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It is getting increasingly difficult to just invest in companies you believe in. Like how twenty years ago you could buy a stock you believed in for like $4 by

by patio11 14y ago

It is getting increasingly difficult to just invest in companies you believe in. Like how twenty years ago you could buy a stock you believed in for like $4 by using a computer system, paying a fraction-of-a-penny spread on average, to have a trade executed in milliseconds to seconds, but now you have to talk to a human on the phone and pay a $400 commission to pay a fraction-of-an-eighth spread and have the trade execute in minutes or hours? That fact pattern would make this critique make sense. No, it is fantastically easier to trade the stocks of companies you believe in. If there is a problem with the market, the "problem", and one uses that term loosely, is that people are talking about macroeconomic trends more than individual companies because the observable evidence is overwhelmingly in favor of a conclusion we've pretty much known for decades: seeking alpha is a sucker's bet.

tlb 14y ago
He means it's hard to make money by being a good judge of a company. In the old days you could look at new product introductions and predict better than the majority stockholders (pension funds and insurance companies) how they would affect revenue. They would buy after the next quarterly report showed higher earnings, and you could sell to them at a decent profit. Smart individuals who knew an industry could make decent money. That's no longer true, because HFTs are jumping in front of your transactions.
- jeremyjh 14y ago
  To me this is just him whining that there are no longer market failures for him to exploit. He didn't make lots of money by value investing, he made lots of money by investing in under-priced stocks. That is much harder to do today because the market is better at capturing all the various potential and risk so that a stock price today really does reflect an accurate, risk-adjusted net present value. This means you cannot outperform the market which is his only measure of success.
mej10 14y ago
Trading stocks is fantastically easier, sure. That is obvious. And he says so at the end: "There is value to trading automation. It is here to stay." He never says _trading_ is difficult. Your comment would be more interesting if it confronted his main point: "There is absolutely NO VALUE to High Frequency Trading. None. We need to bring our markets back to their original goals of creating capital for business. "
- PaulHoule 14y ago
  I think it's a miracle that you can ask for $500 dollars of a thinly traded stock and quite quickly get an offer to get it at $515. That's how market makers make money. They match up investors who want to buy and sell the amount they want to sell at the time they want to sell it. Contrast to the private corporation that I own shares in, where it's taken me weeks to broker a deal to buy some more shares from another shareholder -- including face to face meetings with many of the officers of the company. We had to have an accountant do the valuation and I ended up buying exactly the number of shares the other owner wanted to sell because this would mean more financing complexity and paperwork for the hardworking officers who should be spending their time building the business. Maybe your broker gets $10 and the market maker gets $15 but this is a bargain when you consider how much it would cost without them. Imagine trading on the New York Stock exchange when you were in San Francisco in 1860! Many low latency (high frequency) traders are market makers. Since the first successful offer gets the trade, you've got to be the fastest to survive at this game. One reason it's hard to make money as a trader is that as people find discover deviations from ideality and exploit them, the deviations go away. "Market neutral" strategies we quite successful through the 90's but are no longer profitable. Today I'm worried about the options market because trading in volatility may alter the relationship between implied and realized volatility and ruin another family of simple strategies that have performed well lately.
  - crucialfelix 14y ago
    This really has nothing to do with retail investors. Retail is completely insignificant. Its about what the bulk of the trading is: robots trading with robots without any regard to the stocks they are trading. The big whales are the mutual funds and they have to execute their buy/sells using special techniques of spacing trades out to try to not show what they are up to. Otherwise the HFT spots it (and they usually do) and then front runs all of the trades, just skimming pennies off. What use are they ? The majority of the trades are not making markets at all, they are just zipping back and forth to collect pennies. If they were market makers then they would hold inventory, but they never do. NOBODY believes the "liquidity" story. and what about flooding the market with fake bids to cause opponents to get overloaded ? or running tracer LFOs spitting out strange bid patterns just to see if they can detect another hidden program ? what does that have to with market making ? its just robot games.
uptown 14y ago
"It is getting increasingly difficult to just invest in companies you believe in." You're interpreting that sentence literally. His point is that investing in a company used to largely be based on how successful you though that company would be. The market has changed in a way that an overwhelming number of external factors can have a negative (or positive) impact on that company's share price, making the evaluation of risk far more difficult. At the same time, the barriers to getting into the market have been lowered making it far-easier for anyone to participate. That sentence has nothing to do with how your initial trade was executed.
