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Michael Lewis On '60 Minutes' Says Stock Market Is Rigged

phlatsphilphlatsphil Posts: 14,632 AG
Like I was saying.....

Michael Lewis On '60 Minutes' Says Stock Market Is Rigged

The U.S. stock market is rigged, with elite traders buying access to a high-speed network that allows them to figure out what you've just ordered, order it first, then raise the price before your order is complete.

And according to Michael Lewis, author of a new book about high-frequency trading called "Flash Boys," this form of "front running" is completely legal.

"The insiders are able to move faster than you," Lewis said on "60 Minutes" on Sunday night. "They're able to see your order and play it against other orders in ways that you don't understand. They're able to front run your order."

The advantage adds up to less than a second -- in some cases a fraction of a millisecond -- but thanks to the powerful computers masterminding the trades, it's enough time to make serious money.

"One hedge fund manager said, 'I was running a hedge fund that was $9 billion and that we figured that the, just our inability to, to make the trades the market said we should be able to make was costing us $300 million a year.' That was $300 million a year in someone else's pocket," Lewis said.

Watch the full "60 Minutes" segment above for more on the story, and to learn about one Canadian trader's groundbreaking idea that he says completely eliminates the practice.

http://www.huffingtonpost.com/2014/03/30/michael-lewis-on-60-minutes_n_5060400.html
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Replies

  • Mister-JrMister-Jr Posts: 27,699 AG
    What a surprise!
    Vote for the other candidate
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Reminds me of friends who owned a couple of successful restaurants, made millions, sold out and thought they were going to achieve criminal US senator/ball player wealth status by playing the stock market.
    They're both back to 9-5.
  • dragon baitdragon bait Posts: 8,378 Admiral
    any idea what IPO stands for?
    here is a clue it is not initial public offering.
  • Grady-ladyGrady-lady east of the river, west of the woodsPosts: 5,282 Admiral
    No worries....I'm sure the DOJ will dispense terrible and swift justice to those dastardly Flash Boys...just ask the wolves of Wall Street.
    I find my peace out on the sand...Beside the sea, not beyond or behind. R.A. Britt

  • WaterEngineerWaterEngineer Posts: 24,415 AG
    I watched this segment as it aired after the basketball game. A fascinating segment.

    As said in the segment, everything is legal, so what is the problem?

    I am sure gub'ment will try to regulate this so-called "issue" away.

    Does anyone actually think gub'ment is as smart as and as nimble as private business.

    Private biz legally exploited something they saw and are profiting.
  • NACl H2O LuvrNACl H2O Luvr Posts: 12,363 AG
    But wait.....our Libby friends constantly cheer the the Market surge under the leadership of the Czar in the White house.....I have been convinced this is a good thing.....where's Gunby?
  • Mister-JrMister-Jr Posts: 27,699 AG
    I watched this segment as it aired after the basketball game. A fascinating segment.

    As said in the segment, everything is legal, so what is the problem?

    I am sure gub'ment will try to regulate this so-called "issue" away.

    Does anyone actually think gub'ment is as smart as and as nimble as private business.

    Private biz legally exploited something they saw and are profiting.

    On “60 Minutes” last night, author Michael Lewis made a bland assertion: High-frequency traders, he said, working with U.S. stock exchanges and big banks, have rigged the markets in their own favor. The only surprising thing about Lewis’s assertion was that anyone could be even remotely surprised by it.

    The math on trading is simple: It is a zero-sum game. One trader’s gain is another trader’s loss. Only in the case of HFT, the losers are the investors — by way of their pension funds, retirement accounts and institutional funds. The HFT’s take — the “skim” — comes out of these large institution’s trade executions.

    The technology behind HFT may be complex, but the math is that simple. Once the Securities and Exchange Commission allowed stock exchanges to share with traders all of the unexecuted incoming orders, it was hard not to make money by skimming a few cents or fractions of a cent from each trade. Several years ago, the founder of Tradebot, one of the biggest high-frequency firms, had said that the firm had “not had a losing day of trading in four years.” The firm’s average holding period for stocks is 11 seconds.

    continues here

    http://www.bloombergview.com/articles/2014-03-31/speed-trading-in-a-rigged-market
    Vote for the other candidate
  • navigator2navigator2 Posts: 22,499 AG
    Mister-Jr wrote: »
    What a surprise!

