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>"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." Pleas

>"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.
- djoldman 14y ago
  Please explain what you mean by "HFT works to quickly create momentum in pricing." What is bad/wrong/unlawful/unethical about: >"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." And just to check: do you think it would NOT be bad/wrong/unlawful/unethical if one substituted "up day" for "down day" in your sentence? It seems like you take issue with that fact that stock price changes have become more correlated. Is it bad/wrong/unlawful/unethical that traders may want to sell(buy) stock A when the price of stock B decreases(increases)?
  - lmm 14y ago
    >It seems like you take issue with that fact that stock price changes have become more correlated. Is it bad/wrong/unlawful/unethical that traders may want to sell(buy) stock A when the price of stock B decreases(increases)? It suggests the market is no longer performing its intended function of allocating capital to those companies that will use it most efficiently.
    - djoldman 14y ago
      "It suggests the market is no longer performing its intended function of allocating capital to those companies that will use it most efficiently." Please explain how the trading of a company's stock changes that company's capital allocation.
      - lmm 14y ago
        A company's market capitialization is its capital allocation. It's reasonably common for companies to use their own stock when making big buys (such as other companies).

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.

djoldman 14y ago
Please explain what you mean by "HFT works to quickly create momentum in pricing." What is bad/wrong/unlawful/unethical about: >"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." And just to check: do you think it would NOT be bad/wrong/unlawful/unethical if one substituted "up day" for "down day" in your sentence? It seems like you take issue with that fact that stock price changes have become more correlated. Is it bad/wrong/unlawful/unethical that traders may want to sell(buy) stock A when the price of stock B decreases(increases)?
- lmm 14y ago
  >It seems like you take issue with that fact that stock price changes have become more correlated. Is it bad/wrong/unlawful/unethical that traders may want to sell(buy) stock A when the price of stock B decreases(increases)? It suggests the market is no longer performing its intended function of allocating capital to those companies that will use it most efficiently.
  - djoldman 14y ago
    "It suggests the market is no longer performing its intended function of allocating capital to those companies that will use it most efficiently." Please explain how the trading of a company's stock changes that company's capital allocation.
    - lmm 14y ago
      A company's market capitialization is its capital allocation. It's reasonably common for companies to use their own stock when making big buys (such as other companies).