High Frequency Traders

[brker_guy]

Scary story:

 

http://www.cbsnews.com/stories/2010/10/07/60minutes/main6936075.shtml

[Guest ValueCarl]

Scary? How about "CRIMINAL"? Take your LIQUIDITY and shove it!

 

This is the stage of their New World Order where stealth information with no ties to factual values became a dictatorship. By doing this, they can prevent any individual or group of investors from being "true owners" of enterprise, excluding those with unlimited pools of capital-Buffett types-to keep purchasing their fraudulent quotes for as long as they can keep "pitching" them!

 

You can hear the sounds of their call for "one world currency" in real time now-article excluded.   

 

 

If there were justice, and if the lawmakers weren't in on this as they've been in on every other historical shenanigan inclusive of  "cooking the books" to export their capitalism over the ages, terrorists would be seeking to destroy these opaque factories with their black boxes inside of them, too.

 

The SEC is part of the problem, not the solution. This ineffective, indifferent, bought and paid for institution must be gutted if justice for global investors and US citizens specifically, might ever prevail. 

 

This is at the core of the reason why, there will be blood in the streets of America again, and we haven't seen but a microcosm yet.  imo

 

<These supercomputers - which actually decide which stocks to buy and sell - are operating on highly secret instructions programmed into them by math wizards who may or may not know anything about the value of the companies that are being traded.   

 

 

They're owned by the big banks and by high frequency trading firms, and neither of them would give "60 Minutes" an interview or let us inside to film their operations, but they trade more than a billion shares a day at blinding speed, and most of those bets are being made by machines.

 

 

 

The players range from firms like Goldman Sachs, Barclays, Credit-Suisse and Morgan Stanley to hedge funds and smaller operations like Tradeworx, which is the only high frequency trading firm that would talk to us or let us in.

 

It's run by Manoj Narang and a small group of mathematicians and scientists called "quants," which is short for quantitative analysts. Their high speed computers trade 40 million shares every day.>

 

 

 

[Guest ValueCarl]

Do you see the glaring contradictions here? They're experimenting with "long term" investing methods/strategies as others are and will too, I'm sure. This is not a strategy where they're out of all their positions by the day's end!  If they can do these things with their computer programmers, they can do anything they wish! They are not constrained by any "supply/demand" factors whatsoever, because they "artificially" create supply/demand for their own purposes.

 

There is no free market here, it's a dictatorship by the banks and their cohorts "fixing prices" under the disguise that they've gotten to "information" because of a "faster connection!"

 

That's an early ruse to their end game or goal! imo

 

 

 

<"I'm gonna test a strategy where if a stock went down five percent for the past week, I'm going to buy $5 of that stock. And if a different stock went up ten percent last week, I'm going to sell $10 of that stock. And I'm gonna do that for every stock that's in my tradable universe simultaneously," he told Kroft.

 

"Which is how many?" Kroft asked.

 

"There's over 4,000 stocks, about 4,500 stocks," he replied.

 

The strategy, which could only be successfully executed with a high speed computer, would result in almost as many losing trades as winners, but over the past eight years would have produced a tidy profit - something that Narang and other high frequency traders have gotten used to.

 

Asked how successful he and his firm have been, Narang told Kroft, "We've had two or three days in a row where we lose money. But we've never had a week, so far, where we lost. We've never had a month that was a loser for us." >

[brker_guy]

Carl, we are seeing this high frequency trading being practiced right now on a company like LVLT in front of our eyes.  Ever since the convertible notes being floated, look at the volume and the price movement of LVLT. 

 

I agree with you.  This is way being scary; it's criminal almost...  I am pretty much in favor of open market, but this kind of practice will lead to another crash, I am afraid...

 

 

[beerbaron]

Anybody here read Adam's Smith "The Money Game"? It sounds familiar and was written in the 60s...

 

BeerBaron

[lethean46]

Longleaf's presentation to the SEC re HFTs.  It begins at about page 9.  First 8 pages is just background on Longleaf.

 

http://www.sec.gov/comments/s7-02-10/s70210-228.pdf

 

ML

[Guest ValueCarl]

Brker_guy, when you mention (3), it hurts my heart to see. No comment by the SEC on the manipulation of under one dollar, i.e., penny stocks.

 

This is an indirect route towards an insidious creation of "efficient markets," their idea only, one which they dictate by underlying "control" of supply/demand factors under the false pretense of providing "liquidity", artificial no less, in order to  "price fix."

