Monday, October 8, 2012

High Speed Trading

Mikko Hypponen, one of the greatest minds in security posted a link that asserts that 4% of all trades and 10% of all trading volume were the result of a test of a new High Speed Trading algorithm ( HST ).

This predatory practice really does not directly affect individual investors like me. I try to mostly adhere to a buy and hold strategy even though I do profit take successful stocks that I cannot believe should become core holdings. Since my world view is a year minimum, I really do not care if someone else gets to "queue jump".

However, it does impact me; and you, and everyone one else. The less faith in the free market system, the less investment. The less investment, the lower the stock prices. As an investor, I have been consistently taking profits from this lovely bull market and investing my principal and interest in safer investments such as CDs and Municipals.

When and if I am blessed to new money in the market, I try to make a value play ( not that I am against growth, we just are fairly far down the bull path). While I deeply understand I cannot time the market, my gut, my experience, tells me to *slightly* reduce my exposure, profit take, and get money on the sidelines for a buying spree if the market should tank. But, that does not mean I am not buying, just that I am buying with deep limit offers. I put two in my Value Basket FIk tonight, ALEX (limit 20.00) and JMBA (limit 2.20). Hopefully, these HSP crooks are not so smart that when the market is crashing they beat me to my limit offer.

Update October 20, 2012 Jamba closed on Friday at 2.31 Alexander Baldwin closed at 26.93

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