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There are also a lot more liquidity providers than there were in the past, no? I know there are concerns that the high-frequency traders will turn off the compu
by intuitionist 7y ago
There are also a lot more liquidity providers than there were in the past, no? I know there are concerns that the high-frequency traders will turn off the computers in a crash, but if the index funds have to sell their small holdings at a deep discount, that’s an opportunity for someone to step in and buy them on the cheap.
I guess there are more legitimate concerns for funds that hold bonds or real estate or other less-liquid assets. But the solution to that is just, don’t put yourself in a position where you have to liquidate those funds in a crunch.
- rocqua 7y agoThe high frequency traders I know of are market makers. They want to make money by buying and immediately selling stock. Earning a spread, but never having an actual position. For them, the prospect of holding a stock that is undervalued by 10% for a few days is not good. Other forms of algorithmic trading might still step in though.