High Frequency Trading: The End of an Era?

When I wrote my last article, High Frequency Trading (HTF) was at the top of the mountain, with companies clamoring to purchase the technology to execute these millisecond trades. Now it seems that the era of high-speed trading has screeched to a halt, as companies are not seeing the high profits of 2008 and 2009.

An article by Bloomberg Businessweek shares some interesting facts about the changes in this style of trading. “According to estimates from Rosenblatt Securities, as much as two-thirds of all stock trades in the U.S. from 2008 to 2011 were executed by high-frequency firms; today it’s about half.” Many suspect volume and volatility to be the main culprits to the decline HFT success , making profit margins on high speed trading as well as arbitrage opportunities more difficult to accomplish.

Politicians are also setting their sights on controlling this type of trading behavior. While countries in Europe have implemented a trading tax, it is now echoing in the United States, where a there have been tax proposals. Bart Chilton, commissioner of the Commodity Futures Trading Commission has proposed a $.06 tax on futures and swaps while others have recommended percentage tax on trades.

Images like this show just how crazy one second in a stock market looks. Until legislation is put in place, I believe there will always be companies taking advantage of obtaining information milliseconds before their competition and profiting. This is definitely something to pay attention to.

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High Frequency Trading: How This Technology is Hurting the Stock Market

In an age of technology and high speed information, it seemed like a matter of time before the stock markets adapted to these changes, and change they surely did. The stock market now lives in an era of computers doing a majority of the trading in nanoseconds, taking out the human element and substituting hardware for hard work.

In an article in the New York Times, Roger Lowenstein outlines this epidemic of high frequency trading(HFT) and how it is impacting the market. He states that with company servers being located right next to stock exchanges, the average investor is being left in the dust. He quotes David Lauer, a former trader who spoke in front of the Senate, that High Frequency Trading is “a destructive force in the market.” With flash crashes that occur, the most publicized taking place in 2010, the stock market is now at the hands of computers making decisions before we can even process the information.

Roger Lowenstein is not the only individual against this high frequency trading. Billionaire entrepreneur Mark Cuban has been adamant about controlling this issue. In his article, Mark Cuban compares high frequency trading to hacking, something coming from a technology mogul like him should carry some serious weight. He also states that there should be more regulation in the sector, creating incentives for firms as well as individuals that want to be part of a company, not just a sudden arbitrage in the market.

High Frequency Trading has strict regulations in other countries, but the United States is firm on this creating a “more liquid market.” Until there are higher taxes for these types of trades, people will continue to abuse it and only have to pay a capital gains tax. We need to go back to investing with our minds and not leaving it to the powers of a computer.

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Is Yandex the Next Search Engine Giant?

In this technological world that we live in, companies and products may only shine bright for a short period of time. Google seems to have broken that mold while becoming the model of what a technology firm should strive to become. But the question remains: Is there anything that can rise to the worldwide popularity as Google?

An article from a contributor at seekingalpha.com makes the case that in the future Yandex(YNDX) might be the better financial option, and after reading this article I tend to agree. In recent years BRIC (Brazil, Russia, India, and China) have been the main focus in global economics. Seeing these countries with incredible growth potential, people are clamoring for a chance to invest in these hot markets.

China was the first to really make a statement in the global economy, and companies like Baidu(BIDU) have grown into worldwide firms. With the slight fall off of the Chinese economy as of late, investors are looking for a new horizon the grow profits outside the United States.

Russia received huge news last week when they were finally accepted into the World Trade Organization(WTO), opening up their markets for worldwide trade. While many people see this as a great opportunity because they remember in 2001 when China officially opened its doors to the world, but a Bloomberg article points out that these are two vastly different economies.

With a population making progress towards growing from its recent slide, Russia is now prime for a company like Yandex to take advantage of what Google has done in the US and transpose it into Russia. I believe that they can growth from the current Russian market share of 60% into a giant not only in Russia, but globally as well.

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Is Taco Bell’s ‘Cantina Bell’ a Real Threat to Chipotle Mexican Grill?

Being a college student, I know a thing or two when it comes to meals at Taco Bell: 1) It is an inexpensive fast food meal that can be fit into almost anyones budget and 2) It might not be of the highest quality, but is always going to be there late at night. Now all of this is about to change this week when Taco Bell introduces the Cantina Bell line. Poised with ammunition to attack Chipotle in the casual Mexican dining arena, Taco Bell is now including burrito bowls that will rival their enemy Chipotle set to start July 5th.

