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Monday, July 15, 2024



Courtesy of Joshua M Brown, The Reformed Broker 

I don’t know what it takes to get people’s attention these days.  Peel your eyes away from the latest episode of Glee and drop the spork you’re using to shovel artificial mashed potatoes into your face for just one moment.

Is everyone following?  OK, read this, please:

The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said.

That gem appeared in a New York Times article about high frequency trading.  The article came out on May 16th and no one is talking about it.  Nobody seems to think that the invention of a machine that has made its owner a profit EVERY SINGLE TRADING DAY FOR FOUR YEARS is such a big deal.

Have you all Green Mountain Coffee’d yourselves into a zombie trance?  Well?

An automatic money machine.  Seriously.  Plug it in, maintain the gears and software and voila!  Money.

There isn’t any stock research or economic musing going on.  According to the article, the automatic money machine’s operators don’t even know what the stocks are that it’s trading.  Again – the machine almost can’t lose money because it’s holding stocks for an average of 11 seconds.

OK, here’s the money shot – all the big Wall Street investment banks are working on the improvement of their own quasi-market maker HFT machines.  Apparently, near perfect annual trading records simply won’t do. 

Let me save everyone some time and give you the recipe for our next crash and subsequent Ferrigno-strength reccession:

Step 1:  Build automatic money machine, hide it in Kansas City or thereabouts where nobody will ask questions.

Step 2:  After 3 or 4 years of zero losses, time to lever up.

Step 3:  Make sure a few wayward team members join all the other big firms and build their own automatic money machines.  Incestuous coding?  No worries.

Step 4:  Yeah, so you know they should probably lever up the new machines also.  Conservatively – like 25-to-1 or so.

Step 5:  China and Russia could probably use a few Tradebots, too.  And Dubai.  Giddy up!

Step 6:  Replace all human personnel, build additional machines that are tasked with running and servicing the money machine.  Oh, and we’ll need more leverage.

Step 7:  Boom.

You’re welcome.  Now you can narrate it for your friends as it happens. 

One quick aside about technology in general and then I’m done for today…in the 1960’s, GE commercials and episodes of The Jetsons promised us how great technology would be and how much easier it would make all our lives.  Everything automatic so the housewife could put her dainty little feet up and wait for her husband to come home. 

Flash forward 50 years.  Do you know anyone who isn’t working harder than ever?  Who isn’t killing themselves 12 to 14 hours a day just to pay their taxes?  Sure, we’re all connected.  To more work.  24 hours a day.

Ok, now I’m done. 

Yes, an automatic money machine. 

Photo courtesy of Jr. Deputy Accountant 

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