Wall Street's high-tech war on investors
PCs, broadband Internet connections, online brokerage accounts. These advances brought democracy to Wall Street, leveling the playing field between everyday investors and the insiders, right?
Wrong.
In fact, computers are ruining investing for the average investor.
Sure, your PC lets you see when your stock is moving. But multiply its computing power by thousands, add a throng of software geniuses earning more than $1 million a year and an army of full-time analysts, and you start to understand how the biggest brokerages and hedge funds can stay a few steps ahead of any move you can make.
Yes, you can trade from your cell phone while waiting at a traffic light. But at the big hedge funds, computers execute thousands of trades in milliseconds --and cut into line ahead of buyers like you and me, our mutual funds and our brokers.
All this helps explain why your portfolio was likely hemorrhaging money as stock markets tanked in the first quarter of this year -- yet elite traders at Goldman Sachs (GS, news, msgs) were creating near-record profits.
Tricks of the trading
You won't be surprised that your home computer pales compared to systems honed by the Wall Street elite at places like Goldman Sachs, Citadel Investment Group and Renaissance Technologies. But you might be surprised at what they do with those systems to get an edge over you:
* Scour the markets for opportunities and make millions of trades in less time than it takes you to hit the "enter" key.
* Take advantage of exclusive "flash orders" to trade stocks at better prices than you'll ever see.
* Fish for profitable stock bargains inside exclusive trading venues called "dark pools," where you'll never swim.
More on:
Wall Street's high-tech war on investors
http://articles.moneycentral.msn.com/Investing/CompanyFocus/wall-sreets-high-tech-war-on-investors.aspx
Wrong.
In fact, computers are ruining investing for the average investor.
Sure, your PC lets you see when your stock is moving. But multiply its computing power by thousands, add a throng of software geniuses earning more than $1 million a year and an army of full-time analysts, and you start to understand how the biggest brokerages and hedge funds can stay a few steps ahead of any move you can make.
Yes, you can trade from your cell phone while waiting at a traffic light. But at the big hedge funds, computers execute thousands of trades in milliseconds --and cut into line ahead of buyers like you and me, our mutual funds and our brokers.
All this helps explain why your portfolio was likely hemorrhaging money as stock markets tanked in the first quarter of this year -- yet elite traders at Goldman Sachs (GS, news, msgs) were creating near-record profits.
Tricks of the trading
You won't be surprised that your home computer pales compared to systems honed by the Wall Street elite at places like Goldman Sachs, Citadel Investment Group and Renaissance Technologies. But you might be surprised at what they do with those systems to get an edge over you:
* Scour the markets for opportunities and make millions of trades in less time than it takes you to hit the "enter" key.
* Take advantage of exclusive "flash orders" to trade stocks at better prices than you'll ever see.
* Fish for profitable stock bargains inside exclusive trading venues called "dark pools," where you'll never swim.
More on:
Wall Street's high-tech war on investors
http://articles.moneycentral.msn.com/Investing/CompanyFocus/wall-sreets-high-tech-war-on-investors.aspx
