Tags: Cramer | high | frequency | trading

CNBC's Jim Cramer: High-Frequency Trading Doesn't Affect Average Retail Investors

By    |   Wednesday, 02 April 2014 03:25 PM

While high-speed trading indeed rigs the stock market, as financial author Michael Lewis claims, that doesn't mean it affects individuals engaged in long-term investing, says CNBC commentator Jim Cramer.

Lewis created a storm on Wall Street with his remarks about the subject on CBS' "60 Minutes" Sunday.

"Look, it's entirely rigged . . . if you trade 50 times a day," Cramer said on the air. "These people are going to take a little bit of your vig. [But] if you are out there trying to find the next Google, they're not really going to impact you."

Editor's Note:
38 Investments That Profit 96% of the Time (Free Video)


High-speed trading is "unfair" to day traders, but normal individual investors shouldn't be day-trading anyway, Cramer said. "If you're playing this game at home and you're trying to beat these guys, forget it. That's not the right game."

Instead, he suggested that investors allocate their first $10,000 to a Standard & Poor's 500 Index fund and devote about 25 percent of their portfolio to individual stocks.

"The market for the last five years proves that if you buy high-quality companies and hold onto them, you can make a great deal of money," Cramer said.

Data published by Bloomberg News indicate that high-speed trading might become a bigger issue for the currency market than the stock market.

High-frequency trades accounted for more than 35 percent of spot currency trading volume in October 2013, up from 9 percent in October 2008, according to research firm Aite Group.

Meanwhile, the trend is going in the opposite direction for equities. High-frequency activity accounted for 50 percent of stock trading in 2012, down from 66 percent in 2008, according to Rosenblatt Securities.

Editor's Note:
38 Investments That Profit 96% of the Time (Free Video)


Related Stories:

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
StreetTalk
While high-speed trading indeed rigs the stock market, as financial author Michael Lewis claims, that doesn't mean it affects individuals engaged in long-term investing, says CNBC commentator Jim Cramer.
Cramer,high,frequency,trading
316
2014-25-02
Wednesday, 02 April 2014 03:25 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved