Stock Market Truth

In today's global, Reg NMS electronic stock markets, investors and traders react to market construction. Generally terms, Economy Structure means the number, size, type and distribution of participants in a marketplace. Quantitative trading became successful and popular since it handles risk through mathematical analysis of market construction. Here's precisely the cold truth: precisely the act of investing is the domain of private equity, whilst the tradition of trading in pursuit of beta and alpha is the common kind of investment today at the equity markets. Contemplate: The Nasdaq and the NYSE, having consumed Archipelago and Instinet, are basically ECNs. Trades on what remains of precisely the floor of precisely the NYSE are guided by mathematics and execute 200 milliseconds or less.

High frequency companies like Octeg, Renaissance Technologies, Citadel Derivatives, Millenco and BATS Trading transfer countless shares per month - often over the global market's largest equity program dealer, Morgan Stanley. Also, Goldman Sachs, now the world's biggest hedge fund, grew earnings 52% in the year 2006 to $38 billion and had an all time investment lender high net earnings of $9.5 billion mostly on the strength of trading operations. Fidelity is among the biggest algorithmic dealers. If you're still practicing investor connections the same old manner, you are ill equipped for Reg NMS markets. If you do not, you are the only participant in your very own market who doesn't.

If you conduct your Investor Relations software - messaging, shareholder base goals, outreach, measurement - without considering marketplace structure, you are neglecting a key facet of what drives your external target market's decisions. Risks? Inaccurate answers on why your equity appreciates or declines. Wasted time on outreach and messages unsuitable for your market structure. Net effect: Reduced value in the management table, less operational relevance. But we concentrate on the company and let the stock look after itself. Okay. Or accept that precisely the short term nature of the current equity markets is at odds with altruism. Then adapt by learning precisely the new key value drivers embodied in marketplace construction. If you - and your management team - want to navigate the current equity market with calm assurance, you must cozy up to market construction and make it your friend. Tim Quast is a 15 year Investor Relations veteran and founder and controlling your stresses director of ModernIR.com, which parses and classifies over a half billion stocks per week with its trading intelligence systems.

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