tag:blogger.com,1999:blog-7905515.post5914879066673004516..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Al Gore, Sociologists, Address HFTEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-7905515.post-9972036297747706372013-02-14T15:16:43.504-06:002013-02-14T15:16:43.504-06:00"I’m hardly encouraged by the “It’s just like..."I’m hardly encouraged by the “It’s just like the Great Depression!” analogy."<br /><br />The point of the analogy is not to offer you encouragement but to point out that periods of low trading activity are often observed in post-crisis periods (and this is true of any such periods, not just the 1930s). The "HFT has scared away retail investors!" panic utterly fails to contend with (or even consider) such confounding variables.<br /><br />"You are trying to claim that the problems leading to the crash of 2008 just happened to turn up all in one day?"<br /><br />No, I'm saying that the available information about these problems, and the trading public's interpretation of it, was changing so rapidly from minute to minute that the ability to "get liquid" at a moment's notice was critical to not exacerbating the declines and sending the level of panic higher than it already was. (There are a lot of stocks out there, and this kind of uncertainty shows up on a regular basis in individual issues from time to time.) In general, stopping two people from making a trade they would otherwise like to make seems like a particularly unwise regulatory arrangement to me.Unfilteredhttps://www.blogger.com/profile/14786763516386772099noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-68893326106268029362013-02-14T04:34:52.403-06:002013-02-14T04:34:52.403-06:00Even without any HFT a separate exchange with very...<i>Even without any HFT a separate exchange with very different rules like that would probably just get arbed to death and beyond a certain point I think the downside of more market fragmentation outweighs the upside anyway.</i><br /><br />The point is to encourage stocks to list on THAT exchange rather than other exchanges. Remember, only IPO's actually raise money for investment. The rest is horse trading.<br />Telhttp://lnx-bsp.net/noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-89843202246732597352013-02-14T04:32:31.284-06:002013-02-14T04:32:31.284-06:00Imagine a scheme like this having been in place fo...<i>Imagine a scheme like this having been in place for the stocks of major financial firms in October 2008.</i><br /><br />What is your point?<br /><br />You are trying to claim that the problems leading to the crash of 2008 just happened to turn up all in one day? Or perhaps you are claiming that it is perfectly reasonable for some slightly better connected market participants to have that critical opportunity to bail out early and let the suckers take the fall for them?<br /><br />What exactly are you claiming here?Telhttp://lnx-bsp.net/noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-59398236985214572682013-02-13T10:19:41.021-06:002013-02-13T10:19:41.021-06:00@Unfiltered
These days the spread at any given sp...@Unfiltered<br /><br />These days the spread at any given split second is less indicative than ever of what price you can actually buy or sell X amount of shares – although this should be more or less a non-issue for most retail traders.<br /><br />Even without any HFT a separate exchange with very different rules like that would probably just get arbed to death and beyond a certain point I think the downside of more market fragmentation outweighs the upside anyway.<br /><br />Obviously there are more ingredients to a robust public equity market than just HFT issues but I’m hardly encouraged by the “It’s just like the Great Depression!” analogy.<br />Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-78776344400871625192013-02-13T01:44:42.963-06:002013-02-13T01:44:42.963-06:00"Try to make the random 'tick' happen..."Try to make the random 'tick' happen only about 10 times a day, because quite frankly the real value of a corporation does not change any faster than that."<br /><br />I love it when people bookend their uninformed musings with a statement so ridiculous as to give their entire entry the air of a comedic performance.<br /><br />Imagine a scheme like this having been in place for the stocks of major financial firms in October 2008. <br /><br />@Mercury:<br />If a non-HFT dominated exchange (and its attendant wider spreads) is something that would attract retail investor confidence and volume, as you seem to be arguing, then why doesn't someone start such an exchange and lure all that latent business away from all the others? The SEC is not exactly putting up roadblocks to new equity exchanges these days.<br /><br />In actual fact the subdued trading activity we're witnessing now is not limited to unsophisticated retail investors. It's also taking place in the institutional world. And it's exactly what *always* occurs in a post-crisis period following the bursting of an asset bubble. Why was there a similar low volume period following the 1929 stock market crash? There was no computerized trading in existence then.Unfilteredhttps://www.blogger.com/profile/14786763516386772099noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-4206212608137882722013-02-12T09:54:09.111-06:002013-02-12T09:54:09.111-06:00@jeffrey: as much as I despise Gore (probably more...@jeffrey: as much as I despise Gore (probably more than you all, and feel he's one of the most relevant threats to a serious discussion of certain significant problems), I do also get upset when hearing yet another time the old hypocrisy rant, possibly thanks to a step back abstracting from the specific case. <br />Let me put it this way: do you really think it would be a worse world if the mafia was a bit more hypocrite, and instead of a "honorable" walking the talk they atleast preached for something better instead? Half of their strength arises from blind faith and perverted but consistent "honour", draining resources for free, not from some superior and efficient social model.