Within 24 hours of author Michael Lewis calling the stock market “rigged” on 60 Minutes every major Wall Street enforcement agency had stood up and proclaimed itself ready and able to start cracking heads. They sounded off in print, television and whatever passes for radio today. Apparently unsatisfied with the degree to which they were being taken seriously the FBI told CNBC’s Eamon Javers it was seeking tips from traders with information regarding HFT:
It’s unclear who how or why anyone with information about HFTs would use an 800-number to contact the FBI but no stone is going unturned in the effort to put an end to illicit computer trading.
Beyond sniffing a headline opportunity the government can’t have the financial center of the world called rigged without rising to the challenge. Heads will roll because the public needs to be assured Wall Street is not in fact rigged.
In the attached video Lee Munson of Portfolio LLC welcomes the show of regulatory force, but warns investors against thinking Wall Street has suddenly become a safe place for investing naifs.
Wall Street “has never been safe for nearly 400 years. Why should it be safe now? This is always going to be a pit of vipers.”
Investors are all too aware of the risk. Stocks have been sitting near record highs for three months but according to a recent Gallup poll fewer than half of the country thinks putting money in stocks is “a good idea.”
A lack of confidence in Wall Street is a serious problem. Not for the vipers and wolves, they obviously do fine with or without Main Street investors. In fact the entire gist of the HFT scandal is that it’s largely a matter of institutions stealing from one another.
It’s never been easier or cheaper for individual investors to invest. The problem with the anger and distrust is that it’s kept too many Americans from investing during one of the great bull markets in history. Stocks have doubled in five years while most of the country stood on the sidelines.
The answer to what ails your investments isn’t taking down High Frequency Traders. Hanging the HFT thieves will be satisfying but it won’t help you retire.
Investing for the long haul is still the safest, smartest way to build wealth. Everything else is a sideshow.
- Wall Street