Stock Market and Algorithisms
Folks, does anyone know why the stock market was created? The simple answer is a place where to invest in a company, you or an investment organization believed, would do well in the marketplace and you would make economic gains in that investment through that company’s knowledge and marketability. Which in turn gave that company capital to expand, research, purchase capital equipment, and other things which a company would need to grow. This is how our country became the most dynamic economy in world history. Think of Apple and Microsoft for examples. The people who got on the ground floor of these companies got returns beyond their wildest dreams.
The markets are not like that anymore, now it is algorithms and super computers that control the markets and not just the stock market either, most financial markets. The initial purpose was not only to make money but to invest in something which improved the overall marketplace and benefits which enhanced our overall economy. Now the financial markets are controlled by algorithms and super computers, where making money the ONLY thing which is the goal now:
http://www.washingtonsblog.com/2012/04/84-of-all-stock-trades-are-by-high-frequency-computers-only-16-are-done-by-humans.html
Currently corporations are mostly directed by the MBA (bean counters) mentality of short term gains, so much is being lost in creativity in the market place. It also unfortunately opens the door for gains, through these super computers and algorithms, for insider trading in milliseconds and vehicles like naked short selling which to this point, is illegal in most countries and very difficult to track. These are not good but what really bothers me, because of my engineering research background, creativity within the marketplace has been all but eliminated.
I know the I-phones, computers, and things like these seem like we have advanced but it is just applications from silicon technology developed in the late 1940s and microelectronics has been the most creative and competitive. Just think where we would be if the basic research dollars were spent in other industries like energy.
Development and creativity is what made this economic engine run, not just profits but I believe this current batch of CEOs do not know how to compete except buying out the competition or controlling the markets they are in. Market controlled capitalism is not how we became the most dynamic economy the world has ever seen, a true free enterprise market is how we did it, through competition and creativity.
Greg Goodwin
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