<br />Still this doesnt apply here, it has nothing to do with the fact that yeah, Gore's silly rants on finance as such dont make any sense, "hypocrisy" or not. But you're probably not his target audience anyway :D<br />The first anonymous was imho technically correct, he dindt say that we *actually* are in such a situation. But is that possibility really out of question, just because of what he or Gore said? I would have expected a more serious discussion...<br /><br />Actually the reason those morons insist with such dumb gut appeals is that they're invariably rewarded by media attention, even by otherwise serious blogs such as this one. :)<br />Quartzhttp://afterthinking.tumblr.comnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-51044773035719844402013-02-12T05:00:30.068-06:002013-02-12T05:00:30.068-06:00I think that HFT is a legitimate problem, but I do...I think that HFT is a legitimate problem, but I don't see Gore's crony capitalism as a solution, nor do I believe that a transaction tax is the right approach.<br /><br />It should be in the interests of the stock exchanges to attract investment. If the small-time investors who just trade once every week or so think they are being shafted by a robot trader with the ability to react in milliseconds, then the investors will keep their money in their pockets and the robots can go play with each other. That's a bad situation for the exchange once it becomes entrenched.<br /><br />Thus, innovation in the design of an exchange should lead to way that discourage robot traders and it is easy enough to do. Just queue up all bids until a random "tick" comes around and then freeze all trades instantaneously, resolve the backed-up queue as far as it can be, and then unfreeze and start accepting new bids. Try to make the random "tick" happen only about 10 times a day, because quite frankly the real value of a corporation does not change any faster than that.Telhttp://lnx-bsp.net/noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-53615906266237926052013-02-11T12:22:49.484-06:002013-02-11T12:22:49.484-06:00Like Mr. Gore the Anonymous (1) responder doesn...Like Mr. Gore the Anonymous (1) responder doesn't share a shred of evidence to support his/her pronouncement.<br /><br />Are we really in "dire" need for a transaction tax to stem so-called nonsense?<br /><br />What exactly "dire" here? Explain what is nonsense, please. And in doing so kindly leave your partisan talking points at the door.<br /><br />And speaking of nonsense, is Mr. Gore's drive to riches truly ethical? Mr. Gore is a hypocrite with his hand in the taxpayer's pocket both directly and indirectly. There is nothing to be proud of there.<br /><br />Evidence is readily available in the public domain, but one need pull their head from the sand in which it is planted.<br /><br />As for Dunning-Kruger; pot meet kettle.<br /><br />Good grief.Jeffreynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-65043349804288573422013-02-11T10:18:26.531-06:002013-02-11T10:18:26.531-06:00“As to how the stock market volume hurts the econo...“As to how the stock market volume hurts the economy, he isn't clear,…”<br /><br />Well, LOW stock market volume probably doesn’t help the economy. US equity market volume peaked in 2009 and has been on a sharp decline since. You can argue about how much of this is due to a lame, post-crisis economy, Sarbox or other regulatory headaches but I think HFT spooks away more potential trading activity than it attracts. <br /><br />Only a government wonk like Gore would conclude that more private transactions and opportunities for price discovery are detrimental to capital markets but the fact is some HFT algos have demonstrated an ability to achieve desired ends by overwhelming the mechanics and plumbing of the market with results that are less than confidence inspiring to outsiders. This isn’t to say that various iterations of the old market structure were perfect or that the technologies that make HFT possible haven’t been hugely beneficial in other ways but at some point it is best for the larger economy if a free, fair, stable and transparent marketplace is something that can be taken more or less for granted. That some market participants can gain an advantage by digging a tunnel (or building microwave relay stations) to the exchange probably doesn’t help that desired perception even if in other ways this current HFT dominated market structure is more “fair” than older versions dominated by “upstairs” power players.<br /><br />Also, by definition a market is a central venue where people with different needs and preferences can have the most opportunities to exchange capital with others and observe similar transactions. Ultimately it is probably best for all market participants if our current, very fragmented equity marketplace (still evidence of robust competition to many) re-concentrates in some way.<br />Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-62919739201982832552013-02-11T10:11:56.612-06:002013-02-11T10:11:56.612-06:00After finishing the fight lecture I have to add th...After finishing the fight lecture I have to add that his calls for a global (financial) government are quite scary.zbyhttps://www.blogger.com/profile/04636763782334128869noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-58301645401898515042013-02-11T03:59:28.833-06:002013-02-11T03:59:28.833-06:00I wonder what you think about Soros - here is his ...I wonder what you think about Soros - here is his lecture from 2009: http://www.ft.com/intl/indepth/soros-lectures (look for the transcripts, the videos are now deleted). This reflexitivity theory sounds very vague, but in my view he is spot on in nearly all of his points in the conclusions. He is against efficient market hypothesis, but your batesian mimicry theory is not very far from his arguments. He is for some regulations, but he admits that regulations mostly fail.zbyhttps://www.blogger.com/profile/04636763782334128869noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-53232164209239908842013-02-10T21:43:20.619-06:002013-02-10T21:43:20.619-06:00just because gore doesnt know what he's talkin...just because gore doesnt know what he's talking about doesnt mean we aren't in dire need of a transaction tax to eliminate some of this nonsense. you and gore both suffer from dunning-kruger. amazingly, he actually might be more humble about his knowledge than you.Anonymousnoreply@blogger.com