Tags: Jack Bogle | investors | flash trading | stock market

Vanguard's Jack Bogle: Long-Term Investors Don't Need to Worry About Flash Trading

By    |   Wednesday, 30 April 2014 02:13 PM

High-frequency trading has gotten a bad name recently, as financial author Michael Lewis argues in his new book "Flash Boys" that such trading rigs the stock market.

But Jack Bogle, founder of The Vanguard Group, maintains that individual investors have nothing to worry about if they focus on the long term. It's short-term traders who are at risk, and they're essentially speculators, he tells CNBC.

"These things like flash trading, dark pools and so on should mean and do mean nothing to the long-term investor," Bogle argues. "They're simply things that traders get trapped by and often outmaneuvered in the marketplace by."

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Trading is a game among gunslingers who want to "duke it out with other investors, and they think they are smarter or stronger," he explains. That's another good reason for individuals to stick with long-term investing.

"Investors should not be traders. It should be a matter not of short-term speculation but of long-term investing," Bogle declares.

Plenty of financial experts disagree with Lewis. Hedge fund luminary Clifford Asness, managing principal of AQR Capital Management, argues that individual investors who trade for themselves benefit from high-speed trading.

"Their small orders are a perfect match for today's narrow bid-offer spread, small average-trade-size market. For the first time in history, Main Street might have it rigged against Wall Street," he and AQR portfolio manager Michael Mendelson write in The Wall Street Journal.

And ace bank analyst Dick Bove of Rafferty Capital Markets writes in a commentary for CNBC, "Lewis declares that the financial markets are rigged, but that may be a little hasty."

Editor's Note: 250% Gains Bagged Using Secret Calendar (See Video)

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StreetTalk
High-frequency trading has gotten a bad name recently, as financial author Michael Lewis argues in his new book "Flash Boys" that such trading rigs the stock market.
Jack Bogle, investors, flash trading, stock market
285
2014-13-30
Wednesday, 30 April 2014 02:13 PM
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