70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS
by ilene - October 22nd, 2010 7:27 pm
70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS
Courtesy of Washington’s Blog
The Fourteenth Banker writes today:
In the stock market, program trading dominates volume. I heard recently that 70% of trade positions are held for an average of 11 seconds.
He’s correct.
As the New York Times dealbook noted in May:
These are short-term bets. Very short. 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
Similarly, FT’s Martin Wheatley pointed out last month:
I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds
And market analyst Peter Cohan writes at AOL’s Daily Finance:
70% of trading volume on the major exchanges is conducted by high-frequency traders who hold a stock for an average of 11 seconds.
The fact that the vast majority of stock market trades are held for 11 seconds shows that the stock market is not a real market with real traders governed by the law of supply and demand, and with no real price discovery.
But as Tyler Durden points out, alot can happen in 11 seconds when the players are high-powered computers:
07-29-10 BATS "Flag Repeater". 15,000 quotes in 11 seconds, dropping the ASK price 1 penny each quote from $9.36 to $8.58 and back up again.
Myths about stock market myths that just won’t die
by ilene - August 27th, 2010 1:25 am
Baruch actually likes stocks, embraces the HFTing-bots and thinks that now is a good time to go long. Share his George Constanza moment… except this is serious. Baruch makes a compelling argument that stocks are the best investment around, the "asset class of the future." He takes on bond apologists, Brett Arends, Felix Salmon and the myths. – Ilene
Myths about stockmarket myths that just won’t die
Courtesy of Ultimi Barbarorum
[Watch George Costanza Does The Opposite]
Baruch hasn’t stopped blogging. He’s just been busy at work. To be fair, there also hasn’t been that much he has wanted to write about.
That changes here! A recent and growing animus in the econoblogoverse to, of all things, equity markets, has woken him up. Baruch finds this fairly incredible. Equities, he is fairly convinced, are the asset class of the future. This anti-equities movement, led by jealous journalists and winking, cackling bond apologists with axes to grind, needs to be nipped in the bud, as it is dead wrong. The WSJ’s otherwise reasonable Brett Arends is Baruch’s immediate target among the evil-thinkers, for his (last week’s top read on Abnormal Returns) The Top 10 Stock Market Myths that Just Won’t Die. And that Felix Salmon is also guilty as sin in this, for many offences against shares committed over the past few years.
Myth 1: stocks don’t generally go up
Wronngggg! Try shorting for a living and see how long you last. I’ve tried it. It is *really* fricking hard. Actually this year my shorts have made me more money than my longs, but I am an investing genius, and you are probably not. To those bond apologists who claim that this “stocks for the long haul” stuff is bullshit, I urge you to actually count the number of 10 year periods since 1950 where stocks have not made you a net percentage gain. I can only see 1963-64 and 1999-2001 as periods with evident losses (check out the S&P log chart from 1950). So around 90% of the time in the past 50 years, stocks have made you money on a 10-year investment horizon.
It’s not like you lost lots of money when they did go down, either. At worst, if you had been unfortunate (or dumb) enough to invest in January 2000, by 2010 you had lost about 20%. You would have faced the same, a 20% loss, in 1964…