Wednesday, May 26, 2010
The capitalist disconnect
Re Fat Finger Thursday:
Re Fat Finger Thursday:
A Bloomberg Businessweek investigation into those harrowing minutes revealed the extent to which the market is now dominated by quick-draw traders who have no intrinsic interest in the fate of companies or industries. Instead, these former mathematicians and computer scientists see securities as a cascade of abstract data. They direct their mainframes to sift the information flows for minute discrepancies, such as when futures contracts fall out of sync with related underlying stocks. High-frequency traders (HFTs), as they're known, set an astonishing pace. On May 6, 19 billion shares were bought and sold; as recently as 1998, 3 billion shares constituted a very busy day.In other words, forget about the quaint notion that Wall Street capitalism is about efficiently allocating money to growing businesses that need it. Those days are gone.
