Article: End of Wall Street (as they knew it)

Quote from sheda:

Whys that?
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Given the disaster we continue to experience over the past 4 years the benefits of hedge funds providing liquidity to the markets cannot be balanced when considering the potential for downside risk when they blow up themselves, and everyone else around them. An article from 07 points out what can happen when too few players, hold too much position, with too much risk. As it turned out this article, and many others you can find from the 05-08 period proved to be prophetic.
http://www.helium.com/items/693921-how-hedge-funds-impact-the-us-economy
 
Yea your right CaptainObvious, all those hedge funds that had to be bailed out by the gov for the crisis they caused with there financial engineering of crappy products and over lending to goverments, we need to remove these cowboys and the public from the market and just allow qualified banks to take part.
 
or hows about allowed to fail? and then, what G W Bush said about another great depression comes to pass? Which is why he said he started the bailouts in the first place, but then, we've got business as per usual, only with less money to go around to less conglomerates, and less to give out to make the economy run after the corruption is covered.

My take is that it's not the end of Wall Street. Wall Street is changing just like it always is, and some players are being left behind just like always. And of course, because there's such a need for news stories, they found a venue where they can bitch and moan about it (The Good Old Days Man! The Good Old Cocaine Filled Liar's Poker Days!).
 
Quote from S2007S:


So basically if you have enough money to move large orders around you can make money no matter what, its literally like printing free money.....

$112,000 a day X 5 $560,000 a week X 52 = $29 million dollars a year WITHOUT any risk what so ever.....
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You're joking, I hope? On the ECN's that constitute the lion's share of volume, these rebates are given only for adding liquidity, and there's adverse selection cost to this ("picking up pennies in front of a steam roller"). So it's hardly "without risk". For ECN's which rebate fractions of a penny for taking liquidity, there's spread cost which grossly outweighs any rebates.

Not only that, but on a stock like BAC, a huge portion of the volume (maybe even approaching 50%) is internalized, never exposed to an outside market. So that means that a retail trader going through one of the major discount brokerages likely never hits a real market -- either their own broker is trading against them, or one of the 5 dominant PFOF firms has bought the right to their volume.

The article you quote is testimony to how utterly awful financial reporting can be.
 
Quote from Nanook:

Presenting The "Rise Of The HFT Machine" - Visual Confirmation How SkyNet Broke The Stock Market On US Downgrade Day
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interesting video. I'd say that the downgrade changed lots of things, probably the correlations of instruments. It's very easy to find correlated instruments, some quality time with Excel can do it. Knowing why they are correlated takes a bit more work. Figuring out things when they stop being correlated is yet another problem. LTCM went down the tubes because their correlations came unglued. Maybe some HFT machines were cruising along, breaking even or making a little but waiting for things to decorrelate so they could slaughter the other guys...
 
From the Yahoo article:
(...)Citigroup (...) was often the highest-volume stock — as many as 500 million shares changing hands in one day.

Last year, Citi reduced the number of shares by exchanging one share for every 10. That brought its stock price up — $33 on Wednesday — and high-frequency traders stopped flocking to it. Volume on a normal day has dropped to 50 million.
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This journalist deserves to clean toilets.
 
Quote from Eight:

...Deregulation and Government interference in the loan approval process...
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So now the government is interfering by deregulating! :D
 
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