- harryh 14y ago
  "The market has changed in a way that an overwhelming number of external factors can have a negative (or positive) impact on that company's share price" Really? In what way has it changed? External factors have always had a huge impact on businesses. I'm sure there were lots of super well run businesses that went under durring the Great Depression (which was, you know, the mother of "external factors").
  - whatshisface 14y ago
    By external factors, I think he means factors unrelated (or at least not very related) to the success of the company, like wild stock speculation.
    - debacle 14y ago
      As someone who invests in small caps almost exclusively, I can tell you that 99.99% of the companies in existence today don't suffer from wild stock speculation.
  - uptown 14y ago
    "In what way has it changed?" Two examples: 1. High-frequency algorithmic trading. http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-the-day-hft-edition/ http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-th... 3. Repeal of the Glass–Steagall Act, giving government-protected 'too-big-to-fail' commercial banks the ability to incur risks traditionally reserved for investment banks.
larrys 14y ago
First let me say that I agree with most of Cuban's thoughts in general. But by "invest" he is not talking about the friction out there (paraphrase as "having to spend $400 and talk to a human") to purchase a stock but rather the price of the stock in relation to the value being manipulated by, as one example, high frequency trading and macro economic conditions. Let's say someone decides to invest in Bingo Card Creator because they think there will be a market in China and that Patrick and BCC are the ones to be able to take advantage of that opportunity. So they invest in BCC because as a small operation, and after doing due diligence, they believe the "new chinese sales manager" that you hired can crack that market. Regardless of what else is going on in the world or in China. But the truth is even though the stock market is less like that analogy today, I don't believe it was ever like that. (Look at 1929 as one example). Of course in the past I do believe people did make more long term investments. There were places to put "widow and orphans" money. Not sure that is the case today anymore (is it?) And that could also be just because of friction in distribution of investment information - there were less places to read things about companies and that actually helped create more long term investments (my thoughts strictly). The game now is that people attempt to predict by all means possible what will happen in the future by triangulating any info available to determine how a company will do. And then those companies become bellwether's of the market and people make decisions in advance of those decisions. While this always happened to some extent (I'm sure before people could fly airplanes over shopping centers or before there were even shopping centers there were people who attempted to find out how a particular company was doing by evaluating any information they could. I just think the amount of people doing that was in the minority and now the majority of people are making decisions for non-fundamental reasons.)
- djoldman 14y ago
  >"but rather the price of the stock in relation to the value being manipulated by, as one example, high frequency trading and macro economic conditions." Please explain or expand on how the above occurs.
  - larrys 14y ago
    HFT works to quickly create momentum in pricing (Note: there are alternative theories that this is not the case to be sure) which changes a large quantity of stock prices for the day. And when the market is having a down day other stocks that have nothing to do with the stocks being traded are changed as well. So if the market is down someone's investment in Patrick's BCC will have a large chance of dropping as well. As far as macro economic conditions same thing. A report comes out that Fedex has shipped less packages or ADP reports that there are less people using their payroll service (bellwethers). So stocks start to drop and the market goes down because people anticipate it will effect earnings of all companies. Even though it has nothing to do with what is going on specifically with BCC or with a company whose business it is is to create the washers that are used in pumps in sewer systems.
hodder 14y ago
I agree with your argument until your last point, "seeking alpha is a sucker's bet". There is ample academic evidence supporting "cheap stock" strategies as improving performance relative to the broader market. Do you disagree with much of what is said in this article? http://www.tweedy.com/resources/library_docs/papers/WhatHasWorkedInInvesting.pdf http://www.tweedy.com/resources/library_docs/papers/WhatHasW...
lonnyk 14y ago
I think you are interpreting the term 'invest' incorrectly. He has previously [1] alluded to a difference in the definition of trading and investing. [1] http://blogmaverick.com/2012/09/04/facebook-handled-their-ipo-exactly-right/ http://blogmaverick.com/2012/09/04/facebook-handled-their-ip...
marcamillion 14y ago
