As most of the financial world knows by now, author Michael Lewis appeared on 60 Minutes last night to promote his new book “Flash Boys: A Wall Street Revolt.” What made the headlines was Lewis’ remarks that the U.S. stock market is rigged to hurt average investors to the benefit of high frequency traders, stock exchanges and large Wall Street banks.
“The insiders are able to move faster than you and play it against orders in ways you don't understand,” according to Lewis.
So, we asked in today’s poll: Do you agree with Michael Lewis' assertion that "the market is rigged?"
At the time of this post, 72% responded YES the market is rigged; 28% said NO.
Besides stating that the market was clearly and obviously rigged, many who voted YES said it’s the only way to win, and can’t remember a time when the stock market wasn’t rigged. Here are some noteworthy comments
- As someone works with HFT managers and firms I know that they are laughing all the way to the bank.
- Just look at the action in the market for the past 2 ½ years or so, it is clear as a bell. One would have to be blind not to see it.
- Stocks in the junior sector I own show constant signs of predatory trading, manipulative moves, naked shorting, bid stack kills, spoofing, etc. It's endless, perverse, and aggressive. This never used to exist like this.
- 60 Minutes didn't even address the futures markets and how the computers are manipulating orders on those exchanges.
- Ethics, morals and values have no place in the US system anymore (if they ever did) and the means to exploit and yes, steal are so technologically advanced that the system has 99% of us in near complete subjugation.
- The playing field isn't on the level... HFT isn't the problem, though... it's only a symptom. Every leaked market moving "news" item gets to some before everyone skews the price. Every monetary intervention or expectation of monetary intervention skews price. This thing is so rigged, we wouldn't know a free market price if it hit us in the head. Price isn't set by supply/demand...it's supply/denomination/demand.
- It’s all a big game of regulatory and representative capture. Insider and rigged trading is alive and well.
- It’s not the only thing that is rigged in this market! Please, this market will eventually blow up.
On the opposite end, NO voters said the market is not “rigged” in the normal statutory definition, and that, “it is what it is. Just like Vegas.”
Another NO commenter explained, “Rigged assumes you must lose. Impact HFT doesn't not mean you lose, it simply means you should adjust your risk premium slightly, much like one would do for insider trading in other countries that allow it. Don’t ignore the liquidity that is provided by these HFT firms and the value it has for all investors. Should those who invested millions for a faster way not be able to benefit when they are not breaking any rules? Embrace those like IEX who provide an alternative to traditional exchanges. Let the market solve its own problem, you just need to spread the information.”
As for Hedgeye CEO Keith McCullough, he believes Michael Lewis is merely making hay out of an old issue — five years too late — for monetary gain.
“Michael Lewis has jumped the populist topic shark,” according to McCullough. “The stock market is rigged for the average monkey who hasn't evolved. Lewis takes the side of “horse-and-buggy whip” old Wall Street traders at the advent of the car engine. Note that Lewis had 0% content on the SEC's read-through on evolution.”