    :grin

    Waiting for Nuevo to weigh in. I knew 15 years ago market makers were scam artists and day traders were up against the wall against them. If you can guess with them and ride their coattails, guaranteed money.
    [SIGPIC][/SIGPIC]
  • Mister-JrMister-Jr Posts: 27,699 AG
    navigator2 wrote: »
    :grin

    Waiting for Nuevo to weigh in. I knew 15 years ago market makers were scam artists and day traders were up against the wall against them. If you can guess with them and ride their coattails, guaranteed money.

    They know what is going to happen before us, I already guessed too much.
    Vote for the other candidate
  • nuevowavonuevowavo Posts: 6,788 Admin
    navigator2 wrote: »
    :grin

    Waiting for Nuevo to weigh in. I knew 15 years ago market makers were scam artists and day traders were up against the wall against them. If you can guess with them and ride their coattails, guaranteed money.

    You rang?

    Simply put, there are many exchanges to execute stock trades. The HFT guys are taking advantage of physical proximity to exchanges, so they see orders milliseconds before they are executed, and get in front of the orders. So they get the stock slightly cheaper than you, then turn around and sell it, possibly even to you to fill your order.
    Nothing illegal about it, as grady said, and it has nothing to to with the direction of the market.
    Perfect example of the free market at work, and as the 60 Minutes piece explained, a private company has already figured a way to negate them.
    Federales, bring my baby back to me!
  • Mister-JrMister-Jr Posts: 27,699 AG
    nuevowavo wrote: »
    You rang?

    Simply put, there are many exchanges to execute stock trades. The HFT guys are taking advantage of physical proximity to exchanges, so they see orders milliseconds before they are executed, and get in front of the orders. So they get the stock slightly cheaper than you, then turn around and sell it, possibly even to you to fill your order.
    Nothing illegal about it, as grady said, and it has nothing to to with the direction of the market.
    Perfect example of the free market at work, and as the 60 Minutes piece explained, a private company has already figured a way to negate them.

    Legally it has not been regulated, but ethically, from the point of view of the average investor it's wrong. Just another reason people have no trust in Wall Street.
    Vote for the other candidate
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    Mister-Jr wrote: »
    On “60 Minutes” last night, author Michael Lewis made a bland assertion: High-frequency traders, he said, working with U.S. stock exchanges and big banks, have rigged the markets in their own favor. The only surprising thing about Lewis’s assertion was that anyone could be even remotely surprised by it.

    The math on trading is simple: It is a zero-sum game. One trader’s gain is another trader’s loss. Only in the case of HFT, the losers are the investors — by way of their pension funds, retirement accounts and institutional funds. The HFT’s take — the “skim” — comes out of these large institution’s trade executions.

    The technology behind HFT may be complex, but the math is that simple. Once the Securities and Exchange Commission allowed stock exchanges to share with traders all of the unexecuted incoming orders, it was hard not to make money by skimming a few cents or fractions of a cent from each trade. Several years ago, the founder of Tradebot, one of the biggest high-frequency firms, had said that the firm had “not had a losing day of trading in four years.” The firm’s average holding period for stocks is 11 seconds.
    continues here

    http://www.bloombergview.com/articles/2014-03-31/speed-trading-in-a-rigged-market

    Sounds like investing to me.:wink
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • Big BatteryBig Battery Posts: 20,037 AG
    You're worried about pennies made in seconds and the biggest scam is the FED.

    Sent from my SM-N900V using Tapatalk
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    It's not pennies, it's pennies x 100million x thousands.

    Or $300 million in the case of the fund qouted.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • MACDMACD Lee CountyPosts: 4,954 Captain
    I hope my broker doesn't have dial -up............
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Grady-lady wrote: »
    No worries....I'm sure the DOJ will dispense terrible and swift justice to those dastardly Flash Boys...just ask the wolves of Wall Street.

