Read the article if you have money in the market, or plan to during your life.
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How traders killed investing – MSN Money
A market dominated by nontraditional trading forces explains, in part, why GM shares have kept so much value. Arbitrage traders make a lot of contrarian moves. They buy to cover their short positions. They sell to take a profit. All they really need is for the price to move.There’s no simple solution to the problems of the market. A few proposals today aim to improve things a bit, such as the elimination of naked shorting, reinstatement of the uptick rule and more transparency of traders’ holdings. Some people, like David Weild of Grant Thornton are calling for separate markets for certain securities, such as newly issued stock.
But separating investors from traders in the market would destroy it. The market needs both. Traders, after all, provide regular price discovery and the other side of the deal. They keep the market moving, but they’ve also replaced investors as the market’s driving force. Don’t bet on that changing anytime soon.