 

Their former representative, Greenspook, knew exactly what he was saying some years back when stating, "This is not your father's stock market."

 

Best to you, sir.   

[biaggio]

It amazes me that 70% of volume is due to HFT.

 

What would Charlie Munger say about HFT?

 

I think value investors will be fine. I would put my money with members on this board.

 

Buy when price makes sense. Don t buy if its not a good price. In the long run I think everyone here will be fine. I believe (maybe I am naive) that if they are stealing or manipulating, that the vast majority of the time we are probably talking about a fraction of a penny.

 

I have a little trouble knowing that they know the order flow, but I am trying not to get emotional about it as I can t change it.

[Guest longinvestor]

Carl, we are seeing this high frequency trading being practiced right now on a company like LVLT in front of our eyes.  Ever since the convertible notes being floated, look at the volume and the price movement of LVLT.  

I agree with you.  This is way being scary; it's criminal almost...  I am pretty much in favor of open market, but this kind of practice will lead to another crash, I am afraid...

I have a vested interest in both FFH and LVLT. FFH went thru manipulation in the 2002-06 period and there is one thing I remember from that period, which was Prem's words "The numbers will out"; Can't be truer words than those. My investment in LVLT is also hinging on their eventual numbers. I have watched, rather carefully, LVLT management behavior transform itself, arguably under the influence of a very large ownership interest of SEAM and FFH(?). They used to play the fools game of giving out quarterly guidance and worse, missing them perpetually. Over the past year or so, they are doing less and less of that. In fact, I wrote their IR dept, called them on it when they promised "no more guidance" and kept doing it anyway.

 

LVLT's current state is one of an increasing ownership in a few hands (the one's we like around here) which along with not playing the fool(street)'s game means that the stock will be under pressure (manipulated and otherwise) until the numbers out. What it means for me is that if I believe in the investment thesis, I need to buy more.

 

[Guest ValueCarl]

"The numbers will out."

 

I am going to say that three times, and click my heels three times, with each time representing about 3 years since the network was finished, because during that time the numbers have refused to come out.

 

I hope you are not taking us down "the yellow brick road," longinvestor, because the path going that Wall Street direction, is one winding, dark road that is filled with "lions and tigers and bears," oh my!  ;D

 

From your mouth to God's ears. On the other hand, Hi Ho, Silver!       

[Guest ValueCarl]

High frequency trade this! Rather than clicking heels over "the numbers will out," one should click them to, "in response to demand."

 

<Level 3 Communications, Inc. (NASDAQ: LVLT) announced today that, in response to increased demand, it will now offer uncompressed high-definition (HD) video transport services between Los Angeles, Washington, D.C. and New York City, giving customers in these cities the ability to transmit live video with a previously unattainable level of clarity and quality.>

 

Then again, I have always cautioned these people about giving away their products! As a matter of fact, I've even suggested to turn the damn network off, if "customer bases" believe the investment capital which created this network, is never to garner a return while they cost effectively manage their businesses over cyberspace according to incumbent owners' expense.

 

Where did that old adage, "There's no free lunch on Wall Street" come from, since that, at least as respects Wall Street, it's all about "FREE LUNCH." 

 

<For a limited time, Level 3 will be offering uncompressed occasional-use HD services at the same rates as its standard definition services. For more information on Level 3’s uncompressed HD services, visit www.level3.com/index.cfm?pageID=382. >

 

http://www.level3.com/index.cfm?pageID=491&PR=951

[Guest ValueCarl]

longnvestor, how do you feel about every management presentation in Sept.-Oct. so far, implying that 2 percent quarterly growth has been revived? That's a form of guidance, and feeding "The Beast," isn't it? Maybe you should attempt more subtle messages to your IR contacts, like, "a dead fish wrapped in paper"?  Otherwise, maybe they should attempt to "change" their "exchange,"  as your friends at Fairfax did.

 

http://www.entertonement.com/clips/cvmpfddyzb--Sleeps-with-the-fishesThe-Godfather-James-Caan-Santino-'Sonny'-Corleone-Abe-Vigoda-

 

I keep wondering how this newest flavor of trading theft doesn't somehow violate, "The Wash Rule," accounting.

 

But then again, investors X the globe are fully aware how "accountancies, regulators, and others who should be held responsible," rarely find themselves in a "dark cell" for implementing the foul odors they do in the form of "enterprise corruption."  