    The party of the rich? No chance.
  • Hickory DogHickory Dog Posts: 5,047 Officer
    You do realize that it is not illegal, right?
  • Mister-JrMister-Jr Posts: 27,699 AG
    You do realize that it is not illegal, right?

    I realize it's not illegal, but just another opportunity for Wall Street to skim additional money from investors. For all the brilliant financial minds controlling investment and capital, they are mostly color bind, seemingly not able to comprehend these kind of schemes brings more scrutiny from investors and ultimately regulators.
    Vote for the other candidate
  • Big BatteryBig Battery Posts: 20,037 AG
    It's not pennies, it's pennies x 100million x thousands.

    Or $300 million in the case of the fund qouted.

    Yea...and the FED is in the trillions
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    You do realize that it is not illegal, right?

    Well, that makes it all good, right?

    I mean, hey, if our nanny government hasn't sought to make it illegal then it must be something that any good person would engage in.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • Mister-JrMister-Jr Posts: 27,699 AG
    Yea...and the FED is in the trillions


    Try and stay with the topic. It's not the FED.
    Vote for the other candidate
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    Yea...and the FED is in the trillions

    One fund, $300 million x number of fund organizations.

    We the people vote for and thereby authorize the fed to do what they do. This bleeding of the cow.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • nuevowavonuevowavo Posts: 6,788 Admin
    Mister-Jr wrote: »
    I realize it's not illegal, but just another opportunity for Wall Street to skim additional money from investors.

    Actually, it's investors gaming other investors. Who do you think backs the HFTs? Pension funds, venture capital groups, other investment banks...
    Federales, bring my baby back to me!
  • Mister-JrMister-Jr Posts: 27,699 AG
    nuevowavo wrote: »
    Actually, it's investors gaming other investors. Who do you think backs the HFTs? Pension funds, venture capital groups, other investment banks...

    I'm an investor, $401K, a couple of mutual funds. Are you saying that I'm gaming other investors like me or they are gaming me?
    Vote for the other candidate
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    nuevowavo wrote: »
    Actually, it's investors gaming other investors. Who do you think backs the HFTs? Pension funds, venture capital groups, other investment banks...

    No it is not, it is fund managers gaming other fund managers with other peoples money.
    People like grandma and people with 401K's, people who are vested in pension funds, common people.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    No it is not, it is fund managers gaming other fund managers with other peoples money.
    People like grandma and people with 401K's, people who are vested in pension funds, common people.

    Plus when they crash the market again, and they will, they get to collect your tax money to cover their bonuses.
  • LouieLouieLouieLouie Posts: 2,702 Officer
    This crap happens every time you put a big-business / big oil guy in the White House.
    [SIGPIC][/SIGPIC] I want to offer thanks the "FS Forum Powers That Be" for giving me the opportunity to see the light and makes changes from my past... The knowledge and awareness I have gained during the last few months of BannedCation has helped changed my life... I will strive to continue in the right, I mean LEFT direction... Thank You.
  • Team SabatageTeam Sabatage USA, USA, USAPosts: 12,966 AG
    Easy there jeff, we're not supposed to agree on anything.
    Strap me in, tie me down and roll me a bone, I'm getting on an airplane and I'm flying home...
  • NewberryJeffNewberryJeff Posts: 7,447 Admiral
    Easy there jeff, we're not supposed to agree on anything.

    When we aren't being partisan snipers, most of us are in agreement here.
  • LouieLouieLouieLouie Posts: 2,702 Officer
    Plus when they crash the market again, and they will, they get to collect your tax money to cover their bonuses.

    And it's coming. It'll make 2008 look like a picnic.
    [SIGPIC][/SIGPIC] I want to offer thanks the "FS Forum Powers That Be" for giving me the opportunity to see the light and makes changes from my past... The knowledge and awareness I have gained during the last few months of BannedCation has helped changed my life... I will strive to continue in the right, I mean LEFT direction... Thank You.
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