Trader Talk

Man vs Machine: What Investors Think Now


Today, CNBC begins a series on how trading has changed in the last several years, called Man vs. Machine. What exactly has changed? What's the good and bad of high-frequency trading? What changes will the SEC likely make in market structure? Who are the key players? Here is the link with a series of stories I and other CNBC Correspondents wrote for the web.

We're also airing stories every day at 10:45am ET and 3:40pm on Tuesday, Wednesday and Thursday.

To coincide with Man vs. Machine, Associated Press and CNBC have teamed up for an Investors Survey.

Is the system fair? Only 13 percent say the market is fair to small investors, but it's a lot more fair to hedge funds and professional traders.

Investors don't think too much of regulators...only 8 percent are "very confident" in them, 43 percent are "somewhat confident" and the rest. little or no confidence (34 percent have little confidence, and 16 percent "no confidence").

That Flash Crash has rattled the nerves of a lot of investors...61 percent feel less confident in investing in stocks after the recent volatility. We have seen clear evidence of that loss of confidence in the continuing outflows from stock equity funds.

Who's to blame for that volatility? Most respondents (80 percent) assign responsibility to general economic uncertainty, 50 percent blame it on news from particular companies, and just 37 percent blame high frequency traders.

Speaking of high-frequency traders, investors are split. 35 percent say they are a good thing, 38 percent are neutral, and 28 percent say they're bad.

As for buy and hold, the pundits have said it's dead — but investors apparently have not got the memo. 78 percent still say buy and hold is the best investment strategy...only 21 percent are willing to embrace active trading.


1) futures rose off lows as August retail sales stronger than expected.

2) Best Buy jumps 7 percent after Q2 earnings far exceeded expectations ($0.60 vs. $0.44 consensus), as higher margins and a lower tax rate helped. Revenues were short of expectations as same-store sales fell 0.1 percent amid declining traffic. Mobile phone, appliance and computer sales were strong. More troubling was a "low-double digit" decline in TV sales as demand waned and prices fell.

Citing a strong first half and reduced shares outstanding from stock buybacks, earnings guidance for the full year was raised to $3.55-$3.70 vs. $3.43 consensus. Meanwhile, revenues are seen essentially inline with estimates ($52 billion vs. $52.34 billion consensus).

3) Philips Electronics falls 2 percent despite projecting a strong long-term forecast. The Dutch conglomerate sees annual sales growth to be 2 percentage points higher than GDP between 2011 and 2015. By 2015, it also expects 40 percent of its revenues will come from emerging markets vs. under 30 percent now.

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