 

Of course, ultimately, governments who are no strangers to "cooking books" in order to "nation build," even while opposition mounts by nations not interested in their form of capitalism, usually see things end bad, in places like the Word Trade Centers, a place where fraud had run rampant, mind us.

 

Wasn't it uncanny to see all the useless PAPERS flying around the atmosphere leaving no trails on that infamous day?

 

To that end, questions about the extent of "cooking the books" accountancies, and who benefits most from the after math destruction, can raise the eyebrows of more suspicious citizens watching these criminal activities unfold.

 

Without a doubt, LVLT remains the poster child for where "dark forces," or are they "enlightened forces," seem to be demanding their pound of flesh in the other direction!  >:(

 

http://finance.yahoo.com/news/Traders-manipulating-cheap-rb-4120720457.html?x=0&.v=1

 

 

 

 

 

[Guest longinvestor]

longnvestor, how do you feel about every management presentation in Sept.-Oct. so far, implying that 2 percent quarterly growth has been revived? That's a form of guidance, and feeding "The Beast," isn't it? .....

I listened to each one of the recent presentations and not once did any of them (Crowe, Storey, Gray, Patel) say or imply that they have returned to 2% qtrly growth. They said they are focused on returning to the 2-3% q growth trends (2007) before they started toe stubbing. Suggest you listen to the calls and correct this if needed.  

 

In fact, every question from the analysts asking to "break it down"(to fit into spreadsheets) met with non-answers and just sound bites on the opportunities in the four biz segments. They did not feed the beast. Storey in particular made me happy. The street has less and less leverage at LVLT, SEAM and Prem have more and more. This is the real ongoing LVLT story.

 

LVLT is in no man's land when it comes to the Street and they have one way out, the numbers have to out. I am looking for history (FFH) to repeat but at no time has LVLT been in the same place as FFH. Who knows, it may still be a mistake but I've learned so much from this controversial story. Time will tell if this was the cardinal virtue of patience or simple denial.

[jasonw1]

Is there a summary investment thesis for LVLT?

One thing puzzles me is why their revenue isn't growing, with all the devices and multimedia data, there is tremendous growth in data going through their pipe, why are they not able to get more money from it.

 

[Guest longinvestor]

Is there a summary investment thesis for LVLT?

One thing puzzles me is why their revenue isn't growing, with all the devices and multimedia data, there is tremendous growth in data going through their pipe, why are they not able to get more money from it.

Their operational issues from 2007 on are now legion. They talk openly about it.

 

A silver lining is that their revenue losses are mainly made of SBC and Alltel revs which are low margin. This is a great thing. They have been replacing this with high margin biz. If the 2-3% growth rates becomes reality the 80% margins will get noticed in a hurry. It is not since they are burning cash. I dont expect things to turn as fast as many are expecting. 5 -10 years or so.   

[Guest ValueCarl]

Oh my, longinvestor!

 

<I listened to each one of the recent presentations and not once did any of them (Crowe, Storey, Gray, Patel) say or imply that they have returned to 2% qtrly growth. They said they are focused on returning to the 2-3% q growth trends (2007) before they started toe stubbing. Suggest you listen to the calls and correct this if needed.> 

 

Like you, I have listened to every presentation. My use of the word "imply" may suggest wishful thinking on my part, since that, the two percent quarterly seems to be their "benchmark" goal as you are stating, even though that, one can hear that number baked into their cake if they listen close enough. 

 

In this regard, one can only hope that they're setting up the street mongrels for a greater whipping because, two percent quarterly after decimating top line sales by greater than ten percent the past couple of years is no consolation prize! Peterburkeceo and other naysayers will agree.

 

Then again, if they were capable of delivering spectacular results more in line to "the expectation setting" they have created during the past thirteen years of their existence, they might finally release a multi billion dollar government contract tied to the SSA, as one example, of another pumped up opportunity that somehow went nowhere to date! More than likely though, they rushed into the new, most expensive convert because something went "wry," in the land of government contracts again.

 

<"Social Security is in the process of complying with GAO's corrective action request and expects an announcement of a new award determination by the end of FY 2010," an agency spokeswoman said in a written response to questions from Network World. >

 

http://www.businessweek.com/idg/2010-08-25/social-security-administration-to-award-massive-network-deal.html 

 

With all the internet paths this company leads to, and has led to from the beginning, they should be sporting $6-8B top line CNS revenues instead of the paltry $2.8B standing today.

