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Living and Investing Low Frequency in a High Frequency World…and ‘Big Enough to Frontrun’

We live in a ‘high frequency’, ‘big data’ world.  The media has globbed on to this.

Here is the latest ‘CHEATING’ article (from The Atlantic) about Wall Street, Hedge Funds and our banks.  It’s most likely 100 percent true.

The banks are in on this. They were ‘Too Big To Fail’ in 2008 and the mutation they took on since have made them too hideous to ponder.

I am trying to live my life as an investor in a ‘low frequency’, ‘small data’ world.

I follow price, some pretty simple trend formulas and I share it all publicly in real time on Stocktwits.

My blogroll pretty much covers my daily routine of reading. By taking a ‘Too Small to Fail’ attitude and surrounding myself with low-frequency thinking and people, I have survived amongst the ‘CHEATERS’.

Back in 2004, Seth Godin, who has probably never traded a stock in his life, posted this …’Five Years From Now‘:

Five years from now…
Assume that:

Hard drive space is free

Wifi like connections are everywhere

Connections speeds are 10 to 100 times faster

Everyone has a digital camera

Everyone carries a device that is sort of like a laptop, but cheap and tiny

The number of new products introduced every day is five times greater than now

Wal-Mart’s sales are three times as big

Any manufactured product that’s more than five years old in design sells at commodity pricing

The retirement age will be five years higher than it is now

Your current profession will either be gone or totally different

There were no stockpicks here, but in a bull market, these predictions were money.

Wall Street can’t give you research like this. They don’t read Seth or anyone on my blogroll. That’s good news. Wall Street is about now and maybe six months from now.

Wall Street and the large Global Financial Institutions have become ‘BIG ENOUGH TO FRONTRUN’. It’s not a sure thing, it’s not illegal, but it allows me to live in a low frequency world.

  • http://www.pointsandfigures.com/ pointsnfigures

    great points my friend. I am strapping on the trading saddle again. I deliberately took time off. I have a tremendous amount of fear welling up inside me. I am like a Jedi Knight that’s been wounded. I know I can’t compete on speed-so I have to lengthen time horizon-but the difficulty is how, and do I have enough for margin to make meaningful money given the risk.

    • http://www.howardlindzon.com howardlindzon

      thanks man. happy to trade ideas around in real time.

  • http://blog.kwiqly.com/ James Ferguson @kWIQly

    If you take a purist view for a moment, the market is an arbitrage system, paying for new information by incorporating it in the price. In this sense (only) these high frequency trades do add value (they break trends by discounting an extrapolation). However, they cannot process information that is not available.

    IF by interpreting Seth (or other) data you add value to the market, and if this value is significant relative to market opinion, you prognosticate a direction of movement (through discounting your information) not a trend, and if this is correct you are rewarded (less transaction costs) .

    So IMHO (and I am not a trader), it seems there are technical and fundamental angles to the market – technical trading is about arbitrating the old, while fundamentals are about valuing the new. As such I understand you to be a fundamentalist which is why we see you on http://avc.com so often I expect – because you deal in intelligence not fashion.

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