seeking alpha is a sucker's bet. Surely this can't be right. If for the only reason that, if it were a sucker's bet, then most people wouldn't take it. Especially most 'informed/rational' actors. The vast majority of the players on Wall Street, we can assume, are informed and relatively rational. Yes, they may follow the herd - but that too is a rational exercise. If you are in a building and everybody is running for the exits, it is irrational to stand still and risk being trampled. So, the mere fact that there are countless informed/rational actors seeking alpha and - quite frankly, many do capture it - would seem to me that statement is inaccurate. If your argument is that the odds are long, well that is more nuanced view. There are many traders that seek a small amount of alpha, with no leverage, and make a reasonable return annually - enough to support say 1 - 2 employees. But, there are many others that do the same with a larger capital base and capture enough to support larger organizations. Seeking bets with long odds is, quite frequently, not a sucker's bet - because the mainstream view of that bet is that it is a sucker's bet. Mainstream adoption of that view, actually - non-intuitively - turns the bet into a prudent bet. The whole be greedy when everybody is fearful bit. The same can be said of founders wanting to build the next Facebook - you might argue it is a sucker's bet, but the outcomes aren't as rare as it may seem.
- icelancer 14y ago
  >If for the only reason that, if it were a sucker's bet, then most people wouldn't take it. The market can remain irrational for longer you can remain solvent.
  - marcamillion 14y ago
    > The market can remain irrational for longer you can remain solvent. Yes, but can it remain solvent for as long as everybody can remain solvent? i.e. everyone that makes these "sucker" bets? No. Liquidity will dry up, because there is a big chunk of the market that takes these bets.
- RockyMcNuts 14y ago
  People bet on slot machines too. Can you say, if it were a sucker's bet, most people wouldn't take it? When I started writing I thought if I proved X was a stupid thing to do that people would stop doing X. I was wrong. - Bill James For some measure of 'sucker-value', seeking alpha is a sucker's bet, or timing the market is a sucker's bet, or blackjack is a sucker's bet, or poker is a sucker's bet. But there are the few who can find an edge, and don't play when they don't. A more nuanced point of view is that the market is efficient enough and perverse enough that it takes an unusual ability to find alpha, or time the market, or to pursue any strategy. So if you don't have those, then it's a sucker's bet. As a thought experiment, consider what would happen if (nearly) everyone indexed. Anything outside the index would be super-cheap and illiquid, and the index would be expensive in comparison. In that case, non-indexers would outperform. (Efficient market theorists would of course argue it was an illiquidity and risk premium and the market is still efficient.) In the real world, the market finds an equilibrium between indexers and non-indexers where some can generate alpha, enough to persuade a lot of people that they're alpha generating when they are just fooling themselves. It's really people's ability to rationalize and fool themselves that explains the persistence of alpha-seeking strategies, not their success. Paradoxically, when dumb money acknowledges its limitations, it ceases to be dumb. - Warren Buffett I agree with you that it's possible, but hard to outperform, but mostly for a different reason. Partly because the market is somewhat efficient and rational, but mostly because where and when it's irrational, it inherently mirrors the irrationality of the human participant in ways which almost everyone will struggle in vain to overcome.
paulsutter 14y ago
He's making a distinction between trading and investment. The purpose of the stock market is raising capital to start/grow/sell companies (investment). The technical term for high frequency trading is "scalping" (yes, exactly the same word and meaning as ticket scalping). HFT traders like to think they "create liquidity", but I haven't heard a credible argument to support that. Divide the market into three categories of participants: A. Holding period less than one minute (high frequency traders) B. Holding period greater than one month (entrepreneurs, companies, value investors) C. Everyone else (noise) Question: Does category A really create any useful liquidity for category B? Category B is the economic purpose and intent of the stock market. He's saying: that the HFT guys are like trolls living under a bridge stealing a shoelace from each person who crosses the bridge. He's saying that doesn't fulfill an economic purpose. I'd love to hear a counterargument. I don't know enough to have a firm position.
- lifeisstillgood 14y ago
  My view (possibly wrong, it has been known) is that liquidity need only be provided by one party. A competitive Market in liquidity has minimal benefits it is unimportant if the Market maker holds for 1 pixo second or one month - what matters is that someone is there to trade. Now HFT is at a disadvantage as they have less scope to make their spread (essentially the other side must already be in the Market) but that's where if all other Market makers disappeared (and the stock slowed down) HFTs must become LFTs and hey presto are indistinguishable from the old style Market maker yes there is a price point issue but most buyers really have a range they will buy at so more precisely I am conjecturing that there are minimal benefits to an exchange to having more than one Market maker at a given stock within a given price range. How to provethat - not sure
  - Ntrails 14y ago
    "I am conjecturing that there are minimal benefits to an exchange to having more than one Market maker at a given stock within a given price range." Could you perhaps explain the downside of having multiple market makers per stock? It seems trivial to state that competition in providing liquidity alters the cost of said liquidity and disprove your contention - but why bother to make that argument when there can't really be additional costs by multiple parties competing to offer a service?

