Buy and Hold Investing: Dead or Still Very Much Alive?

If high-frequency traders felt under siege this month on both sides of the North American border, they could look to a single place for the root of their problems: Royal Bank of Canada. RBC, Canada’s biggest bank, is a key shareholder in Aequitas Innovations Inc., which was blessed by regulators on Nov. 13 with a “recognition order” approving the creation of a new trading platform and exchange.

Back in 2009 we first warned that the market is now just a "market" where between the direct manipulation of all asset-prices by the firehose Fed and its peers, and the explicit rigging of stock prices by the HFTs, there is no such thing as a market left. Back then, we were called tinfoil something or another. Now that everyone admits the Fed's only purpose is to push asset prices higher, and the topic of HFT's rigging of markets is now a blockbuster book, those accusations have grown silent.

I was in Las Vegas last week for the Value Investing Congress. The irony of that statement is not lost on me. Then again, the stock market can often seem like a casino — or worse, a rigged casino. Especially with all this talk about high-frequency trading, or HFT. There is a lot of buzz about HFT. You almost can’t open a financial publication without finding something about it. But how relevant is it to you? Should you care? These are the questions I sit down to answer now.

By Tom Lydon: Investors who have stuck to underperforming, costly actively managed mutual funds should switch to low-cost index exchange traded funds, according to market maven Burton Malkiel.

Hey there, flash boy. Exchanges around the world are avidly wooing high-frequency traders, those controversial speed demons of Wall Street. Despite the often explosive debate over this kind of trading in the U.S., bourses in Mexico, Turkey, South Africa and beyond are trying to lure HFT types to boost business. The message is clear: whatever the perceived risks, algorithmic robot traders — algobots — are marching steadily across the globe.

In the aftermath of Michael Lewis' book "Flash Boys" there has been a renewed surge in interest in High Frequency Trading. Alas, much of it is conflicted, biased, overly technical or simply wrong. And since we can't assume that all those interested have been followed our 5 year of coverage of a topic that finally has earned its day in the public spotlight, below is a simple summary for everyone.

One of the New Normal responses to allegations, first started here in 2009 and subsequently everywhere, that all HFT does is to frontrun traditional market players (among many other evils) now that its conventional and flawed defense that it "provides liquidity" lies dead and buried, is that "everyone does it" so you must acquit because how can you possibly prosecute a technology that accounts for over 60% of all market volume and where if you throw one person in jail you would throw everyone in jail.