Wednesday, December 28, 2011

Efficient markets

A long time ago that financial markets are no longer efficient markets, to be should have a number of essential elements such as the participation of a large number of buyers and sellers, information handy to everyone and equal conditions access to markets and effective regulation to prevent conflicts of interest.

Regarding the number of buyers and sellers has been watching the gradual professionalization, which means a significant reduction in the number of independent investors as compensation for its replacement by an elite of managers. Investment funds, including hedge funds, are the current major players in the market function.

With regard to information has never been easier to access it and has never been so complicated as well, clearing the dust from the chaff, we have not only better information more noise. Something similar to what happens on television, the emergence of more channels has not only improved the level has increased crying.

In relation to equal access, the ever more numerous automatic trading programs (HFT) will fit trends, creating volatility where there is none to his orders, immense in amount and speed of execution, since they are machines those who shoot, make the most possible where there is nothing. So, ordinary mortals do not have anything to do about it, it is impossible to follow a trend because they are custom made machines.

The latter would not be so simple if there is background volume, but as it has driven out the small and medium investors, the game is between the tables of the large international brokers and managers who possess the technical and financial capacity to do so.

Regarding the law, what to say?, the collapse of 2007 seemed to gain momentum in this regard, but again everything has been watered down, the industry is always ahead of the legislator, is faster in the adjustment and pays much better .

Today the Ibex have fallen by 2% for no apparent reason except that you ignore a possible new war, this time with Iran.

The year has ended and the profitability of portfolios and funds will not improve in these four days left, to waste this year.

Large hands are always taken advantage of their privileged position, but now are moving earnestly, now just play with marked cards.

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