Dear John: There has been a lot of talk of late about the regulation of high-frequency trading.
The way I see things, all institutions, including the ones that represent retail customers, have the ability to purchase and co-locate high-capacity servers, develop high-frequency trading strategies and to leverage high throughput, low latency networks for data and execution services.
Is it fair that high-frequency shops may be [consigned] to mediocrity because of those that choose not to leverage the technology that is currently available? J.R.
Dear J.R.: You make a very interesting point — leave high-frequency traders alone because they are just taking advantage of better technology.
And you are right, to a point, that all of the people complaining about HFT could join the crowd by getting better technology.
But what if you carried this a step forward? People should also get better sources of information. Why should inside information be illegal when anyone can go out and bribe the CFO of a company to get a hint at next quarter’s financial results?
I think the real issue with HFT is this: The markets are unstable with this sort of trading. And the question now becomes who will be blamed the next time the stock market crashes. HFT will, of course.
But those folks will be long gone by then, holed up in their European mansions and opening Swiss banking statements. And they’ll be laughing at Washington.
Dear John: I did a minor kitchen fix-up and some general house repairs on a new customer’s house.
He’s old and in his third career, finishing up with Boston Census Bureau. He’s one of 10 in his business survey section. He figures [that he and another employee] do true surveys. The rest fabricate, are no-show, do junk to varying degrees.
All the supervisor of the 10 cares about is that her reports are in a few days early so that she gets good numbers. Quality? Fugheddaboudit.
The customer said the actual job is easy, even interesting, as he visits and talks to a variety of business owners. They’re flattered someone is interested.
So, I suspect the incentives, or lack [thereof], are the same throughout the system. Maybe total “garbage in, garbage out.” Paul
Dear Paul: Thanks for the note.
Unfortunately, those people putting the garbage into our statistical system don’t realize the true damage they are doing just to look good.
Dear John: I wish the government would start polling people in their 50s (like me) who got laid off and can’t even get a simple office job. I can type 60-80 words per minute like employers ask; I’m just not the right age.
And I can assure you I’m not the only one I know going through similar frustrations. I have a friend who’s pretty much given up after seven years — seven years! — of looking for work. And he’s a lot more qualified than I am.
It’s pretty clear to me that no one, Democrat or Republican, has a clue as to what’s really happening outside of Washington. K.K.
Dear K.K.: I’m pretty sure the folks in Washington understand — both Democrats and Republicans. They just don’t know what to do about it.
And if you can’t solve a problem, the next best thing, in the eyes of politicians, is to ignore it.
I want to wish you the best of luck.
Dear John: As a loyal reader of your work, I would like to [discuss] your recent answer to reader R.D.B.
R.D.B. states that he has triple tax-exempt bonds. Is he aware that in NY state that is not factual?
Some years ago, I invested in an Oppenheimer bond fund advertised as triple tax-exempt.
I lost a considerable amount of money, which in and of itself was one problem. I finally got out when my losses were $58,000. (At one point, they were $71,000.)
Here is the [other] problem, which, by the way, I was never informed about when I purchased this investment.
The New York State Department of Taxation and Finance started to send me annual bills representing under-reported income on my annual tax returns. In reality there never was any income — just dividends, which could not, nor would ever, offset my losses.
Their claim is that the dividends from any municipality outside New York state are not tax-exempt.
The person who facilitated the purchase never knew about this, and Oppenheimer stated likewise. So the bottom line is, unless you know for a fact that every one of those bonds within a given fund is from New York, stand by to pay the tax man.
[That’s what I’ve been doing] for the last three years. J.C.
Dear J.C.: Thanks for the information.
Any tax experts out there who’d like to offer an opinion?
J.C. (by the way, great initials), if you were misinformed, you should consult a lawyer. I’ve passed along to you the name of a group at the Brooklyn Law School that is representing aggrieved investors like you for free.