Monday, October 22, 2012

High Frequency Trading and Algorithms

Is this what capitalism has become? Who has the fastest computer? 
What happened to investing in the sound fundamentals of "the business," or investing in the quality of "the people" running the business. Something is seriously wrong when these trading systems can cause the price fluctuation of a company's stock to the point of collapse or bubble status and not based on any sound economic principles. Where have the fundamentals gone? Remember that old saying, "if it's too easy to get, then it's probably not worth having." Now, don't get me wrong I'm all for advancements in technology, after all I'm a college graduate in electronics, but the question is about the "integrity" of the system? Now a days anyone can trade stocks, commodities and mutual funds with no education or experience in business what so ever. Large financial institutions are now hiring anyone, as long as they pass the Mutual Funds Exam and can generate commissions for the company. Does this sound like a safe place for your hard earned money?
The evolution of markets have reached a point where "the trading system" has become more important than the investment itself and in this computerized environment who is really safe from "the system" crashing? It could be a computer hacker, a power failure or a simple "glitch" in the software that cause the entire system to go haywire. Read your account agreement or prospectus carefully and notice where the liability lies when a "technology failure" occurs and you suffer losses. Not only is the integrity of "paper" contracts at risk from fraud, but your investment is really a digital signal to some computer in the black hole of cyberspace.

Yet people still question the value of gold bullion in your hands??? Sorry folks, but I'll take gold's 5,000 years of real value over any computerized trading system. Think of the REAL hard work and risk that miners go through to find, dig and refine gold, and then tell me it doesn't represent true value. Better yet, I dare you to tell that miner who risked his life going hungry and thirsty for years to find the gold, that it doesn't have value. I work hard to build a good life for my family and a future for my children, and I'll be damned if some computer is going to take that away from me.   BK

Listen from 3:50

Also from USA Watchdog on the mortgage crisis.