Wallace Turbeville, writing earlier this week in The American Prospect, reveals the following chilling but less-than-surprising reduction to near absurdity in the world of stock trading:
For me, the story starts with a book, Dark Pools, written by Wall Street Journal Reporter Scott Patterson. The book, published in the summer of 2012, is an account of the rise of high-frequency trading or “HFT.”That is automated trading of securities and derivatives using powerful computers driven by complex algorithms. It is widely accepted that trading activity in most markets is dominated by HFT. Firms that specialize in this practice trade in enormous volumes but start and end the day with few if any holdings. Their purpose is to profit from intra-day market moves, not from fundamental investment. They buy and sell in the blink of an eye, churning the markets constantly. Mr. Patterson’s book contains the following passage:
At the end of World War II, the average holding period for a stock was four years. By 2000, it was eight months. By 2008, it was two months. And by 2011, it was 22 seconds, at least according to one professor’s estimate.
Gone In 22 Seconds: How Frequent is High Frequency Trading? (The American Prospect)
(Hat tip: Mark Malone)