Why is high frequency trading the hot topic?
The current hot topic is Michael Lewis’s book, “Flash Boys” where he talks about high frequency trading. Lewis tells how certain traders have developed a strategy to take advantage of information to benefit their investments. It’s controversial because some people think this type of trading is legal while regulators and the general public do not.
Should you be concerned about high frequency trading?
In one way you do need to be concerned about high frequency trading. I believe the markets need to be fair to everybody and not favor anyone. However, if you are a long term investor, the day to day trading strategies of the over all market, like high frequency trading, do not really affect you. High frequency trading can cause volatility in the market. Some people are debating that high frequency trading has caused the market to go higher, but the jury is still out.
Reality for the long term investor
If you are a long term investor, you will hold on to certain stocks for many years. High frequency trading then, will not impact you because you are going for the overall long term return.
My personal opinion
I still believe that the financial markets are still the best place to invest and grow your net worth. Can we guarantee that? No. But the the kind of strategies and investing we do here at fi-Plan Partners is not day trading so we are not worried about high frequency trading.
Please send me your questions or comments below
If you would like to talk about your personal investment strategy, please send me a comment below, email me here or call me at (205) 989-3498.
Greg Powell, CIMA
Greg Powell is President and CEO of fi-Plan Partners, an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.