Stephen Colbert takes on high-frequency trading
The surest sign that high-frequency trading has raised its profile on Main Street is that was the subject of some recent satire on The Colbert Report.
Stephen Colbert, as only he can, intoned: "Our finance sector is much safer now because Wall Street has removed the weakest link: man."
The spot then featured some excerpts from 60 Minutes about the rise of automated trading and how that has ushered in some big changes to the now quaint floor of the New York Stock Exchange.
"Humans still play an important role, as seen here at Goldman Sachs", Colbert said. He then flashed scenes from the movie The Matrix. "Folks, superfast computers are necessary for something called high-frequency trading, or HFT, of 'hffft,' for the sound of your pension evaporating," he said.
He noted that HFT makes a tiny fraction of a penny on every share, "And that adds up to serious money," he says, when "traders take their coins to the local Coinstar." HFT "traders make money just by churning out the same formula over and over again, much like Maroon 5."
And then there's this bit about an algorithm that caused concern lately: "Not only was it fast it made everyone else slower. Like instead of just doping, Lance Armstrong made everyone else eat a turkey dinner."
This is all very funny, but to some it might come across like kicking a man while he's down. The high-frequency crowd has been in the doldrums all year, and a big rebound doesn't appear to be in the offing. It's a lot easier to laugh at yourself when you're making millions.
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