Counter-example: someone has inside information (means non-public) that the company is going to pay dividends. This NECESSARILY increases the stock price. going long in this situation is guaranteed to make money, and is also very illegal.
It's not the shorting that makes it fraud, it's the inside info.
Do you have a problem with borrowing? Do you have a problem with selling? Shorting is merely doing both.
HFT couldn't make money if they weren't using all available information that goes into price discovery. You can tell this is true, because these days such information get's rolled into the price quicker than a human could manage. Arbitrage and market making were strategies long before computers. Computers just improve the speed and the efficiency, and reduce the cost - even to the investor (but not to the broker!)
The only way you are a fraudster is if you have non-public information.
Well, there is another - but it's more or less impossible with current regulations: Keep shorting naked. In effect you are flooding the market with additional stock that doesn't actually exist. All the selling combined with the dilution effect of the additional stock in circulation pushes the price down. Then you buy it back.
But selling short naked is very difficult now, AFAIK.
Without shorting risk mitigation is much harder, and the cost of trading goes up - eventually to the investor. Workarounds would be created - working through new instruments, for example. At the end, it probably wouldn't make much difference. Calling it fraud is ridiculous. It's simple - one person lends someone else some stock. There is a contract. The lender thinks the stock is going up, the borrower thinks it's going down. One of them is right. Possibly both (on different time frames)!
1. Would lead to huge inefficiencies and investments to go oversees where the markets would be more stable and efficient. 2. Would lead to wider spreads. HFT still profits, but the tax is laden on the investor. Not your intention. Also increases inefficiency and drives investment oversees. 3. Already a legal requirement.
This isn't true. HFT works in many markets where the spread differs by many orders of magnitude from a penny. What do you think is so special about a penny?
1. Broken trades are done by an exchange only when the trades were "clearly erroneous". E.g. they occurred outside the NBBO. 2. HFT companies aren't the companies that were bailed out. I know of no HFT company that received any bailout money at all. 3. HFT company ONLY see public information, just like everyone else.
A transaction tax would not have the effect desired. It would become unprofitable for market makers to keep the spreads at 1c - therefore the spreads would widen. The market maker still makes their profit, but the investor gets a worse deal. The INVESTOR ends up "paying" the tax - not directly, but via market forces. It WOULD lead to reduced liquidity, which will slow the economy overall.
Any such tax leads to more inefficiency. It should only ever be done to improve fairness and openness. Trying to punish some market participant with taxes and regulations is highly suspect, especially when they aren't doing anything dangerous, unfair, harmful, or illegal.
Completely wrong. The rules aren't specific to any particular participant. ANY "clearly erroneous" trade may be broken - and it's done by the exchange or SRO who is a neutral party. The rules are very clear and simple.
How were YOU hurt by Knight Trading losing $440MM? And do you realize that in their mistake many other companies profited - i.e. that money didn't just evaporate?
The protections aren't perfect, but when something like this happens the worst affected is the HFT company.
Also, to give you an idea of how important HFT is considered to markets these days, a number of companies invested in Knight Trading (even a former competitor), to keep them functioning. Knight going under might well be very costly to the market and economy as a whole.
The "undo" feature is entirely based on "clearly erroneous" pricing. i.e. if you bought some stock, and it turned out it was outside the NBBO, then YES, you can get that trade broken (if done before settlement).
Your idea about HFT being a tax is askew. There is always a middleman. In the case of HFT, he is the most efficient middleman - which is why he is successful. He gives you better prices than anyone else. That's the way the market works. Without him you'd be paying a lot more for each transaction. Before HFT the spreads were 25c... now they're 1c. That's a direct saving to the investor. But don't let fact and reason get in the way of a good rant.
This isn't true. HFT pulls money almost exclusively from brokers by being faster and more competitive. This is the only industry where people regularly complain about competition!
Investors actually get a better deal because of HFT (on the whole - I'm sure there are some bad apples).
Investing is always gambling. HFT is most often base on some kind of arbitrage, which is relatively risk-free, and therefore NOT gambling...
There are many. The most important reason to investors is that the cost of investing would increase and the value of companies would decrease. Delays in price discovery necessarily increase the bid/ask spread - which directly and negatively affects the price someone can buy or sell. Trading companies can afford to offer and bid at 1c spread because they can disperse risk very quickly. Without that speed the trading company cannot profit from 1c or 2c spreads. With 1 day between trades spreads would likely go to dollars. Liquidity would dry up, and investors would go oversees. With less investment in US stocks, US companies are penalized, and overall the US does worse.
Anything that interferes with efficiency will cause some participants money (actually, by definition). Such interference should only ever be done to improve fairness and openness.
Acrually, random in this case really refers to our ignorance. Even at the quantum level there are deterministic equations that will make predictions. Those predictions can be tested. Things like how many mutations, even the kinds of mutations and the likelihood of a mutation producing something new are all testable, and have to some degree or another. When results agree with predictions so accurately, how is the world different without God in it?
Men can choose to have the procedure, if they believe that the penis looks better that way, or if they think they'll have better sex. Having a foreskin, I think it's highly unlikely. However, the children circumcised don't have a choice, and some of them die. Some of them end up disfigured (more than usual). In all other cases an amputation is only recommended for an actual extant medical condition. Whatever happened to "do no harm"? Why is circumcision given special treatment?? The answer is obvious.
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Counter-example: someone has inside information (means non-public) that the company is going to pay dividends. This NECESSARILY increases the stock price. going long in this situation is guaranteed to make money, and is also very illegal.
It's not the shorting that makes it fraud, it's the inside info.
Do you have a problem with borrowing?
Do you have a problem with selling?
Shorting is merely doing both.
