There is a lot of talk right now about the stock market being rigged. A new book by Michael Lewis has shown that every time you and I make a stock trade, we are losing a penny or two. The proof is in and there is no disputing that fact after the well researched book hit the newsstands.
It is a complicated rigging that appears to actually be legal. Because it is so geeky hard to understand, this has been going on for years. Finally, a person by the name of Brad Katsuyama recognized that something was wrong and was determined to find out why his companies stock trades were not being fulfilled at the price he thought they should be. It took someone like Brad who is an industry insider years to follow all the leads and do the research necessary to understand exactly what was going on.
Anyone interested in buying stocks should watch the video below as it is all explained pretty clearly:
Should you be worried about all this? Am I worried?
Well, yes and no. I am worried that some scandal like this could disrupt the market and bring investor confidence down. That wouldn’t be good for anyone. But the penny or two I might lose on every trade isn’t something that I care about will not affect my bottom line (which is why no one noticed this problem in the first place).
As I have stated many times throughout this website, I am a long term investor. I make very few trades and every stock I buy I would love to hold for 5 or 10 years. It doesn’t always work out that way but it would be wonderful if it could. A penny here or a penny there lost while buying or selling a stock is immaterial to me and will certainly not change my perception of the stock market as the only place right now I can make a decent return on my savings.