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Today’s equity markets are a high-speed rigged casino: what investors must know, and what investors and regulators can do about it.
In just the past few years, the equity markets have been transformed into a high-speed casino that’s a pure crapshoot: a white-knuckle rollercoaster ride that has left individual investors legitimately terrified of equities. The Flash Crash of May 6, 2010–when the DJIA plummeted 734 points in 17 minutes, and dozens of top companies traded as low as zero–was just a harbinger of disasters to come. In Crap Shoot Investing, Barron’s Washington Editor Jim McTague reveals the twin causes of this massive transformation: high-frequency traders using mathematical hocus pocus, and blundering regulators whose attempts to promote long-term investment have massively backfired. McTague takes you through the Flash Crash moment by moment, revealing what happened and how it happened. Next, he burrows “under the volcano” to uncover the titanic, uncontrolled forces now at work in equity markets, showing investors exactly what they’re jumping into when they buy and sell stock today. You’ll learn how new exchanges, desperate for cash, are attracting high-frequency traders at everyone else’s expense… how “dark pools” of hidden trades are tilting the playing field…how even small investors are promoting dangerous volatility. McTague explains why regulators continue to ignore the big picture as the markets accelerate towards chaos. Last but not least, he presents a rational strategy for investors who need to get ahead in markets that have become riskier than most casinos.
"A valuable read for anyone considering investing in equity markets."
Reprinted with permission from CHOICE http://www.cro2.org, copyright by the American Library Association.
Download the sample pages (includes Chapter 1 and Index)
About the Author viii
Chapter 1: Strange Encounters 11
Chapter 2: Not Your Grandma’s Market 27
Chapter 3: Screaming Headlines 39
Chapter 4: Accidental Senator 47
Chapter 5: Flash Crash 61
Chapter 6: Shock and Awe 81
Chapter 7: Poster Child 85
Chapter 8: Accident Investigation 91
Chapter 9: The Trouble with Mary–and Gary 97
Chapter 10: The Road to Ruin 105
Chapter 11: Busted! 113
Chapter 12: Precursor 125
Chapter 13: Birth of High-Frequency Trading 135
Chapter 14: Evil Geniuses? 149
Chapter 15: Dirty Rotten Scoundrels 165
Chapter 16: Dark Pools 171
Chapter 17: Volatility Villains 175
Chapter 18: The Investigation 183
Chapter 19: The Vigilantes 193
Chapter 20: The Tide Turns 199
Chapter 21: Letter Bomb 207
Chapter 22: Scapegoat 213
Chapter 23: The Real Culprits 221
Chapter 24: Investing in a Shark-Infested Market 229