Analyst WSJ: Traders are killing the undervalued company investment strategy
Long before 1 June, dates, to which General Motors was officially declared bankrupt, it became clear, that nothing can save the American auto giant. Nevertheless, the company's shares all this time were traded in the area $1 for pike. Wall Street Journal Analyst David Weidner (David Weidner) wonders, why this happened and GM securities did not lose all their value.
GM Stock, publicly traded on the eve of bankruptcy, Wadener writes, were a value of $1 billion, which did not actually exist. Even today, their course is in the area $1,5. Market analysts are confused, but this situation reflects large-scale changes, occurring over the past decade, namely, the transfer of the stock market under the control of speculators, opening positions for a short time. They control trading volumes, which means they also control the price.
Today hedge funds, investing billions of dollars, using quantitative market analysis, can stop the change in the share price of virtually any company. Several pooled funds, занимающих короткие позиции, may even provoke a small collapse on Wall Street, how it was in september 2008 G. Currently, the prospects of a particular firm do not fully influence the growth of its securities., how it was in the old days.
Now traders and computer programs rule the market, not real investors, an example of which was Warren Buffett (Warren Buffett) and Bill Miller (Bill Miller), who carefully selected undervalued securities in their portfolio counting on their growth in the future. New players can change the structure of their portfolios to 100% several times a day. Numbers, indicating a change in the ratio of different types of players in the market, speak for themselves – last year about 2000 Analysts, engaged in long-term investment strategies, left wall street. They can no longer resist the seizing power of computer programs for conducting trading operations., Sorry Wadener. In May 2009 G. volume of transactions on the exchange NYSE committed by these programs was 30%, whereas 10 years ago, he did not even reach 10%.
Market, driven by unconventional forces and caused, that GM stock didn't go down to zero – players buy, to close short positions, продают, to make a profit. Everything, what interests them – this is a change in the price of a stock in a short period of time, not an analysis of the company's future prospects.
“Little can be changed now in this regard, – by David Weidner. – Some attempts are being made – prohibit unsecured short sales, fallback to the uptick rule (trade rule, at which short selling is allowed only at a price higher than the previous trade). Some even propose to split the markets, used for various purposes, but it will kill the very market idea. Must, Nevertheless, clearly understand the fact, that traders now rule the exchange and this situation will not change in the near future”.
(With)k2kapital.ru