All of this buzz around this new menu has put the spotlight on Chipotle with critics saying that they are no longer the kings of the casual Mexican restaurant sector, but if you delve into the numbers, many still have faith in Chipotle. In an article by Seeking Alpha, they posted data to back up their belief that Taco Bell is no threat to Chipotle. With their stock rising by 392% over the last three years, Chipotle has shown to withstand the current economic stresses of the United States by growing by 25% this last quarter.

These numbers lead the writer of this article to make the comparison to Apple. Both companies have a young affluent target market while offering luxury in their respected niches. Neither need much advertising to drive sales, but let the products speak for themselves while Taco Bell plans to invest $20 million in advertising the new Cantina Bell line.

Being from Texas and a fan of Mexican food my allegiance lies with Chipotle, but when it is 2 A.M I will never refuse a meal from Taco Bell. I believe this new line will add value to Taco Bell, but will always be behind Chipotle in the upscale casual Mexican sector.

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The economics beind a buffet

As any college kid will tell you, its not always about the quality of the food you eat during your years at a university, but the quantity that you can get for your dollar. Nothing spells a college eatery more than a buffet, with the ambiance of eating until you can eat no more. It was not until I read this article did I realize that I wasn’t putting these buffets under like I had thought.

The theory of adverse selection is what is discussed in this article along with asymmetrical information by both sides. The article goes on to say that buffets should no longer exist. People should only go into a buffet knowing that they can eat more than the price they pay, but with this mindset the restaurant should charge as much as they can until only one person is left standing.

Being both a business major and a hungry college student, this article got me thinking. Am I really getting my true monies worth or am I succumbing to the great power that is an all-you-can-eat buffet?

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City of Los Angeles Reaps Huge Benefits From Sports Teams Success, But it Comes With a Price

In an article published by Bloomberg yesterday, it outlines how the current success of L.A’s sports teams, the Lakers and Clippers in the NBA as well as the Kings in the NHL, are pumping enormous amounts of money into the cities economy. Staples Center owner Philip Anschutz of AEG Worldwide is looking at five games in three days at his venue, while also the owner of the Kings, looks to strike it big in this weekends events. AEG spokesman said “These types of events are a win for everybody…Our 1,000-room hotel is completely booked. You won’t be able to get a table at any of our restaurants.”

With all of this success comes rigorous coordination by the city of Los Angeles with regards to traffic. Being one of the cities with the most traffic to begin with, this is has to be a major concern to ensure everything can run smoothly. As a fan of both sports and business, this weekend should be great not only for fans of the specific teams, but for the city as a whole.

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Miami Heat Plan to Create “Spark” with a New Night Club

The city of Miami has never been one of conservatism, but always on the cutting edge of what is “cool” in pop culture. From their new stadium for the Miami Marlins with fish tanks behind home plate to the flashy images of South Beach, just watching a sporting event is a thing of the past.

The Miami Heat are in discussions with SBE Entertainment Group to add a nightclub/lounge to the American Airlines Arena. Called Hyde, SBE plans to add a club in addition to one that already exists in the Staples Center in Los Angles.

I see how they are trying to make going to a sporting event more of an experience, but I don’t think that every city is quite ready for a nightclub that has five star chefs in their stadium.

I believe that sporting events are pricing themselves out of the market that is actualy there for the game and not a social event.

 

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The Creation of Tupac’s Performance spells opportunities for Digital Domain Media Group

If you haven’t herd the buzz by now, Tupac alongside Dr. Dre and Snoop Dogg performed live Sunday night at Coachella.

The video quickly became an internet sensation, with old fans excited to see any resemblance of Tupac that they could. This also scored big for the company that created this technology, Digital Domain Media Group.

The publicly traded company is currently down on the year, but in my opinion as well as Dr. Dre, this could be a huge money making opportunity. With the attention that one performance received, the possibility for a nationwide or world tour could reap huge rewards for Digital Domain Media Group.

It will be interesting to see if they take advantage and strike while the iron is hot and turn around their poor year into possibly their best ever.

The Wallstreet journal had more on the topic. 

Here is a link to the performance

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