David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

Thoughts on High Frequency Trading

June 2nd, 2014

Bestselling author Michael Lewis made headlines in April when he released his latest book, “Flash Boys,” an exposé on so-called “High Frequency Trading” (HFT) firms, which Lewis claims have “rigged” the stock market to the detriment of the average retail investor.  Coming in the wake of recent high-profile insider trading convictions at a major hedge fund, Lewis’ allegations understandably raised some eyebrows.  In short, Lewis alleges that HFT firms earn enormous and “parasitic” profits by investing in fiber optic infrastructure and software algorithms capable of exploiting the tiniest increments of time advantage (measured in milliseconds). Complicit in this endeavor are the electronic stock exchanges, which pad their revenues by charging HFT firms for enhanced physical proximity to the exchange’s servers.  On the surface, Lewis makes a compelling case…but the truth is more complicated. Read the rest of this entry »

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