Long ago, value investing proponents such as Warren Buffett and Benjamin Graham put forth the fictional embodiment of the stock market in the form “Mr. Market.” This allegory was, and is, anything but genteel.
Think of Mr. Market, said these famed investors, as carried away by some of the more extreme mood swings of the age. He’s got stocks, as many as you want to buy. And he’ll buy whatever you want to sell. The question is, when you do business with the good sir, is the price you pay or receive the right one as determined by the business’ underlying value? This allows for the capture of value, and ultimately, gains, for the investor who is shrewd enough to see past volatility. The market may be efficient, arguably, but it is not always efficient.
News that Amazon has joined up with the Healthy Markets Association, an investor advocacy group, to examine stock trading through the eCommerce giant’s Web Service cloud services may beg another look at the market analogy.
Bloomberg reported that the Amazon/HMA duo is linking with trading analytics firm MayStreet to address how and what type of information is disseminated to the public about the daily movements of stocks. As the newswire noted, trading is conducted by machine (where once humans touched the process), and the ultimate aim may be, in part, to pinpoint, identify and publicize stock manipulation. The ripple effect here may be a more level playing field for the smallest of retail investors.
It’s a high-speed trading, Amazon world. We just live in it.
The as yet-to-be-launched platform aimed at investors and academics. For investors, might the moody Mr. Market be less of an enigma? Perhaps, or perhaps not. But more information, as they say, can give way to knowledge and knowledge is power.