So says Ian R. Campbell of www.StockResearchPortal.com in excerpts from his latest Economic & Resource Stocks Commentary (subscription required). (Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited his comments below for length and clarity. This paragraph must be included in any article re-posting to avoid copyright infringement.)
Campbell goes on to write:
Featured Article: A March 22 article reports on high frequency algorithmic trading in silver ETF SLV, claiming that “On March 20, 2012 at 13:22:33 (1:22:33 p.m. ET) the quote rate in the ETF symbol SLV sustained a rate exceeding 75,000/sec (75,000 quotes per second) for 25 milliseconds (25 thousands of one second)”.
My Comments: High speed algorithmic (computer programmed) trading is a big deal. It is going to become a bigger one. Consider:
- the author refers to this activity as (1) a ‘whack-a-mole’ algo, or (2) process, or (3) intervention, or (4) manipulation. He does not jump up shouting “ah, manipulation”, as silver manipulation theorists might do. Good for him. Such computer activity is not manipulation, it is simply an example of someone using technology to advance their own purposes. It has yet to be declared illegal;
- to day-trade in physical silver or any other highly liquid commodity, stock or other publicly traded financial instrument in the current financial and regulatory environment is a David and Goliath scenario in the extreme, where it is Goliath that has the slingshot and is throwing boulders, not stones;
- one exception where individuals may be able to day trade competitively, is trading in small and microcap stocks. Many resource stocks on the Canadian and other stock exchanges qualify as small and microcap stocks; and,
- if you are a trader, you need to understand algorithmic trading and who and what you are competing with. If you don’t, start your ‘road to learning’ by buying ‘Nerds on Wall Street’ by David Leinweber – available from both Amazon and Kobo. Don’t stop your ‘algorithmic trading’ education there. Read all you can about it [in this Bible on the subject]. Then decide if your name is David (as in Goliath) in the context of highly liquid commodities, stocks and other financial instruments.
Note: I also referenced ‘Nerds on Wall Street’ in last Friday’s e-mail. I have never met or spoken with Mr. Leinweber, and have no financial interest in promoting his book.
Read: Catching the “Silver Crusher” Algorithm in the Act. Source: AdvisorAnalyst.com (from the Zerohedge Blog), March 22, 2012. Reading time 4 minutes, thinking time longer.
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Other Comments/Critiques by Ian Campbell:
The world is on the verge of becoming a cauldron of Disorder [y]et the market is orderly for now and people refuse to fully acknowledge it. This inability to compartmentalize the “world reality” from the “market reality” is costing investors money. The world isn’t likely to end well in the not too distant future but for now the market is doing just fine. Words: 610
If you hold, or are considering holding, physical gold or silver or both, [it is imperative that you] read as many ‘balanced opinions’ as you possibly can with respect to ownership of each. [Here’s why]. Words: 337
Meredith Whitney has resurfaced on the subject of U.S. Municipal defaults stating that a “tidal wave” of defaults in the municipal bond market is still building and will eventually hit the United States [although her views are at odds with those of] Moody’s Investors Service [who only see] a small but growing number of defaults. [Here is a critique of her latest views.]
Hundreds of articles are posted every week but their content is almost never challeged. Campbell does just that. He conveys his comments, concerns and criticisms in a concise conversation, concluding his critiques with either his concurrence or contrary point of view. He invariably ends each critique with a question or two for you to mull over until his next insightful and thought-provoking commentaries. Put your thinking cap on and give them a read. Words: 1722
Editor’s Note: The above commentary may have been has edited ([ ]), abridged (…), and reformatted (including titles, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The commentary’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.