High-Tech Snooping (The Little Guy Doesn’t Have a Chance) – A few months ago the world shocked when Eric Snowden came forward revealing that the NSA was collecting data and snooping on the call habits of American citizens, not to mention world leaders. Since then attention has been focused on the capability of technology and the edge it gives those who know how to use it. Gaining an advantage certainly doesn’t stop at the NSA’s Comprehensive National Cybersecurity Data Center in Utah.
Information translates into profits and the quickest way to turn a profit with high-tech snooping is of course, Wall Street. Today’s Wall Street Journal’s article on a little known company called Genscape is a must-read for every day-trader who thinks they can compete with the big banks and hedge funds.
Using infrared cameras and other high-tech surveillance equipment Genscape is flying helicopters over Cushing, Oklahoma gathering data on how much oil is sitting in those large storage tanks. Almost like Superman, operators peek inside and get an accurate reading of oil levels. The information is invaluable to traders looking to determine future prices. In addition to energy markets, the technology is being used to determine electric-power consumption, retail traffic and crop yields. Why wait for government data when you can have it today.
Earlier this year we were shocked to find out that Reuters was releasing government data early to hedge funds and traders willing to pay for it. In a high-tech world of lightning fast computerized trading, milliseconds count and can be the difference between profits and losses.
None of this information comes cheap and is well beyond the pocket books of most investors. My point is that the playing field isn’t level and never will be. Wall Street has always sought an edge and will continue to do so no matter what legislation, regulation or rules we put up as obstacles. Get used to it. This is here to stay.
The best hope for the little guy is that as more companies get into the business of supplying high tech solutions to investors, the costs will come down. For now, the little guy doesn’t have a chance.
Fed Day (I was WRONG!) – In yesterday’s post I said; “Either, the markets don’t care, the Fed will do nothing or the very modest sell-off we’ve seen this month priced in expectations for the Fed’s eventual exit.” Well, I was wrong on all three. The market did care, the Fed started the taper and the market hadn’t priced it in. The correct price was higher, much higher.
I went on to say; “Yeah, I get the fact that if the Fed moves today we could easily get a knee jerk reaction sparking a sell off that could last a few days…” I was right on this one but only for about 20 seconds.
I think yesterday’s reaction is good news for investors and continues to support the view that we are in a secular bull market. Will there be corrections along the way? You bet!
– David Nelson ,CFA
