The Wolf Hunters of Wall St. (Must read if you have stocks)

[JohnnyV13]

http://www.nytimes.com/2014/04/06/ma...ael-lewis.html

Moneyball writer Michael Lewis shows how Wall St. is a rigged game in favor of High Frequency Traders (HFTs).

This is a must read if you want to know what's happening to your money on the stock market.

I know it's long. But it's VERY MUCH WORTH IT.

[Halfcan]

I recently started investing in the market again. I majored in finance in college and was quite good at analyzing companies.

I have been looking at the Bio and Pharmacy companies in the penney stock price range. Delcath Systems- works with liver cancer. Biohart-is a pharmacy company.

I was following a private airline that was still trading like crazy Avair- when I started researching it I found an article it was bankrupt and just had an auction to liquidate the assets-yet people were still buying and trading their common stock?? Wow talk about risk adversive-lol It has lost 99.9% of its value and people are still buying it-hopeing not to be the last holding the paper when they finally shut the lights off.

[BlackHelicopters]

NYTimes and 60 Minutes. Meh.

[planetdoc]

Originally Posted by Molitoth

Holding paper money does nothing.

truth

[Window Licking Whiner]

I read through that, that is very interesting. I think that they found an issue and corrected it, and props to them for that. However, the investigation didnt go far enough, and they kinda gloss over who was raking it in. Someone deep unknown in one of those trading houses, or the exchanges themselves have been raking it in for a long time.

Think about that, someone found and wrote a stock buying script/program that can identify orders placed in one exchange, and beat them to the next exchange to the buying. Surely someone can correlate 'who' bought the stock that they were looking for??

Surely they have a history of the trades they made prior to IEX, and it should be pretty easy (SEC?) to see that Company X bought 100million shares of Company Y at 08:13:01:159 and that Company Z bought 40million shares of Company Y at 08:13:01:100, surely Company Z is aware, or is the main culprit of the illicit gains. I wouldnt be suprised if it indeed was one of the Main houses (JP Goldmans/etc) and that they use the profits trading in that dark pool.

Very interesting

[wazu]

What an amazing story. I love it when corruption is defeated by market forces rather than Feds kicking down doors.

[KC native]

Originally Posted by Halfcan

I recently started investing in the market again. I majored in finance in college and was quite good at analyzing companies.

I have been looking at the Bio and Pharmacy companies in the penney stock price range. Delcath Systems- works with liver cancer. Biohart-is a pharmacy company.

I was following a private airline that was still trading like crazy Avair- when I started researching it I found an article it was bankrupt and just had an auction to liquidate the assets-yet people were still buying and trading their common stock?? Wow talk about risk adversive-lol It has lost 99.9% of its value and people are still buying it-hopeing not to be the last holding the paper when they finally shut the lights off.

Bio-tech is awful frothy these days. Companies that are dependent on approval are trading like they have approved drugs already. Tread carefully.

And I have major issues with how the SEC and FINRA handle trading of bankrupt securities. They don't stop trading in them when they should especially when it's pretty clear equity holders are going to receive nothing. Every time a company comes out of bankruptcy, they issue new stock leaving the old stock holders with worthless paper that the SEC eventually stops trading in.

[KC native]

Originally Posted by gochiefs_va

I read through that, that is very interesting. I think that they found an issue and corrected it, and props to them for that. However, the investigation didnt go far enough, and they kinda gloss over who was raking it in. Someone deep unknown in one of those trading houses, or the exchanges themselves have been raking it in for a long time.

Think about that, someone found and wrote a stock buying script/program that can identify orders placed in one exchange, and beat them to the next exchange to the buying. Surely someone can correlate 'who' bought the stock that they were looking for??

Surely they have a history of the trades they made prior to IEX, and it should be pretty easy (SEC?) to see that Company X bought 100million shares of Company Y at 08:13:01:159 and that Company Z bought 40million shares of Company Y at 08:13:01:100, surely Company Z is aware, or is the main culprit of the illicit gains. I wouldnt be suprised if it indeed was one of the Main houses (JP Goldmans/etc) and that they use the profits trading in that dark pool.

Very interesting

There are several HFT firms out there (one is about to IPO or just IPOed) and some hedge funds have HFT arms.

One of the disclosures for that firm in the pre-IPO material was astounding. They had a disclosure stating they have not had a negative trading day in 4 years. Considering the best traders are usually only 60-65% correct with their trades, that is absurd and should demonstrate that regulators need to fix the issue.

[KC native]

Originally Posted by wazu

What an amazing story. I love it when corruption is defeated by market forces rather than Feds kicking down doors.

They haven't really defeated anything yet. The majority of volume still resides on NYSE and NASDAQ.

They are a threat to the established exchanges. If the buy side determines they can get better execution using IEX, then you may see the traditional exchanges handicap HFT.

[alnorth]

I'm a buy-and-holder and I rebalance maybe once every couple years.

So, I'm not impacted and I only care about this story from a moral standpoint that its probably not right and something probably should be done. Since I don't try to trade and compete against the big boys on a daily basis though, I'm not hurt by HFT's.

[KC native]

Originally Posted by alnorth

I'm a buy-and-holder and I rebalance maybe once every couple years.

So, I'm not impacted and I only care about this story from a moral standpoint that its probably not right and something probably should be done. Since I don't try to trade and compete against the big boys on a daily basis though, I'm not hurt by HFT's.

Do you only hold individual stocks?

If you hold any type of mutual fund, then it does impact you. The turnover of the portfolio within the mutual fund is going to be impacted by HFT.

*Do what works for you, but you should probably revisit that rebalancing schedule. Quarterly is what we do on the product I manage.

[Skyy God]

Amazing article. I was aware of the market inefficiencies created by high speed trading, but leave it to Michael Lewis to weave complex financial machinations into a compelling narrative.

[FringeNC]

Put your 401k money into an index mutual fund and leave it alone, and these arms races among traders won't affect you in any meaningful way.

[Halfcan]

Originally Posted by KC native

Bio-tech is awful frothy these days. Companies that are dependent on approval are trading like they have approved drugs already. Tread carefully.

And I have major issues with how the SEC and FINRA handle trading of bankrupt securities. They don't stop trading in them when they should especially when it's pretty clear equity holders are going to receive nothing. Every time a company comes out of bankruptcy, they issue new stock leaving the old stock holders with worthless paper that the SEC eventually stops trading in.

Yep the Bio stocks took a beating last week for whatever reason. You are right-once they get an approval-their stocks go up 1000 % in days. Delcath went down all week last week- but the CEO says they will get it up to $1.00 per share within 60 days so they will not get dropped off NASDAQ.

Biohart has went up every single day I have had it. They have several products up for final approval-so hopeing my thousand shares jump in the next few months. Probably going to buy 10 k more shares this week.

I was looking into Hospitol stock- and almost bought it cheap- but could not find anywhere to say if it was Class C or what-becasue they have another stock trading at $36.00. Seemed very fishy-but people are buying the crap out of it?? Not sure what they are even buying??

[ct]

Originally Posted by FringeNC

Put your 401k money into an index mutual fund and leave it alone, and these arms races among traders won't affect you in any meaningful way.

this

[KC native]

Originally Posted by FringeNC

Put your 401k money into an index mutual fund and leave it alone, and these arms races among traders won't affect you in any meaningful way.

Still affects you. The trading required to mimic the index is affected by HFT.