 

On the other hand, you have cautioned consistently that, "the numbers out" won't come in Q2 or Q3 for that matter. There's a lot of numbers coming out in the form of "interest payments" at very high rates to Watsa, etal, however. What a waste of hard earned "operating" capital in a very capital intense business!

 

Meanwhile, with such risk factors consistently in front of them, and no high growth "revenue sauce," this is your best investment thesis? You must be bond weighted too.

 

This company needs to be sold, like Merchant helped do with Sun Microsystems, aka, Java. As JPM's analyst McCormick once said, "this is not an investable story."     

 

<I dont expect things to turn as fast as many are expecting. 5 -10 years or so.> 

 

http://news.yahoo.com/s/ap/us_tec_google_tv     

 

   

[Guest longinvestor]

On the other hand, you have cautioned consistently that, "the numbers out" won't come in Q2 or Q3 for that matter. There's a lot of numbers coming out in the form of "interest payments" at very high rates to Watsa, etal, however. What a waste of hard earned "operating" capital in a very capital intense business!

.... and no high growth "revenue sauce," this is your best investment thesis? You must be bond weighted too.

This company needs to be sold....      

 

Would rather them pay Watsa an extra % or two than to the Street banks who would have certainly amputated parts of their business by way of covenants. Besides , when they pay Watsa, they pay me :P

 

I don't believe in high growth revenue sauces as a sustaining model. 2-3 % for now is pretty damn good and needed to clean up their debt. The nature of their biz is that churn is very much part of the game. That is clear as mud over the past decade.  dotcom to dial up to VOIP to CDN etc. They come and they go. In all this, IP keeps moving, spurts and all. To rub it in, telecom saw some of the worst investments, period. Why I'm saying this will take a bloody long time.

 

Much of the hate for LVLT is likely because folks built in perpetual double digit growth(or simply bought into the hype) when the bidding war was on. My average price is the $1's due to gradual accumulation after all the irrational exhuberance waned. I rather like SEAM and Prem as owner partners.

 

[Guest ValueCarl]

O.K. So, we now know the hidden message to Sunit's long standing comment about Voip, and "the secret's in the sauce" was less about "factual growth rates" and more about his "Indian financiers." In addition, it may have been the outsourced Indian software engineers that would need to be "contracted" to fix their "integration mess," a mess that Sunit was often involved with, inclusive of his "Looking Glass" stake.  Thanks for adding that color, or was it "spice"?  ;D 

 

Tell us what Sunit's introduction to Neel Dev, former MCI finance guy, is instructive of during the near term?  ;)   

[Guest ValueCarl]

As I continue to connect the dots-pun only partially intended-this has been an interesting additive to the board. On the other hand, what has this former Fannie Mae genius been doing besides collecting easy compensation off the teats of incumbent owners? 

 

Then again, as I continue digging and delving, I start to get that Enron feeling and "war reparation" thoughts for all the "accounting fraud" in "nation building" and "technology, infrastructure" transporting that continues unabated today.

 

Oh yeah, and before anyone gets pissy or thinks I'm a racist, bigot or something else on this board, did I say that, I have always maintained the highest respect, and admiration for the Indian culture in America and elsewhere as a general rule?  ;D  This is a very industrious, intelligent, capable group of people who understand the advantages of education and knowledge being applied which translates into "power." imo

 

Rahul N. Merchant Mr. Merchant has been a director of the company since September 2009. He is currently a partner with Exigen Capital, a private equity firm. Previously, Mr. Merchant served as Executive Vice President, Chief Information Officer and member of the Executive Committee of Fannie Mae, from 2006 until 2008, where he led the Technology and Operations groups. Prior to Fannie Mae, he was a Senior Vice President and Chief Technology Officer for Merrill Lynch and Co. Mr. Merchant has almost 30 years of experience in the information technology industry, and currently serves on the Boards of Collebara, Inc. and Netuitive and on the Board of Advisors of the American India Foundation. Mr. Merchant is also on the board of Fair Isaac Corporation (FICO).

[opihiman2]

The biggest problem I have with Wall Street and bankers in general is that the system is geared towards heads I win, tails I still win:

 

http://www.cnbc.com/id/39664612

 

There is nothing different than what those two gentlemen did and what HF traders do.  Yet, they are facing criminal sentencing?  It's a bizarre landscape we live in.