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Berkshire's Munger: High-Frequency Trading 'Basically Evil'

April 04, 2014

The video clip below is about a year old thus before current press created by Michael Lewis'Flash Boys, but it is interesting to watch now after getting into Lewis' book, as it has become more clear what Munger meant by his comments now that I have a better understanding of how HFT works.

"I think the long term investor is not too much affected by things like the flash crash. That said, I think it is very stupid to allow a system to evolve where half of the trading is a bunch of short term people trying to get information one millionth of a nanosecond ahead of somebody else," Munger said.

"It's legalized front-running. I think it is basically evil and I don't think it should have ever been allowed to reach the size that it did," he said. "Why should all of us pay a little group of people to engage in legalized front-running of our orders?"

H/T Value Investing World

About the author:

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Mariusz Skonieczny is the founder and president of Classic Value Investors, LLC, an investment management firms that builds and manages customized investment portfolios for its clients. He is the author of Why Are we So Clueless about the Stock Market? Learn How to Invest Your Money, How to Pick Stocks, and How to Make Money in the Stock Market. Email: mskonieczny [at] classicvalueinvestors [dot] com. Webpage: www.classicvalueinvestors.com

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Rating: 5.0/5 (13 votes)

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Comments

chompinchuck
Chompinchuck - 5 months ago

While it is perfectly obvious that Munger is correct it is much more fun to watch and read Wall Street people line up to say, "If we have yet another layer of skimming off the top, well there's no cost to the investing public. That's because it is again in their best interest to transfer weath to those who know how to extract fees, fees, and more fees......again, in the investors best interest of course."

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