The past week has been an object lesson in why individual investors need to shut out the noise from Wall Street. Last week a wave of federal investigations began after a “60 Minutes” interview aired in which Lewis, the popular author of Moneyball, The Blind Side and The Big Short, said the market is “rigged.” His appearance coincided with the publication of his latest book, Flash Boys, which details high-frequency trading that could possibly push up the price of stocks acquired by individual investors.
Individual investors looking only at the headlines might conclude that it’s time to surrender. They would be doing a disservice to themselves by doing so, however, said members of the magazine’s Editorial Advisory and Securities Review Committee. Members remind investors that the amounts being discussed are extremely minimal to a long-term investor who plans to hold a stock for five years or more. Some experts even question whether transactions by HFT are harmful at all to us.
In a CBS MoneyWatch article, Vanguard founder Jack Bogle, a longtime champion of individual investors’ interests, says: “Main Street is the great beneficiary [of HFT]. We are better off with high-frequency trading than we are without it” because the practice lowers transaction costs.
This is hardly the first instance of traders vying to gain advantages in transactions. It’s the same game today, committee members say, only faster. Individual investors have had the tools and resources to succeed on Wall Street for many decades — the latest developments haven’t changed our playing field.