WSJ: “Buy low, sell high? Not in this market”

Good article in the Wall Street Journal on the reasons why today’s insane markets have lost the confidence of rational investors:

“During the last decade the march to democratize the markets has charged forward, with each new innovation or revamp heralded as evening the playing field and giving smaller investors a sense of fairness and trust.

These efforts have yielded two tangible results: lightning-fast execution and slashed trading costs. The floor of the New York Stock Exchange is witness to this shift. The number of floor brokers has shrunk by half, to 1,500, in just five years. Actual trading on the floor is less than 10% of volume.

Taking the place of humans are those coldly efficient and incorruptible machines.

And yet despite these efficiencies, most investors find themselves questioning tried-and-true principles and strategies: value investing, technical analysis, momentum plays and even the simplest maxim, “buy low and sell high.”

Poll after poll shows that investors feel the markets are tilted unfairly against them. What’s worse is that investor skepticism is higher than it was before market “reforms” allegedly improved the system…”

It includes some good stats on HFT, derivatives and volume.  You can read the whole article here.

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