HFT couldn't make money if they weren't using all available information that goes into price discovery. You can tell this is true, because these days such information get's rolled into the price quicker than a human could manage.
Arbitrage and market making were strategies long before computers. Computers just improve the speed and the efficiency, and reduce the cost - even to the investor (but not to the broker!)
You are required to have lenders before you can short, these days - making naked short selling without getting caught more or less impossible.
The only way you are a fraudster is if you have non-public information.
Well, there is another - but it's more or less impossible with current regulations: Keep shorting naked. In effect you are flooding the market with additional stock that doesn't actually exist. All the selling combined with the dilution effect of the additional stock in circulation pushes the price down. Then you buy it back.
But selling short naked is very difficult now, AFAIK.
Without shorting risk mitigation is much harder, and the cost of trading goes up - eventually to the investor.
Workarounds would be created - working through new instruments, for example. At the end, it probably wouldn't make much difference.
Calling it fraud is ridiculous. It's simple - one person lends someone else some stock. There is a contract. The lender thinks the stock is going up, the borrower thinks it's going down. One of them is right. Possibly both (on different time frames)!
Why?
1. Would lead to huge inefficiencies and investments to go oversees where the markets would be more stable and efficient.
2. Would lead to wider spreads. HFT still profits, but the tax is laden on the investor. Not your intention. Also increases inefficiency and drives investment oversees.
3. Already a legal requirement.
This isn't true. HFT works in many markets where the spread differs by many orders of magnitude from a penny.
What do you think is so special about a penny?
Nope. The best at investing really do learn a lot about the companies they invest in. Look at Berkshire Hathaway.
This isn't true. All the same information goes into informing a stock price as it ever did, only now it happens faster.
If this were incorrect, there would be an arbitrage opportunity. And guess which trading companies would likely benefit from the miss-pricing?
1. Broken trades are done by an exchange only when the trades were "clearly erroneous". E.g. they occurred outside the NBBO.
2. HFT companies aren't the companies that were bailed out. I know of no HFT company that received any bailout money at all.
3. HFT company ONLY see public information, just like everyone else.
A transaction tax would not have the effect desired. It would become unprofitable for market makers to keep the spreads at 1c - therefore the spreads would widen. The market maker still makes their profit, but the investor gets a worse deal. The INVESTOR ends up "paying" the tax - not directly, but via market forces.
It WOULD lead to reduced liquidity, which will slow the economy overall.
Any such tax leads to more inefficiency. It should only ever be done to improve fairness and openness. Trying to punish some market participant with taxes and regulations is highly suspect, especially when they aren't doing anything dangerous, unfair, harmful, or illegal.
This is merely a witch-hunt.
Completely wrong. The rules aren't specific to any particular participant. ANY "clearly erroneous" trade may be broken - and it's done by the exchange or SRO who is a neutral party. The rules are very clear and simple.
How were YOU hurt by Knight Trading losing $440MM? And do you realize that in their mistake many other companies profited - i.e. that money didn't just evaporate?
The protections aren't perfect, but when something like this happens the worst affected is the HFT company.
Also, to give you an idea of how important HFT is considered to markets these days, a number of companies invested in Knight Trading (even a former competitor), to keep them functioning. Knight going under might well be very costly to the market and economy as a whole.
The "undo" feature is entirely based on "clearly erroneous" pricing. i.e. if you bought some stock, and it turned out it was outside the NBBO, then YES, you can get that trade broken (if done before settlement).
Your idea about HFT being a tax is askew. There is always a middleman. In the case of HFT, he is the most efficient middleman - which is why he is successful. He gives you better prices than anyone else. That's the way the market works. Without him you'd be paying a lot more for each transaction. Before HFT the spreads were 25c... now they're 1c. That's a direct saving to the investor. But don't let fact and reason get in the way of a good rant.
This isn't true. HFT pulls money almost exclusively from brokers by being faster and more competitive. This is the only industry where people regularly complain about competition!
Investors actually get a better deal because of HFT (on the whole - I'm sure there are some bad apples).
Investing is always gambling. HFT is most often base on some kind of arbitrage, which is relatively risk-free, and therefore NOT gambling...
There are many. The most important reason to investors is that the cost of investing would increase and the value of companies would decrease. Delays in price discovery necessarily increase the bid/ask spread - which directly and negatively affects the price someone can buy or sell. Trading companies can afford to offer and bid at 1c spread because they can disperse risk very quickly. Without that speed the trading company cannot profit from 1c or 2c spreads. With 1 day between trades spreads would likely go to dollars. Liquidity would dry up, and investors would go oversees. With less investment in US stocks, US companies are penalized, and overall the US does worse.
Anything that interferes with efficiency will cause some participants money (actually, by definition). Such interference should only ever be done to improve fairness and openness.
Acrually, random in this case really refers to our ignorance.
Even at the quantum level there are deterministic equations that will make predictions. Those predictions can be tested. Things like how many mutations, even the kinds of mutations and the likelihood of a mutation producing something new are all testable, and have to some degree or another.
When results agree with predictions so accurately, how is the world different without God in it?
Very nicely put.
Science is man's greatest invention, IMHO.
I dislike religion not the religious.
I guess we mostly agree.
Let him decide. You can't give one back after it's been amputated.
Nice find!
Men can choose to have the procedure, if they believe that the penis looks better that way, or if they think they'll have better sex. Having a foreskin, I think it's highly unlikely.
However, the children circumcised don't have a choice, and some of them die. Some of them end up disfigured (more than usual).
In all other cases an amputation is only recommended for an actual extant medical condition.
Whatever happened to "do no harm"?
Why is circumcision given special treatment?? The answer is obvious.
I think you've hit the nail on the head!
Sorry.
Oh - and I have a foreskin. I thank my parents that I have the CHOICE.