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HomeMichael Lewis on HFT: “It’s All A Scam”; Here’s the Cause and Effect
Posted by Larry Doyle on March 30th, 2014 8:42 PM |
Major props to renowned writer Michael Lewis for using his enormous platform to direct light on the scam that has come to define our equity markets under the construct of high frequency trading.
As Lewis states, the scam is not only restricted to HFT activity but rather the market as a whole has become a scam. Powerful words and worth the minute to listen to the video clip below.
But let’s go deeper than that. (more…)
Not Surprised by Size but Swiftness of Market Decline
Posted by Larry Doyle on February 3rd, 2014 2:06 PM |
Without trying to be a Monday morning quarterback, I am not at all surprised by the market’s decline.
I remain hard pressed to believe that our domestic economy and the global economy remain on sufficiently firm ground that would justify the fact that equity valuations belong even at current levels.
That said, I long ago gave up “fighting the Fed” and other global central banks that have been engaged in pumping liquidity into the system in order to prop the markets in the hope of stimulating the economy. So where should we look for a measure of support in the market? (more…)
Market Warning Signs
Posted by Larry Doyle on January 24th, 2014 9:58 AM |
When everybody is on one side of a ship that vessel will tend to list and often has a hard time continuing to move in the same direction.
This navigating analogy is used very often on Wall Street and strikes me as very applicable a mere three weeks into trading for calendar 2014. Let’s get more specific in terms of what exactly I mean.
Sentiment indicators on Wall Street are defined as,
A graphical or numerical indicator designed to show how a group feels about the market, business environment or other factor. Sentiment indicators can be used by investors to see how optimistic or pessimistic people are to current market conditions. (more…)
Jeremy Grantham Equity Call: Negative Real Returns Over Next Seven Years
Posted by Larry Doyle on November 20th, 2013 9:20 AM |
A week ago noted investor Ray Dalio projected annual equity returns of a less than robust 4% over the next decade.
Now we hear from another one of my favorite investment gurus, this being Jeremy Grantham. While Grantham believes the current equity ‘party’ has one more leg up over the next year or maybe two, we will then experience the third serious market correction since 1999.
When Grantham talks, I listen. He had plenty to say in his recent quarterly letter.
My personal view is that the Greenspan-Bernanke regime of excessive stimulus, now administered by Yellen, will proceed as usual, and that the path of least resistance, for the market will be up. (more…)
Aguirre Addresses Likely Cause of Next Market Crisis: Selling Counterfeit Stock
Posted by Larry Doyle on November 1st, 2013 10:53 AM |
“The message is simple: Wall Street crime pays and there is no downside.”
Will there be another market crisis and if so what will precipitate it?
In what is an instant Sense on Cents classic, noted attorney and former SEC whistleblower Gary Aguirre takes us on a walk down the path that seems self-evident to me will cause our next market crisis.
Can you imagine if you discovered a businessman went about selling a product, collecting revenues on those sales, but never actually delivered the product sold?
Think that sort of fraud might attract the interest of the authorities? But what if the authorities, in this case our financial regulators, turned a blind eye to the practice? (more…)
Wall Street’s SRO Police Take MAJOR Hit
Posted by Larry Doyle on October 3rd, 2013 8:58 AM |
Did you feel a sizable tremor running between Washington and Wall Street overnight? I did.
At the epicenter of this tremor was the first meaningful questioning of the practice of self-regulation on Wall Street by their governmental overseers at the SEC.
Securities and Exchange Commission Chairman Mary Jo White opened the door to a potential overhaul of financial-market oversight, saying the special regulatory status of U.S. exchanges may not best serve investors or public companies.
Wow. That simple statement may never lead anywhere, but the mere fact the SEC issued a statement of this sort is a tidal shift of epic proportions. Who else echoed the sentiments of this seismic activity? (more…)
“Is There Anybody In There or Out There?”
Posted by Larry Doyle on September 19th, 2010 7:08 AM |
In light of the ongoing decline in equity volumes, I found a short piece in this weekend’s Wall Street Journal to be of special interest. Jonathan Cheng writes, Hello, Is There Anybody In There?
Are trading volumes ever coming back? With options expirations and index rebalancing on the agenda, today could be a decent one for trading volumes, which Peter Boockvar of Miller Tabak notes haven’t hit the 5 billion shares mark in NYSE Composite volume since July 16. Mr. Boockvar cites “confusion” as the culprit, given all the economic uncertainties facing investors.
Rick Bensignor, chief market strategist at Execution Noble, however, chalks it up to something perhaps more fundamental: there aren’t many investors out there to begin with, which he says are likely to keep volumes anemic for the foreseeable future. Here’s his tally: (more…)
What Happens When Investors Lack Trust?
Posted by Larry Doyle on August 6th, 2010 1:05 PM |
Think the structure of the equity markets is broken? With the preponderance of equity volume now dominated by high frequency trading and true retail investors fleeing in droves, what do people think the chances are that we could experience another Flash Crash as we saw on May 6th?
Last evening, The Wall Street Journal ran an online poll on this topic in Legacy of the ‘Flash Crash.’ I have to admit, I was surprised by the results. Did you get concerned witnessing the 1000 point ‘whoosh’ in a very short time period on May 6th? An overwheming number of pollsters believe it can happen again.
With our computer-drive stock market, could a “flash crash’ happen again?
Where Is The Market Headed?
Posted by Larry Doyle on August 2nd, 2010 9:59 AM |
In commentary written specifically for Sense on Cents, our friends from Forextraders.com share some fabulous insights and perspectives on the ups and downs of the equity markets.
The Stock Market Is In Limbo—Which Way Will It Go?
An incredibly positive corporate earnings season in July has helped the market to discount immediate fears of a possible double dip recession. The strong corporate earnings reports, however, had to battle Ben Bernanke’s very dovish remarks, as he emphasized the slowing recovery in the U.S. and raised the possibility of Federal Reserve instituting further quantitative easing measures. Those bearish remarks by the Fed President regarding the possible future direction of the U.S. economy did cause equity markets to stall in the 3rd week of July, but now in the final week of the month, equity markets are again taking a shot at the HI’s from the month of June. (more…)
“You’re Playing with Sharks”
Posted by Larry Doyle on July 22nd, 2010 6:20 AM |
Is it safe to go in the water? In other words, is it safe to play in the markets under the current construct? Do small retail investors truly stand a chance against the ‘big boys’ on Wall Street running high powered algorithmic trading programs and assorted other high frequency trading mechanisms? Are fundamental traders being thrown around amidst the ‘high waves’ and ‘strong surf’ pounding the shore?
No doubt, the scene on Wall Street has changed dramatically over the years. The onslaught of high frequency trading complete with a wide array of ‘bait and tackle’ such as flash orders, dark pools, naked access, co-location, and much more make it extremely challenging — if not downright daunting — for those who believe they can navigate these waters with simple ‘rod and reel.’ (more…)
