Not a chance in hell I'm getting back into the stock market

[SmileyRose]

All the rules they tell you about investing in the market are obsolete now.




http://finance.yahoo.com/news/Secretive-speed-traders-in-apf-2083674255.html?x=0

More than a week after the Dow Jones industrial average fell nearly 1,000 points, its biggest intraday drop ever, regulators are still sifting through buy and sell orders to figure out what sparked it. One big focus are orders placed by high-frequency traders, or HFTs, and for good reason. These quick-buck firms barely existed a few years ago but now account for two-thirds of all U.S. stock trading.

In other words, all those TV pictures of the stately New York Stock Exchange building on the evening news are an illusion. The real action on Wall Street is far away in Kansas City, Mo., and in New Jersey, in towns like Carteret and Red Bank, where HFTs named Tradebot and Wolverine and Tradeworx ply their trade.

High-frequency trading firms, which number over 100, use computers programmed with complex mathematical formulas to comb markets for securities priced too high or too low because traders haven't had to time to react to the latest data. The computers then buy or sell in a split second, locking in a profit.


...........

To spot opportunities and act on them before others, HFTs are constantly hunting for faster computers. They also locate themselves close to the big exchanges' data centers. That can cut their trade times by milliseconds.

One way these traders make money is by exploiting the fact that stock indexes sometimes don't immediately reflect falling or rising prices of their component stocks, said Manoj Narang, chief executive at Tradeworx of Red Bank, N.J. If Microsoft shares rise 5 percent but an index fund that includes it such as the SPDR S&P 500 lags by a fraction of second to adjust, his computers will automatically buy shares of SPDR S&P 500 at the lower price and then sell them again when they are fully valued.

Or maybe Microsoft is trading in London at a penny less than it's trading at the same moment in New York. A high-frequency trader will buy shares in London and wait for them to rise.


....................

MUCH MORE AT THE LINK

[madrchsod]

1. no shit....the fuckers are playing zinga slots

[Richardo]

2. Make them own a stock for at least 24 hours.

Or, hell, even 24 seconds.

[lunatica]

3. I suspect your reaction is pretty common after that fall

If you can't trust something to act the way you know it should then you might as well stand in front of a fire and throw money at it. People aren't in the stock market to lose money.

[old mark]

4. Got out several years ago-2007- and into money markets....probably never go back,

at least not the way the game is played now.

mark

[DeschutesRiver]

21. Me too.

Also got out in 2007 and into money market accounts and at times, treasuries and cds. Prior to that, I'd slowly become aware that the market was no longer about company performance, or buy and hold; rather it had become a trader's market.

Now that I've clued into the fact that HFT is dominating the game, I too am likely out of the market for the duration of my life. Unless something changes, I am not putting that which I need for retirement into a casino. Don't know what I'd do if I was still a young person.

Don't meet many people who got out in 2007, or that are still out even if they did - congrats on making that move. I'd already been messed up badly in the tech wreck, and vowed I wasn't going through that again, and certainly not at my age.

[bvar22]

22. We cashed out in 2006/2007.

Bought "bubble proof" property in The Woods, planted a BIG Veggie Garden, and now live there.
We keep chickens and HoneyBees too.
Wall Street can live or die without our money or concern.

[SmileyRose]

23. During the great depression my "kinfolk" paid off the mortgage early

They lived in a farm community in Michigan. Making do and doing without was the norm. The little community farmers bank did fine. Most of the folks they know did fine to. People just kept on keepin' on.

[old mark]

25. It was just dumb luck all the way around - I had planned to work

till at least August '09, with money in the stock market - although not much in the US market, mostly Asia. I retired early for reasons of health and sanity - and unexpected inherited income.

I would have been right near the bottom...


mark

[KT2000]

5. but they want your money

so they can pull their crap!
I finally figured out that every time the market tanks, the big guys who start it make a killing and the regular people take a bath. Over and over again. The only thing that has changed is the the time span between tanking is getting shorter. Also - now the HFTs have required state of the art computers to even participate.

[Odin2005]

11. Yep. Sucker people in, then short like hell in order to take their money.

Wall Street is a SCAM.

[customerserviceguy]

6. Same here

I figure interest rates are going to rise, I'd much rather be in things that make a near-guaranteed return, even if it's small. At this point in my retirement savings plan, what I put into it monthly is way more important that the rate of return in it. At some point, those two lines might well cross, but I'll evaluate my options then.

The very best thing I can do is try to live on as little of my income as possible, and salt away the rest, I've only got about a dozen years to full Social Security at age 67, if its still available to me by then.

