On or around enough 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 globe responding from what was going on a cope with extreme volatility. Under such conditions, are often times when investors lose big style or make incredible gains. Generally, it is the marketplace professionals who are in the overall game and understand the overall game, that ultimately ends up with all the current prize winnings.
At one time the Dow Jones industrial average went down 632 points in one single day. It had been the biggest drop because the 2008 market crash in a one-day period. The amount of volume being traded that day was in excess of the amount of small-time investors in the market. That’s to say, those numbers were impossible, or so unlikely and highly improbable to make 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 1000s of them per every 10 minute period.
On Larry Cudlow’s “Free-Market Capitalism” show on CNBC Larry was talking to a guest and suggested that it was obtaining a little unmanageable, and things were not fair to the little guy, the in-patient investor. Worse, it was completely eroding confidence inside our stock markets บาคาร่า. If the smalltime investor doesn’t feel safe or feels that the overall game could be the rig, just like a slot machine in a casino, then why would they play?
I laughed because I was in the middle of writing this informative article when I heard his condemnations of high-frequency trading schemes, and I completely agree with what he was saying. Obviously, this is not the very first time, if you’ll recall a year ago there was an important flash crash when the machines took over, and that also rocked investor confidence, and yes the authorities and SEC have investigated the issue, but obviously hasn’t fixed it yet. To possess 10% market swings within just a few 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 at risk, all that they’ve ever earned that uncertainty requires a toll. Not just in it, but also on the general confidence, and that’s negative for our nation because our stock markets are to help capitalize American businesses. If they’re working, that produces an enormous problem. It’s too bad no-one is addressing this problem or fixing it. Indeed I really hope you will please consider all of this and think on.