![Mark Cuban Nails it on Twitter Crash and HFT [VIDEO]](https://www.valuewalk.com/wp-content/uploads/2021/07/clost.png "Mark Cuban Nails it on Twitter Crash and HFT [VIDEO]")
After a fake AP report on Twitter temporarily destroyed billions in market cap, investor Mark Cuban reiterated his call to eliminate high-frequency trading. Mark Cuban, AXS TV co-founder, says he doesn’t think there is vulnerability in Twitter systems — but rather — the way people are using it is where the vulnerability is at. There are no new names, new energy or new opportunities in stocks because of a lack of trust in the market, billionaire entrepreneur Mark Cuban says. Mark Cuban, AXS TV co-founder, says he doesn’t think there is vulnerability in Twitter systems — but rather — the way people are using it is where the vulnerability is at.
Video and computer transcript below:
you know, we watched the reaction in the markets, we saw how traders reacted, people running around trying to figure out what was going on, what was your reaction when you saw whathappened? and we’re showing it on the screen here this quick drop and the recovery almost as fast. mean, i wasn’t surprised at all. i mean, the one thing — look, 140 characters and what was it $200 billion worth of market cap disappeared for a few minutes and came back? it was crazy. i mean, what happened is exactly what we should expect to happen any time we have a market that’s dominated by electronic a algorithmic trading.they look at news headlines, programmed to read these wordsancause a selloff, perhaps, and high-frequency traders,perhaps, exacerbate everything looking at that and hitting thesell button and then you have a giant problem, right? right. look, we’ve gone from a market designed to raise capital to support new businesses to a platform designed for algorithmic traders and hackers. we don’t talk about new companiesing public andour excitement there. we talk about what’s happening at the cboe and what’s going to happen with the software. we talk about will there even be bids because of high frequency trading when news comes out? there’s so many problems with where the market is today because the market doesn’t know what business it’s in. it literally is no longer in the business of providing capital for companies to grow and that’s a huge problem. well, clearly the markets are in the business of expanding technology and the growing role that it is and always will and will play down the road even more of a role in the way stocks are trading. there’s no putting the genie back in the bottle. what’s the solution? well, you can’t put the genie back in the bottle in a lot of ways. because there is no real reason to have algorithmic trading at all. if we’re a market designed forinvestors to come in and invest in companies and watch forgrowth in those companies, you don’t need millisecond trading,that adds no value whatsoever. and we saw the problems, where the advocates of high-frequency trading will come in and tell you they add liquidity and volume. no, they don’t. they just add transactions. and when there’s an issue, they don’t hold positions, they don’t hold positions for minutes let alone days.and so we saw all the bids disappear with the twitter hack.we’ve seen it happen in other situations. and it’s going to happen again and again and again. look at this way, scott.what’s going to happen if there’s a real event? and something bad does happen? do you really think that there’s going to be any bids at all? and are there — is there a process for us to even introduce bids to try to put a bottom at the market? all we have are circuit breakers we hope will work. and after the circuit breakers, what happens?
we talk about will there even be bids because of high frequency trading when news comes out? there’s so many problems with where the market is today because the market doesn’t know what business it’s in. it literally is no longer in the business of providing capital for companies to grow and that’s a huge problem. well, clearly the markets are in the business of expanding technology and the growing role that it is and always will and will play down the road even more of a role in the way stocks are trading. there’s no putting the genie back in the bottle. what’s the solution? well, you can’t put the genie back in the bottle in a lot of ways. because there is no real reason to have algorithmic trading at all. if we’re a market designed for investors to come in and invest in companies and watch for growth in those companies, you don’t need millisecond trading, that adds no value whatsoever. and we saw the problems, where the advocates of high-frequency trading will come in and tell you they add liquidity and volume. no, they don’t. they just add transactions. and when there’s an issue, they don’t hold positions, they don’t hold positions for minutes let alone days. and so we saw all the bids disappear with the twitter hack. we’ve seen it happen in other situations. and it’s going to happen again and again and again. look at this way, scott. what’s going to happen if there’s a real event? and something bad does happen? do you really think that there’s going to be any bids at all? and are there — is there a process for us to even introduce bids to try to put a bottom at the market? all we have are circuit breakers we hope will work. and after the circuit breakers, what happens? mark, it’s steve weiss, i agree with you 1,000%. and the high frequency traders actually suck liquidity out of the market and scare people away from it. what i struggle with is where do you draw the line. they take it to the furthest degree. then you have all of these day traders, many of you stood at home who stood for quarters and halves, they’re also there playing around, not cating capital, not driving the market as it’s intended to do. so where do you draw the line on that? well, first, i mean you’ve got to look at what is the business of the market? and then you’ve got to ha the — the regulatory agencies come in and start saying, look, let’s get back to what we’re here to do and that’s to create capital and to invest capital in companies. and you can say, look, you have to hold a position