking lobby.
coolsaintFeb 25, 2010 @ 16:23
I used to think only 2 types of people were buying stocks . The Feds provided with liquidity by the treasury using tax payers money and idiots . I guess there’s now a third group called “COMPUTERS” . Here comes the TERMINATOR !!!!
All this, and now 5 former Treasury Secretaries joining Paul Volcker in his quest to eradicate proprietary trading at the big banks, and yet the legislation is being reported as DOA in the House… Why?
Have you written your representatives and told them to get on board with Volcker?
And what is wrong with that kind of high frequency trading? If it was a human doing that, would there be complaints? What is the problem here? That they can do it better than the old-fashioned guys? Or that someone is placing stops at obvious places?
There is nothing new under the sun, they are just more efficient.
Other PaulFeb 25, 2010 @ 6:39
Too much cash chasing too few stocks. I remember that mantra a few years ago. The world was going to run out of stocks to buy. Get ’em while you still could.
Are today’s stock and bond markets levels telling us that there is too much cash (“real” or QE’d into existence) around? Why a P-E on the S&P500 over 20 with 10%–20% unemployment? Why are 30 yr Treasuries under 4.65% with looming $100T social obligations? Why zero to negative yields on T-bills with $1+T deficits as far as the eye can see?
Invest in illiquid houses and commercial real estate? No. Invest in stocks and bonds with “nano-second” execution and prompt, dependable settlements? Yes.
Slightly related: The US Bureau of Printing and Engraving publishes how much currency is printed, $1s to $100s. Between 1984 and 2009, the Bureau’s annual output of 100s has increased 10 times. In 2009, there were slightly less 100s printed than $5s, $10s, $20s, and $50s combined (in quantity, not $ value).
Comments on this entry are closed.
Other Paul:
>>Too much cash chasing too few stocks.
That is a heresy here, are you implying inflation? 🙂
>>“nano-second” execution and prompt, dependable settlements? Yes
Dependable settlement?
The problem with settlement delays and defaults went epidemic some time ago, and has not been resolved, you find that reassuring?
to Nuno:
>>”If it was a human doing that..”
That’s one BIG “if”. No human ever has, none ever will. Your case is not even hypothetical.
Bob’s comment gives a great answer, as to the real issues.
One other point:
Like the fraudulent paper back and forth on the COMEX (where x-times the actual physical are traded daily), this hyperspeed trading has degenerated into something out of Star Trek.
In “A Taste of Armageddon”, two planets have been fighting a virtual war for 500 years, where the computers do all the firing and destruction calculations, no physical destruction takes place. Only the affected people must report to disintegration chambers, otherwise life goes on.
We’ll know when Congress is finished its work on the Bad Boyz of Wall Street when Rick runs a piece with grab from the movie “Trading Places.”
What comes to my mind is the scene of Aykroyd and Murphy calmly writing up trading tickets after financially destroying Bellamy and Ameche in the OJ Futures pit.
Bernanke said the Fed is “not going to monetize the debt”
Since when?
Obama wants to outlaw foreclosures unless they go through HAMP first.
As Homer Simpson’s first rule of success at work states, “Great idea boss!”
Nuno — First of all there is everything wrong with co-location of computers at the exchange. It blatantly provides an advantage to only a few. Secondly, the black box guys are doing a helluva lot more than the specialists of the past. The specialists knew where the stops were and would indeed “run” them as they pleased, but they didn’t have algorithms to automate it across the spectrum of stocks, to “phish out” in 100 share lots whatever they wanted to do, be it run stops, paint the tape or otherwise affect the market. It is not efficiency or liquidity these people are providing. It is rather a hijacking of free market movements on a scale that has never been seen before for the benefit of a very select few. This whole affair is truly souring people on the markets as they begin to realize it is not really a public market after all, but rather a market only for the co-located few. What’s the HFT volume these days? 60%? 70%? Somewhere in that area. It’s a distortion, Nuno. A big distortion and it’s not healthy for any of us including the black box guys.
Robert and Other Paul: When writing your congressman make sure you drop in a couple of those newly printed 100’s….it seems to be working well for the banking lobby.
I used to think only 2 types of people were buying stocks . The Feds provided with liquidity by the treasury using tax payers money and idiots . I guess there’s now a third group called “COMPUTERS” . Here comes the TERMINATOR !!!!
All this, and now 5 former Treasury Secretaries joining Paul Volcker in his quest to eradicate proprietary trading at the big banks, and yet the legislation is being reported as DOA in the House… Why?
Have you written your representatives and told them to get on board with Volcker?
And what is wrong with that kind of high frequency trading? If it was a human doing that, would there be complaints? What is the problem here? That they can do it better than the old-fashioned guys? Or that someone is placing stops at obvious places?
There is nothing new under the sun, they are just more efficient.
Too much cash chasing too few stocks. I remember that mantra a few years ago. The world was going to run out of stocks to buy. Get ’em while you still could.
Are today’s stock and bond markets levels telling us that there is too much cash (“real” or QE’d into existence) around? Why a P-E on the S&P500 over 20 with 10%–20% unemployment? Why are 30 yr Treasuries under 4.65% with looming $100T social obligations? Why zero to negative yields on T-bills with $1+T deficits as far as the eye can see?
Invest in illiquid houses and commercial real estate? No. Invest in stocks and bonds with “nano-second” execution and prompt, dependable settlements? Yes.
Slightly related: The US Bureau of Printing and Engraving publishes how much currency is printed, $1s to $100s. Between 1984 and 2009, the Bureau’s annual output of 100s has increased 10 times. In 2009, there were slightly less 100s printed than $5s, $10s, $20s, and $50s combined (in quantity, not $ value).