| No repeatedly your analogies incorrectly assume things that are not true about the way HFT works. In the vast majority of instances the HFT are not buying something and reselling it at an inflated price before another interested party has access to it. They are changing the price on things they themselves had already set the price for. A closer analogy than what either of our gas stations makes is I own ten gas stations in a line down the high way. At the first one a tanker truck pulls up and takes all the gas I have at that gas station, then at another and another and another so on down the line such that I no longer have any gas. When I go to replenish my stocks I find out that some big company needs tons of gas and has driven the price well above the 3.99 I was selling for. This means I just took an extreme beating in the selling gas industry. I don't mind, that is a cost of doing business. Then the next week they come and do the same thing and on and on for years. Eventually, I tell the manager of the first gas station to call all the other managers the minute a tanker truck shows up so we can adjust our prices and not get wiped out. The big gas company now has to pay a much more appropriate rate for the gas. This drives them crazy so they go on 60 minutes and tell everyone on the planet that the game is rigged because I have this super sophisticated technology that lets me "front run" them. You hear this and start thinking to yourself, man I can't trust that they are going to charge me more money for this gas as soon as I pull into the station. You start buying less gas and calling your senator. The big gas company then goes on CNBC and says, "See I told you those little gas companies were no good. Now they are eroding the faith of gas buyers in the fairness of the market place." When in reality all that is happening is that the big gas company can no longer take advantage of me to get cheap gas. |
Wall St. has a long history of fraud and skimmers so it is understandable to say the HTF isn't that bad relative to other things.
But we should be trying to make the markets more fair and give people more confidence that everyone isn't getting ripped off.