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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (35713)	9/16/2010 11:43:46 AM
From: Frank A. Coluccio	Read Replies (2) \| Respond to of 46821

Hi Jim. Half full, half empty. The former manifests through the external influences of the 'technology', the latter shows up in some of the ways it is used. I have remained cognizant, as you know, and first discussed this subject at length twenty-some-odd years ago (major stock market crashes will have that effect on you), about the then potential anomalous outcomes from program trading going as far back as 1987. It's easy to envisage the same types of shenanigans in the energy markets (a la Enron) coming out of emerging smart grid applications that go haywire when stressed at the intersection of bulk energy spot swaps and legitimate grid monitoring data used for load shedding and self-healing purposes resulting potentially in local power outages, or worse, comparable to the flash crashes of which you inform. Cloud computing, likewise, could be used for nefarious-seeming and almost predatory-appearing purposes compared to how our culture has always regarded doing business as usual, i.e., on a level playing field. Since my focus has been elsewhere, the trading aspect, as influenced by low-latency improvements, has always remained a secondary, or more distant, consideration to me. However, due to the impetus to slice microseconds ever finer in the financial markets a ton of capital has gone into research and development of a capability that is now proving crucial to 21st Century cloud computing -- and an array of other state-of-the-art architectures, even if the connections between those emerging fields and the trading domain remain unknown or only vague to those using it for other purposes. All of that said, I see algorithmic trading today as something that has become an activity that should be separate from investing (in the true sense of that word), and even traditional forms of day trading activities, and more akin to gaming that is consistent with a 'real' casino industry structure (as opposed to merely the metaphorical use of the term when referring to the markets) that should be set up as a legitimate gaming domain outside the scope of the stock markets, were it only possible to do so without impacting the valuations of real companies, which I'm afraid, today at least, is not possible. FAC ------

To: axial who wrote (35713)	9/16/2010 12:42:49 PM
From: Maurice Winn	1 Recommendation Respond to of 46821

Jim, I've been reading about the million mile a minute computers and their high speed trading and have yet to see a problem to worry me at my 4 km per hour speed. I know computers are supposed to be scary and they are fast and stuff, with complex algorithms and PhD mathematicians fine tuning them, but what's the actual problem I should worry about when I'm buying and selling shares? I have yet to see a problem other than politicians "doing something" and thereby creating actual serious problems with their "solutions" which are all too often final. Mqurice

To: axial who wrote (35713)	9/16/2010 12:56:47 PM
From: Maurice Winn	2 Recommendations Respond to of 46821

The probability of harm has gone down, not up, with incentives for risk taking <As NASA, Wall Street and lately BP have demonstrated, the probability of harm rises with incentives for risk-taking. > When people first started flying, they took big risks, flying up into the unknown, and frequently coming back to earth with a fatal thud. As risks become known, the rewards are able to be obtained while the risks are obviated. Now we have dirty great A380s soaring around the sky, traveling huge distances luxuriously at low cost, high speed and high altitude in almost total safety. BP can dig oil almost anywhere in almost total safety. They had a major accident, the causes of which are being sorted through and are unlikely to be repeated. The incentives are not to take risks but to avoid risks. Despite the media excitement at the BP oil accident, the harm was actually minimal other than to BP's shareholders, insurers, Transocean, others involved and the 11 dead people. The cameras roamed lovely sandy beaches looking for problems of which there were few. They found a few swamps [fashionably called wetlands these days] and some pelicans in trouble. No biggie. There is still some rearguard action trying to make media hay out of the oil, but it's Game Over unfortunately for them and those who made good bucks and could pose and preen about the terrible terrible environmental catastrophe which has now disappeared into thin air. If that's a catastrophic calamity these days, we don't have much to worry about. Mqurice

To: axial who wrote (35713)	9/16/2010 2:04:47 PM
From: Win-Lose-Draw	Read Replies (2) \| Respond to of 46821

Liquidity pockets like that happened all the time in the Good Old Days. Back in the day, the co-located computers - known in those days as floor traders & specialists - basically pocketed the difference as the cost of holding something nobody temporarily wanted to buy. Such jumpies, especially the short-lived ones (and there were LOTS of them, it happened all the time) often never hit the ticker (unless something big was happening). The real difference is now we have replaced the human co-locates and their hand signals and dubious paper trails with computer co-locates that have (or at least can have) rock-solid data keeping and reporting. So the technology is allowing us to see "all" the data, and for many it is the first time they've seen just how dislocated the markets can be on very short time scales. It can be disconcerting, as it violates the widely-held myth that markets are "almost always" a smooth, well-oiled machine, but there really isn't anything new happening here.