by patio11 14y ago

tlb 14y ago

He means it's hard to make money by being a good judge of a company. In the old days you could look at new product introductions and predict better than the majority stockholders (pension funds and insurance companies) how they would affect revenue. They would buy after the next quarterly report showed higher earnings, and you could sell to them at a decent profit. Smart individuals who knew an industry could make decent money. That's no longer true, because HFTs are jumping in front of your transactions.

jeremyjh 14y ago
To me this is just him whining that there are no longer market failures for him to exploit. He didn't make lots of money by value investing, he made lots of money by investing in under-priced stocks. That is much harder to do today because the market is better at capturing all the various potential and risk so that a stock price today really does reflect an accurate, risk-adjusted net present value. This means you cannot outperform the market which is his only measure of success.

mej10 14y ago

Trading stocks is fantastically easier, sure. That is obvious. And he says so at the end: "There is value to trading automation. It is here to stay." He never says _trading_ is difficult. Your comment would be more interesting if it confronted his main point: "There is absolutely NO VALUE to High Frequency Trading. None. We need to bring our markets back to their original goals of creating capital for business. "

PaulHoule 14y ago
I think it's a miracle that you can ask for $500 dollars of a thinly traded stock and quite quickly get an offer to get it at $515. That's how market makers make money. They match up investors who want to buy and sell the amount they want to sell at the time they want to sell it. Contrast to the private corporation that I own shares in, where it's taken me weeks to broker a deal to buy some more shares from another shareholder -- including face to face meetings with many of the officers of the company. We had to have an accountant do the valuation and I ended up buying exactly the number of shares the other owner wanted to sell because this would mean more financing complexity and paperwork for the hardworking officers who should be spending their time building the business. Maybe your broker gets $10 and the market maker gets $15 but this is a bargain when you consider how much it would cost without them. Imagine trading on the New York Stock exchange when you were in San Francisco in 1860! Many low latency (high frequency) traders are market makers. Since the first successful offer gets the trade, you've got to be the fastest to survive at this game. One reason it's hard to make money as a trader is that as people find discover deviations from ideality and exploit them, the deviations go away. "Market neutral" strategies we quite successful through the 90's but are no longer profitable. Today I'm worried about the options market because trading in volatility may alter the relationship between implied and realized volatility and ruin another family of simple strategies that have performed well lately.
- crucialfelix 14y ago
  This really has nothing to do with retail investors. Retail is completely insignificant. Its about what the bulk of the trading is: robots trading with robots without any regard to the stocks they are trading. The big whales are the mutual funds and they have to execute their buy/sells using special techniques of spacing trades out to try to not show what they are up to. Otherwise the HFT spots it (and they usually do) and then front runs all of the trades, just skimming pennies off. What use are they ? The majority of the trades are not making markets at all, they are just zipping back and forth to collect pennies. If they were market makers then they would hold inventory, but they never do. NOBODY believes the "liquidity" story. and what about flooding the market with fake bids to cause opponents to get overloaded ? or running tracer LFOs spitting out strange bid patterns just to see if they can detect another hidden program ? what does that have to with market making ? its just robot games.

uptown 14y ago

"It is getting increasingly difficult to just invest in companies you believe in." You're interpreting that sentence literally. His point is that investing in a company used to largely be based on how successful you though that company would be. The market has changed in a way that an overwhelming number of external factors can have a negative (or positive) impact on that company's share price, making the evaluation of risk far more difficult. At the same time, the barriers to getting into the market have been lowered making it far-easier for anyone to participate. That sentence has nothing to do with how your initial trade was executed.

