Originally Posted by SudoNym
Originally Posted by rgh71
It is very hard to manipulate a stock price of a company of this size with this much volume. Apple's $14bn barely move it up. Everyone think about that. You guys have no concept of the market.
Apple is probably the most manipulated stock ever.
I think people assume that means from the trading activity but it's perhaps more accurate to say Apple stock traders are the most manipulated traders and they may not be people. 84% of trading activity is computers and computers read online news reports (not to say that all stock will be traded in this ratio but you'd never know):
"(2009) Bloomberg interviewed the former head of Nasdaq, who says that high frequency traders account for 73% of the volume on the stock market, and skews the market when it gets out of balance.
The New York Times hits the issue pretty strongly, writing:
Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer. Goldman Sachs is by far the largest program trader in the market, twice as large as the next biggest.
“This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage”…
PCs have been unable to compete with Wall Street’s computers. Powerful algorithms — “algos,” in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.
High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there…"
"(2012) As of 2010, 50-70% of all stock trades were done by high frequency trading computer algorithms.
And many other asset classes are dominated by high frequency trading as well.
High-frequency trading distorts the markets. It lets the big banks peak at what the real traders are buying and selling, and then trade on the insider information.
Morgan Stanley has just shown (via the Financial Times) that the percentage of high frequency trading in the stock market has skyrocketed to 84%:
Trading by “real” investors is taking up the smallest share of US stock market volumes [since Morgan Stanley started keeping track 10 years ago.]
The findings highlight how US trading activity is increasingly being fuelled by fast turnover of shares by independent firms and the market-making desks of brokerages, many using high-frequency trading engines. [actually all of the market-making desks are using it.]
The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as “real money” or institutional investors, accounted for just 16 per cent of total market volume in the form of buying, and 13 per cent via selling in the final quarter of last year, according to analysis by Morgan Stanley’s Quantitative and Derivative Strategies group."
It's a pretty anti-competitive practise really, allowing banks and people closest to the exchange to execute automated transactions in milliseconds while people on the outside have to do it all manually. They aren't bound by transaction fees so they can do as much activity as they want and this gives them privileged information as to how the market is going. Why doesn't the government bring in laws to limit transaction time and transaction volume and make allowances for the fact that a trading company can spawn multiple trading entities? The whole point of stocks and shares is to invest in companies producing things that are produced in human time. While news can drastically affect a stock value, they only need enough time to process 1 trade, not 1 million trades.