Originally posted at Themis Trading,
Sometimes it’s nice to get a sanity check and hear other investors and market professionals views on how the stock market has changed over the past few years. We hear more and more from various market participants that the market seems to be one big correlated beast that doesn’t trade on supply and demand anymore. We have opined on this topic many times in the past, so today we would like to let you read what three other very well respected professionals recently had to say on the topic:
Steve Wynn, Chairman and CEO of Wynn Resorts
Steve Wynn knows a little something about gambling so it was only fitting that he made some comments on the way his stock has been trading:
“The other day I was watching the stock open up, and it went up on share volumes of a few thousand shares. I mean, every trade was a tick up. That’s not the way it should operate in an honestly or intelligently run exchange. But that’s the thing, all those guys sold their dark pools and their order flow and the positioning on the floors of the servers to the high frequency traders. And it’s made a couple of guys that I’m friendly with very rich because they are high-frequency traders. But don’t respect the activity, and I’m severely critical of it. And I don’t mind saying so, either.”
Wynn also was critical of regulators:
“The activity in the stock markets is, in my view, poorly regulated and irresponsibly policed, especially with regard to short sales. ”
Wynn said he has “very little respect for the integrity of the trading on the exchange of most stocks, and I have particular disdain for the fact that the SEC has failed to deal with high frequency traders.”
Jim Cramer, CNBC
Jim has been critical of market structure issues in the past and seems as frustrated as us when it comes to the regulatory changes that have occurred since the May 2010 Flash Crash. On last week’s 6th Anniversary of the Flash Crash, Cramer said:
“Nothing has really changed to stop the market from once again losing its integrity in 15 minutes of insane, manipulated trading.”
Cramer also commented on Steve Wynn’s comments:
“I think Wynn’s dead right. I see this activity all of the time in his stock. It is a play thing for the shorts and the high frequency traders. He’s been able to take advantage of the shorts who he says helped drive it down, by getting great prices ahead of what turned out to be a bottom in Macau. But as for the day-to-day trading? It’s ridiculous. None of us would play cards at a table where the guy ahead of us knows our cards. Yet, that’s’ what’s going on. Wynn knows it. But most CEOs don’t. I guess it takes a gamer to know when the game’s rigged, and Wynn knows it better than anyone.”
Leon Cooperman, Chairman and CEO of Omega Advisors
In the past, Lee has been very critical of high frequency traders and the lack of regulatory oversight. You might recall that back in September 2012, we co-wrote a Financial Times op-ed with Lee which was titled “SEC Must Put A Stop To Casino Markets” . We’re glad to see that Lee is still speaking out and had this to say last week about the trading that is done in today’s market:
“The market of today is not the one our fathers and grandfathers traded. Dodd frank. Demise of specialists. Demise of uptick rule. It’s a new game. The uptick rule worked for 70 years. In July 2007, they got rid of it for some reason. Now these momentum HFT’s are scaring people out of the market – including me! Whether the S&P is up or down 50 points in an hour – that’s not a real market!”
We hope the SEC reads these comments and takes them into account when deciding on upcoming regulatory issues. However, regulators and policy makers are often not seeing these types of comments and rather are just seeing the comments of entrenched industry insiders who would like to maintain the status quo. These insiders often hire well-paid lobbyists to support their case and will often try and discredit anybody who challenges their viewpoints. They will often claim that the critic doesn’t know what he is talking about or that he doesn’t have the data to back up the accusations. Longtime savvy professionals like Steve Wynn, Jim Cramer and Leon Cooperman might not have the data but they know that something is wrong with today’s stock market and they are sounding the warning alarms. But is anybody at the SEC listening?