harryh 14y ago
"The market has changed in a way that an overwhelming number of external factors can have a negative (or positive) impact on that company's share price" Really? In what way has it changed? External factors have always had a huge impact on businesses. I'm sure there were lots of super well run businesses that went under durring the Great Depression (which was, you know, the mother of "external factors").
- whatshisface 14y ago
  By external factors, I think he means factors unrelated (or at least not very related) to the success of the company, like wild stock speculation.
  - debacle 14y ago
    As someone who invests in small caps almost exclusively, I can tell you that 99.99% of the companies in existence today don't suffer from wild stock speculation.
- uptown 14y ago
  "In what way has it changed?" Two examples: 1. High-frequency algorithmic trading. http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-the-day-hft-edition/ http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-th... 3. Repeal of the Glass–Steagall Act, giving government-protected 'too-big-to-fail' commercial banks the ability to incur risks traditionally reserved for investment banks.

larrys 14y ago

First let me say that I agree with most of Cuban's thoughts in general. But by "invest" he is not talking about the friction out there (paraphrase as "having to spend $400 and talk to a human") to purchase a stock but rather the price of the stock in relation to the value being manipulated by, as one example, high frequency trading and macro economic conditions. Let's say someone decides to invest in Bingo Card Creator because they think there will be a market in China and that Patrick and BCC are the ones to be able to take advantage of that opportunity. So they invest in BCC because as a small operation, and after doing due diligence, they believe the "new chinese sales manager" that you hired can crack that market. Regardless of what else is going on in the world or in China. But the truth is even though the stock market is less like that analogy today, I don't believe it was ever like that. (Look at 1929 as one example). Of course in the past I do believe people did make more long term investments. There were places to put "widow and orphans" money. Not sure that is the case today anymore (is it?) And that could also be just because of friction in distribution of investment information - there were less places to read things about companies and that actually helped create more long term investments (my thoughts strictly). The game now is that people attempt to predict by all means possible what will happen in the future by triangulating any info available to determine how a company will do. And then those companies become bellwether's of the market and people make decisions in advance of those decisions. While this always happened to some extent (I'm sure before people could fly airplanes over shopping centers or before there were even shopping centers there were people who attempted to find out how a particular company was doing by evaluating any information they could. I just think the amount of people doing that was in the minority and now the majority of people are making decisions for non-fundamental reasons.)

djoldman 14y ago
>"but rather the price of the stock in relation to the value being manipulated by, as one example, high frequency trading and macro economic conditions." Please explain or expand on how the above occurs.
- larrys 14y ago
  HFT works to quickly create momentum in pricing (Note: there are alternative theories that this is not the case to be sure) which changes a large quantity of stock prices for the day. And when the market is having a down day other stocks that have nothing to do with the stocks being traded are changed as well. So if the market is down someone's investment in Patrick's BCC will have a large chance of dropping as well. As far as macro economic conditions same thing. A report comes out that Fedex has shipped less packages or ADP reports that there are less people using their payroll service (bellwethers). So stocks start to drop and the market goes down because people anticipate it will effect earnings of all companies. Even though it has nothing to do with what is going on specifically with BCC or with a company whose business it is is to create the washers that are used in pumps in sewer systems.

hodder 14y ago

I agree with your argument until your last point, "seeking alpha is a sucker's bet". There is ample academic evidence supporting "cheap stock" strategies as improving performance relative to the broader market. Do you disagree with much of what is said in this article? http://www.tweedy.com/resources/library_docs/papers/WhatHasWorkedInInvesting.pdf http://www.tweedy.com/resources/library_docs/papers/WhatHasW...

lonnyk 14y ago

I think you are interpreting the term 'invest' incorrectly. He has previously [1] alluded to a difference in the definition of trading and investing. [1] http://blogmaverick.com/2012/09/04/facebook-handled-their-ipo-exactly-right/ http://blogmaverick.com/2012/09/04/facebook-handled-their-ip...

marcamillion 14y ago

seeking alpha is a sucker's bet. Surely this can't be right. If for the only reason that, if it were a sucker's bet, then most people wouldn't take it. Especially most 'informed/rational' actors. The vast majority of the players on Wall Street, we can assume, are informed and relatively rational. Yes, they may follow the herd - but that too is a rational exercise. If you are in a building and everybody is running for the exits, it is irrational to stand still and risk being trampled. So, the mere fact that there are countless informed/rational actors seeking alpha and - quite frankly, many do capture it - would seem to me that statement is inaccurate. If your argument is that the odds are long, well that is more nuanced view. There are many traders that seek a small amount of alpha, with no leverage, and make a reasonable return annually - enough to support say 1 - 2 employees. But, there are many others that do the same with a larger capital base and capture enough to support larger organizations. Seeking bets with long odds is, quite frequently, not a sucker's bet - because the mainstream view of that bet is that it is a sucker's bet. Mainstream adoption of that view, actually - non-intuitively - turns the bet into a prudent bet. The whole be greedy when everybody is fearful bit. The same can be said of founders wanting to build the next Facebook - you might argue it is a sucker's bet, but the outcomes aren't as rare as it may seem.

