This strategy would also cool the heels of the related action of algorithmic trading that tries to capitalize on the worst psychology of the marketplace. Such computer-to-computer trading makes up the majority of trades in certain securities on some days. While it may be a battle of microchip wits, it also does not do anything to encourage thoughtful investment in innovative enterprises. In fact, these computers don’t really care what the stock is. They are in the business of generating and then capitalizing on volatility. In the end, we all lose.
Colin Read chairs the finance and economics faculty at SUNY Plattsburgh and has published a dozen books on local and global finance and economics.