On or around the time of the July-August 2011 debt deal negotiations in Washington DC and the Standard & Poor’s downgrade of all US treasuries we watched the US stock market, and stock markets around the globe responding to what was going on a deal with intense volatility. Under such conditions, are generally times when investors lose large time or create extraordinary gains. Generally, it’s the market professionals that are at the game and know the game, that ends up with all the prize winnings.
It was the largest fall as the 2008 market crash at a one-day period. The quantity of volume being traded that day was in excess of the number of small-time investors in the market. That’s to say, those numbers were impossible, or so unlikely and highly improbable to create one wonder herebig99. What was happening? Well, it is easy; the high-frequency trading computers with their sophisticated artificial intelligent algorithms were making trades in microseconds, and tens of thousands of these per every 10 minute period.
About Larry Cudlow’s” Free-Market Capitalism” a series on CNBC Larry was talking to a guest and suggested that it was getting a little out of control, and things weren’t fair to the little man, the individual investor. In the event the smalltime investor doesn’t feel safe or feels the game is your rig, just like a slot machine at a casino, then why would they perform?
I laughed because I was in the midst of writing this article when I listened to his condemnations of high heeled trading strategies, and I totally agree with what he was saying. Obviously, this is not the first time, though you’ll recall last year there was a significant flash crash when the machines took over, which also rocked investor confidence, and yes the authorities and SEC have looked to the problem, but obviously has not fixed it yet.
When smalltime investors that have their life savings and their retirement monies at risk, all that they’ve ever made that doubt takes a toll. Not just on these, but also on the overall confidence, and that is not great for our state because our stock markets are to assist capitalize American businesses. If they are functioning, that causes a massive problem. It is too bad no one is addressing this problem or fixing it. Indeed I hope you will please consider all this and think about.