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

April 04, 2014
GuruFocus

GuruFocus

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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


Rating: 5.0/5 (13 votes)

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Comments

chompinchuck
Chompinchuck - 8 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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