Some Common Cents for April 18th 2014

April 22, 2014, by John Norris

A reader of my Montgomery Advertiser article wrote me this week to ask what was the cause behind the recent market volatility. Over the years, we have established a pretty good dialogue, so I was happy to hear from him. I was also happy to see in the email he had posed the same question to his financial advisor in New Jersey; a guy at a big firm, who would undoubtedly regurgitate the company line. They almost have to do so, even if they feel or felt otherwise.

Was the current brouhaha over ‘high frequency trading’ the culprit? Succinctly, probably not; these guys have been operating for years, and the nature of their business is buying and selling positions within seconds. They focus on making pennies, or fractions thereof, on large trades, and don’t really take a position in anything. The only thing they care about is having faster technology than everyone else, so they can fill the tiny window between when a trade is input into the system and when the system executes it. We are talking seconds or less; don’t blink, or you will miss them…Read On…

The opinions expressed within this report are those
of John Norris as of the initial publication of this blog. They are subject to
change without notice, and do not necessarily reflect the views of Oakworth
Capital Bank, its directors, shareholders, and employees.