CNBC and Michael Lewis' New Book on High Frequency Trading

Cramer and David Faber are off the mark just now in saying that Michael Lewis isn't "saying anything new."  It's the difference between eating a cake and making a cake.  Michael Lewis, interviewed at length on 60 Minutes last night, can make the cake.  He can get to the core thought that makes the complex understandable.  In this instance Cramer can only eat the cake: he has been talking about high frequency trading for years now, but he never grasped or communicated the core concept that made it understandable. Cramer said that it was closeness to wall street that won the day for the HFTers,  and that's true, but that's only a vague and a half of the story.  It's the HFTer seeing that huge order (to buy or sale), executing on part of it and then putting an order for the rest at the same or a higher price and reselling to the buyer at a higher price. 

Natural Gas Guru: Search results for schuck

(c) 2010 F. Bruce Abel

Had a very enjoyable evening with Philip Schuck and Helene last night. Reading from his poetry and book. He's advising Kingsview Capital Management, 233 Broadway, NY. Phil Silverman is on board.

And from my year-ago blog:


Natural Gas Guru: Search results for schuck: "(c) 2009 F. Bruce Abel

Ah yes, Jimmy Rogers is able to do this. So have I!

Had dinner with Phillip Schuck and Abby Sunday night. Phillip has been able to do this too. Author, successful trader, farmer, sailor.

December 15, 2009

Lessons On Investing And Life
'You have to figure out what your own passions are. By following your passions, you'll never have a job. You'll just get up everyday and have a lot of fun'in GuruFocus.com"

Cramer's Mad Money - The Pajama Game (6/17/10) -- Seeking Alpha

(c) 2010 F. Bruce Abel

"Ludicrous." This concept of ludicrous "Pajama" traders is newish with Cramer.  Read further. Wait just a minute! Can he be serious that there are enough of them -- I'm one -- to match the really active hedge funds that are trading off milisecond-actions?

He needs to do a lot more on this topic to fully flesh it out.


Cramer's Mad Money - The Pajama Game (6/17/10) -- Seeking Alpha: "Cramer said the 'pajama game' was responsible; traders who sit at home in their pajamas with their laptops and trade at a furious pace with the wrong information. Double and triple-leveraged ETFs only exacerbate the problem.
Cramer has spoken before about the problem of high frequency trading which now comprises 80% of trades compared to 30% 4 years ago. False information can make unsustainable rallies given the intensity of trades. For instance, traders started buying because the CurrencyShares Euro Trust (FXE) seemed strong, but the euro was stronger only because of bad news on the home front.
It doesn't help to be the voice of reason when trades are made in a flash. Unfortunately, for now at least, the fate of stocks “rests in their ludicrous hands,' said Cramer."

Two Instances of Deregulation

(c) 2010 F. Bruce Abel

Two instances of deregulation causing "haywire." Last Thursday with (1) unregulated high frequency trading and (2) the BP Oil Spill. Yet what do you think vomit radio is continuing to talk about -- getting rid of government. How can this continue?

It is difficult to parse the "evil government" argument. Under Bush, with the foxes guarding the henhouse in the federal government the feds were horrible.

Santelli -- Best Line of the Day

(c) 2010 F. Bruce Abel

I usually don't understand a word of what Santelli says, but he just gave the line of the century, discussing high frequence traders who say they provide liquidity.

"If volume provides liquidity, where were you (Goldman, etc.) yesterday?"