for an hour, two hours, and tt changes the game right there because once you get away from instantaneous algorithmic trading, the whole market changes, all the opportunities change. look at the fact tthe new york stock exchange is being sold and all these exchanges are going through mergers. their revenues are being driven by transactions, transactions, transactions. long gone are the days where they’re out there looking for new companies to bring on, to go public, to create listings. i mean, it’s — there’s so many downstream problems beyond just the fact that there’s no such thing as perfect software. i mean we haven’t even gotten into the discussion that the only certainty about introducing new software at exchanges and the only certaintybout having to upgrade algorithms and integrate them into software, the only certainty is you’re going to have problems. there’s no such thing as perfect software. i don’t want to gloss over this by any stretch. we’ve put up a graphic that shows in part some of your solutions. one thing you say is that trades should be taxed that aren’t heldfor a long enough period of time to try and cut down on this sort of thing. i could see people on wall street right now rolling their eyes when they hear something like that. well, of course, look, wall street is smart. they follow the money. this is not a knock on the algorithmic traders. this is not a knock really on anybody. people follow the money and it’s very efficient. we all look for opportunities on where we can make money. t,bu again, if — in my opinion, if you look at the bigger picture, all of this — i don’t want to say electronic — algorithmically driven trading has created a ton of downstream probms. look at the aging of the stock market. i don’t have the exact numbers. whether it’s the s&p or the dow or the whole public universe. not only have we seen a decline in the number of public companies, but the companies that we’re looking at and investing in are aging considerably because there are no new companies coming in. look at the tech sector. the bell weather are for the most part 20 and 30 years old, and the youngsters like google and facebook are 9 and 10 years old. long gone from the days where there was a continuous flow of new ideas and fresh companies that reinvigorate the different sectors, particularly the tech sector. now the tech sector’s a grandmother when it comes to aging of the stocks out there. and that, i think, is a reflection of the fact that we are no longer a market designed to create and invest capital in companies and to create growth from those companies. there are those who might also say, look, you know, the — the market is at — the other numbers that are compelling are the dow and the s&p at record highs, right? so these things may happen from time to time. the market may go through these gyrations, these momentary drops, these comebacks. confidence, though, in the market certainly doesn’t seem to be shaken to any great extent. given the fact — record highs. let’s not lie to ourselves about where the market is, right. i mean, look, there are only so many options on where to put your money and, you know, we’re in the land of the blind, right, the one-eyed man is king. and in this particular case, there are only a few choices. but so i don’t think you can look at the — where the markets are right now and say, look, they’re up near highs so things must be good. there’s no real other places to put money. and honestly, in my personal case, i really rarely invest in stocks anymore. there’s just nothing new. you know, when you sit and listen to cnbc or watch cnbc, you’re talking about the same stocks, it’s like going back in time. you could have the same conversation ten years ago, 20 years ago, in some cases 30 years ago talking about the same companies and we’re like how’s the quarter going tobe? good or bad, should you invest, not invest? no new names, no new energy, no new opportunities. that’s a problem and that’s a reflection of the lack of trust, the lack of — the fact that we don’t know what business the markets are in. and there’s so much algorithmic trading and technology-driven trading it’s created downstream problems. you good to sit with us through a commercial? i want to talk to you about technology on that subject on the other side of the break. sure. also, let everybody know that at 12:50, the cboe is set to resume trading. so we’ll certainly be watching for that in about five minute’s time after this long delay due to some sort of technology glitch it appears at the cboe. again, on the other side of this
there are those who might also say, look, you know, the — the market is at — the other numbers that are compelling are the dow and the s&p at record highs, right? so these things may happen from time to time. the market may go through these gyrations, these momentary drops, these comebacks. confidence, though, in the market certainly doesn’t seem to be shaken to any great extent. given the fact — record highs. let’s not lie to ourselves about where the market is, right. i mean, look, there are only so many options on where to put your money and, you know, we’re in the land of the blind, right, the one-eyed man is king. and in this particular case, there are only a few choices. but so i don’t think you can look at the — where the markets are right now and say, look, they’re up near highs so things must be good. there’s no real other places to put money. and honestly, in my personal case, i really rarely invest in stocks anymore. there’s just nothing new. you know, when you sit and listen to cnbc or watch cnbc, you’re talking about the same stocks, it’s like going back in time. you could have the same conversation ten years ago, 20 years ago, in some cases 30 years ago talking about the same companies and we’re like how’s the quarter going tobe? good or bad, should you invest, not invest? no new names, no new energy, no new opportunities. that’s a problem and that’s a reflection of the lack of trust, the lack of — the fact that we don’t know what business the markets are in. and there’s so much algorithmic trading and technology-driven trading it’s created downstream problems.