[truedelphi]

7. Do most people have a choice? Anyone who is involved in

Pension funds where their nine percent (or whatever) is taken from them as apyroll deductions and handed over to the Pension fund manager, I don't know what they can do?

[OutNow]

8. Pension Fund Manager?

If you are getting money taken out of your pay to go into a defined benefit pension program the problem of a falling stock market is the pension fund manager's problem because you will receive a monthly pension annuity when you retire based on the pension formula, not based on the market returns. But this type of pension is not very prevalent these days, since many companies have switched to a defined contribution pension, where they will put a certain amount of money in your pension fund but will not guarantee the amount when you retire. It's up to you, in your spare time, to manage the money the best you can. OTOH, you do get to allocate the funds into safer of riskier investments. In that case, you can decrease or eliminate the amount allocated to stocks.

[Hannah Bell]

15. maybe you'll receive it, maybe you won't. plenty of examples of

even defined benefit pension funds paying reduced benefits or not paying at all.

[OutNow]

17. And it's worse for young people

Yes I know that many defined benefit pensions have either reduced annuities or went broke. There is a fallback. The federal government pension system that will pay you up to a certain amount of your pension if the plan goes broke.

My company froze all pensions for current workers and did away with all pensions for young employees, replacing it with a 401k plan that will never make up for a real pension. My kid and his friends have no pension plans at all and my pleading with them to save as much money as possible is ignored. I really worry about the next generation.

[SmileyRose]

12. I'll never have a pension - dc most people still have pensions?

My savings are pretty small in the grand scheme of things but it's a lot of money to me. My income is far too low to be able to afford losing it. Granted we have DU'ers that think learning how to cook at home and pack a lunch is a new adventure in frugal, but for me putting a few 100 a year into an investment (in those rare years where I had 10 or 20 bucks a month left over) was the difference between being able buy my husband's medicine or not in the bad years. I have lost that avenue and it is extremely frustrating to see the powers that be in Washington continue to encourage the investment behavior that got us in this mess.

[Odin2005]

9. This is how the elites steal your 401K money.

That money they "earn" doing this stuff doesn't pop out of thin air, it comes from everyone else invested in the market.

[NNN0LHI]

28. It wasn't stolen the workers gladly gave it to them

How many workers who had the opportunity of having union representation with a contract and the chance of having a Defined Pension Plan voted it down and kept their 401K do you think?

A lot.

Don

[Odin2005]

29. They were suckered by Wall Street shills saying how great the stock market is.

Like Jim Cramer.

[NNN0LHI]

31. Wouldn't you have thought that the ENRON fiasco would have tipped them off though?

That was plenty enough for me.

I don't know?

Don

[RKP5637]

10. Not surprised, not surprised at all... n/t

[Jakes Progress]

13. You are wise. The stock market has become a scam.

It's not investing. It is betting you will beat the fix.

[Horse with no Name]

14. I guess there is little reason left to speculate why these fascists wanted our

Social Security funds tied up in the Stock Market.
Imagine the mess we would be in had that been allowed to happen.

[laughingliberal]

32. They haven't given up on that, yet. nt

[slackmaster]

16. Seek nothing and you shall receive it

In abundance.

[TheKentuckian]

18. Oh hell no. At the least capitalism must be restored

investment is currently a suckers a game and work is the new welfare. The top layer has moved on to speculation as has 'capital' in a real sense.

[Greyhound]

19. K&R. Hope for Change.

[ThomWV]

20. very simple solution - put a minuscule tax on every share traded. let's say 0.1%

And see what happens immediately to this 'industry' and to the daily volume on the exchanges.

[Johonny]

26. I agree

[Statistical]

27. I would make it a flat fee per share like 1/10th cent per share.

Why flat fee because little know fact is exchanges already charge brokers flat fee per shares so they SYSTEM IS ALREADY IN PLACE.

Simply change the amount charged and transfer the govt "share" to govt. Could be done tomorrow with no minimal cost.

[TheWebHead]

24. the flash crash reconfirmed two big investment lessons

NEVER PLACE STOP LOSS ORDERS
NEVER PLACE MARKET ORDERS

If you want out if a stock reaches a certain point, you'll have to watch the prices everyday and place that stop mentally. If you want to buy a stock and worry about not getting filled with a limit order, place the limit 1/2% above the ask and 99.99% of the time you'll get filled, but in the event of a liquidity panic, you won't get screwed like many did during those few minutes.

[uponit7771]

30. What about trailing stops?!

[leeroysphitz]

33. C'mon, DO IT. Everybody is gonna get rich. It's easy money.