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To: Win-Lose-Draw who wrote (121347)	10/31/2011 3:22:56 AM
From: HerbVic	2 Recommendations Read Replies (3) \| Respond to of 213181

Agree with you on principle. In a purely mathematical model, decreasing market liquidity does in fact increase volatility. However in my estimation, FWIW, with as much as 70% of all electronic transactions being made by HF computers, the dynamic price setting is no longer simply a modulating derivative of supply/demand imbalance fluctuations. It is acted upon in high frequency interaction between the same institutions that not only make the market, but stand to benefit financially from that increased volatility. There is quite a difference between making a market that serves the liquidity needs of retail investors, and whipsawing the market prices through positive and negative feedback loops of inter-computer bid/offer hopping with no oversight, and no requirement to own or borrow shares to sell short. Ergo, the need to rein in the HF transaction mills and allow the price dynamic to show a reflection of supply/demand imbalance pressure from REAL stock purchases and sells.