icelancer 14y ago
>If for the only reason that, if it were a sucker's bet, then most people wouldn't take it. The market can remain irrational for longer you can remain solvent.
- marcamillion 14y ago
  > The market can remain irrational for longer you can remain solvent. Yes, but can it remain solvent for as long as everybody can remain solvent? i.e. everyone that makes these "sucker" bets? No. Liquidity will dry up, because there is a big chunk of the market that takes these bets.
RockyMcNuts 14y ago
People bet on slot machines too. Can you say, if it were a sucker's bet, most people wouldn't take it? When I started writing I thought if I proved X was a stupid thing to do that people would stop doing X. I was wrong. - Bill James For some measure of 'sucker-value', seeking alpha is a sucker's bet, or timing the market is a sucker's bet, or blackjack is a sucker's bet, or poker is a sucker's bet. But there are the few who can find an edge, and don't play when they don't. A more nuanced point of view is that the market is efficient enough and perverse enough that it takes an unusual ability to find alpha, or time the market, or to pursue any strategy. So if you don't have those, then it's a sucker's bet. As a thought experiment, consider what would happen if (nearly) everyone indexed. Anything outside the index would be super-cheap and illiquid, and the index would be expensive in comparison. In that case, non-indexers would outperform. (Efficient market theorists would of course argue it was an illiquidity and risk premium and the market is still efficient.) In the real world, the market finds an equilibrium between indexers and non-indexers where some can generate alpha, enough to persuade a lot of people that they're alpha generating when they are just fooling themselves. It's really people's ability to rationalize and fool themselves that explains the persistence of alpha-seeking strategies, not their success. Paradoxically, when dumb money acknowledges its limitations, it ceases to be dumb. - Warren Buffett I agree with you that it's possible, but hard to outperform, but mostly for a different reason. Partly because the market is somewhat efficient and rational, but mostly because where and when it's irrational, it inherently mirrors the irrationality of the human participant in ways which almost everyone will struggle in vain to overcome.

paulsutter 14y ago

He's making a distinction between trading and investment. The purpose of the stock market is raising capital to start/grow/sell companies (investment). The technical term for high frequency trading is "scalping" (yes, exactly the same word and meaning as ticket scalping). HFT traders like to think they "create liquidity", but I haven't heard a credible argument to support that. Divide the market into three categories of participants: A. Holding period less than one minute (high frequency traders) B. Holding period greater than one month (entrepreneurs, companies, value investors) C. Everyone else (noise) Question: Does category A really create any useful liquidity for category B? Category B is the economic purpose and intent of the stock market. He's saying: that the HFT guys are like trolls living under a bridge stealing a shoelace from each person who crosses the bridge. He's saying that doesn't fulfill an economic purpose. I'd love to hear a counterargument. I don't know enough to have a firm position.

lifeisstillgood 14y ago
My view (possibly wrong, it has been known) is that liquidity need only be provided by one party. A competitive Market in liquidity has minimal benefits it is unimportant if the Market maker holds for 1 pixo second or one month - what matters is that someone is there to trade. Now HFT is at a disadvantage as they have less scope to make their spread (essentially the other side must already be in the Market) but that's where if all other Market makers disappeared (and the stock slowed down) HFTs must become LFTs and hey presto are indistinguishable from the old style Market maker yes there is a price point issue but most buyers really have a range they will buy at so more precisely I am conjecturing that there are minimal benefits to an exchange to having more than one Market maker at a given stock within a given price range. How to provethat - not sure
- Ntrails 14y ago
  "I am conjecturing that there are minimal benefits to an exchange to having more than one Market maker at a given stock within a given price range." Could you perhaps explain the downside of having multiple market makers per stock? It seems trivial to state that competition in providing liquidity alters the cost of said liquidity and disprove your contention - but why bother to make that argument when there can't really be additional costs by multiple parties competing to offer a service?