Monday, August 30, 2010

The Smartest Investing Outfit on the Planet (Not)

Welcome to "Taxes on the Cutting Edge." I was going to start this site off with a summary of current events, like Bush tax cuts slated to end, and Obamacare tax nightmares slated to start, but I just HAD to make this first post something you'll never forget!
I had read where the firm Goldman Sachs (yes THAT one, revolving doors to the White House, Rubin, all those guys from the bailout of '08 and all that) has made a profit every day of the year of 2010 with their trading....every day, not 90%, but EVERY stinkin' day! Well anyone who has invested, or traded, or heck gambled at Gold Country knows that it is VERY DIFFICULT to be right EVERY DAY!
Well, lo and behold, my research has turned up an amazing and should I say sinister explanation for their "good fortune" and "brains" over at GS. They have a supercomputer that DWARFS the NYSE computers. It is located in the nuclear-bomb-proof basement in the same place as the NYSE puters. This supercomputer which I will just call "The Monster" for lack of time to pull out my thesaurus sees every order on every exchange that comes in from everywhere, and it "front-runs" these orders to give GS the edge on any trade anywhere in the world! Remember that day in May when the Dow dropped 1,000 points like nothing? And they blamed it on some "fat-fingered" guy somewhere making a typo? Well that was the Monster doing its thing, it does it automatically, and it can wreak havoc on the markets.
So next time you are deciding to buy 10 shares of Apple to prop up your sagging 401(k) or IRA, remember, some rich dude's computer is seeing your order before it gets executed, and if it so desires, it will make you pay, say 263.50 per share instead of 263.25, and it just made $2.50 off Mr Main Street!
My next post will be much more subdued, unless I get the itch again to get under the PTB's (Powers that be's) skin!