Talking stocks, trading, and investing in general

[lawyerdad]



Interesting read, but I fail to see the lulz aspect. He doesn't really dispute that the HFT systems almost never lose money over the course of a trading day. In fact, anecdotally, one group laid a fiber cable at the cost of $300m to reduce the travel a few miles... so you really think this investment would happen if there weren't massive profits in this practice? Come on dude. Anyone in this game would be an absolute idiot to disclose the profits their making. But spending $300m on a cable is a pretty clear indicator of the revenue stream at hand.

If you're curious, the company that laid that cable was Spread Networks http://spreadnetworks.com/

" We trenched a new route - a direct route with microseconds in mind-to provide firms with the fastest possible speed on the shortest possible route. For firms where every microsecond counts and who want full control over their network from Chicago to New York, Spread Networks offers dedicated ultra-low latency dark fiber networks, wavelength services, and collocation on the fastest path."

I think you're missing the point of the article.

$300M is also in the ballpark for a satellite. Presumably communications companies wouldn't spend that money to launch a satellite unless they had a pretty good indication of a massive revenue stream at hand. That doesn't make it wrong. (Doesn't make it right, either.)

And really, that example cuts the opposite direction from what you're suggesting. Spending $300M to build out your infranstructure is never "risk-free". What if market conditions are such that trading falls and they can't generate as much revenue as they thought? What is somebody spent $301M and built a better cable mousetrap?

 

[idfnl]



I think you're missing the point of the article.

$300M is also in the ballpark for a satellite. Presumably communications companies wouldn't spend that money to launch a satellite unless they had a pretty good indication of a massive revenue stream at hand. That doesn't make it wrong. (Doesn't make it right, either.)

And really, that example cuts the opposite direction from what you're suggesting. Spending $300M to build out your infranstructure is never "risk-free". What if market conditions are such that trading falls and they can't generate as much revenue as they thought? What is somebody spent $301M and built a better cable mousetrap?

We're interpreting the article differently, that's all.

Sure, there is nothing wrong with spending that money on a cable. There are smart people behind that cable assessing risk and enough people thought it was a sure enough thing to make it happen. By proxy it indicates that the investment for a very narrow need between 2 exchanges to save 3 milliseconds was valuable enough to warrant the investment. And that means there is a lot of money in HFT. The estimates I read put it in the neighborhood of $50b annually.

They can lay all the cables they want to, until either the market solves the problem or (dear god) regulation happens that stops the skimming, its a viable investment.

 

[stevent]

Who is gambling on Facebook tomorrow?

 

[GreenFrog]



Who is gambling on Facebook tomorrow?

Me. I've been holding FB for about two months now.

 

[stevent]



Me. I've been holding FB for about two months now.

Yeah thinking to get in tomorrow morning, should have bought last week but wasn't checking market properly

 

[idfnl]



Yeah thinking to get in tomorrow morning, should have bought last week but wasn't checking market properly

I've stayed with Facebook. I think it's a solid long-term play, and I think I'll have another blowout quarter.

 

[idfnl]

I opened two new positions and went back to another yesterday.

I bought solar city and under armor. Both have dipped significantly in the recent correction.

I bought a new stake in Google yesterday also, I sold my stake back in 2011, I had held that position since the IPO. It's cheap.

GILD it's a blowout quarter!! Finally some good news, I've been getting shredded lately.

 

[idfnl]

Bill Ackman was on CNBC today. He made an interesting point about high-frequency trading. If you've heard the news about his deal with Allergan, you'll know that he has been building a position over the last week or so. He said high-frequency traders cost him a lot of money in accumulating that position.

And he's right.

He also said the author of that book is correct, the market is rigged. He said high-frequency traders figured out someone was building a stake and front ran him on virtually every trade.

It is a bit ironic, because people are accusing him of front running on the acquisition deal.

 

[AriGold]

idnfl, what makes you think Facebook is a great long term play? Do you have a basic investment thesis? In looking at these successful growth stock stories in the past, it's always seemed like the companies have never been cheap, e.g. TLSA, Netflix, Amazon etc.... how do you make these kind of picks?

 

[GreenFrog]



idnfl, what makes you think Facebook is a great long term play? Do you have a basic investment thesis? In looking at these successful growth stock stories in the past, it's always seemed like the companies have never been cheap, e.g. TLSA, Netflix, Amazon etc.... how do you make these kind of picks?

Increasing mobile ad spend and they're just starting to monetize Instagram with ads as well.

While still relatively expensive, FB is actually pretty 'cheap' compared to the other high-fliers.

 

[stevent]

Bought some FB for roth and trading account

 

[idfnl]



idnfl, what makes you think Facebook is a great long term play? Do you have a basic investment thesis? In looking at these successful growth stock stories in the past, it's always seemed like the companies have never been cheap, e.g. TLSA, Netflix, Amazon etc.... how do you make these kind of picks?

I was hard pressed to find fault with their last quarter, it was a blowout. Their mobile strategy looks solid. I do question the cost of their acquisitions, but they have the cash. Their stock should be in the high 70's but the recent move away from momentum plays gives it a lot of cushion if they don't blow the quarter out again. I don't believe the recent price decrease had any fundamentals behind it. There was no reason for FB to move lower, so the upside is there if they report a good number. I bought a position an hour ago to trade aftermarket on a pop.

In terms of how I make picks, I have no set strategy. I bought FB in the low 50's when it seemed like it wasn't going to test its IPO price anymore. It seemed to find a support level so I took a nibble and added to it a few times. My general strategy around momentum plays is to buy on weakness, that's why I nibbled on SCTY and UA yesterday as I sense the rotation out of momentum is done or waning.

 

[idfnl]



Bought some FB for roth and trading account

Good man. Do you have after hours access?

Last earnings, FB had a huge pop 15 mins into the call and then ticked down, down, down afterwards. I don't know if history will repeat but I'm selling the initial pop if it materializes.

 

[stevent]



Good man. Do you have after hours access?

Last earnings, FB had a huge pop 15 mins into the call and then ticked down, down, down afterwards. I don't know if history will repeat but I'm selling the initial pop if it materializes.

Thanks for the tip, I do so will make sure to watch for the pop

 

[GreenFrog]



Good man. Do you have after hours access?

Last earnings, FB had a huge pop 15 mins into the call and then ticked down, down, down afterwards. I don't know if history will repeat but I'm selling the initial pop if it materializes.

This happens all the time with after-hours earnings releases because typically the results are released prior to the conference call. So, investors will react to the numbers and then react again after they listen to management's dialogue surrounding future ambitions, guidance, etc.

It's a risk to just play with that initial pop.