Their mere existence makes a mockery of the idea of the stock market as a considered reflection of value of companies and explicitly makes it into a gambling den for dead-eyed people competing to have the fastest card counting systems under their suits. If a company is valuable now, it'll be valuable in 5 minutes.
There's a benefit to liquidity to everyone, but I don't really see a liquidity benefit faster than a few _minutes_, much less faster than a few _ms_: end individual traders don't even get to trade that fast anyway, they're just artificially disadvantaged against the institutions.
> If a company is valuable now, it'll be valuable in 5 minutes.
That’s not necessarily true.
I think we are going to have very different views as to what the terms "value" and "everyone" mean
because HFT's provide no value at all to the everyday person on mainstreet just looking get by and maybe put 10% of their wages into the stock market for retirement.
if by everyone you mean "the top 1%" and by value you mean "make lots of money at the expense of mainstreet investors" then sure.
If you participate in the stock market at all, you indirectly benefit from HFTs lowering the bid/ask spread and therefore getting a better price. Now matter how insignificant, but the benefit is there.
Of course if we're dealing in millions, not thousands, then the benefit is more pronounced, but a couple of cents here or there still make a difference.
At the very worst HFT firms are a net neutral.
> "make lots of money at the expense of mainstreet investors"
Can you elaborate on this further? I don't see how HFTs make money at the expense of mainstreet investors. HFTs make money on the expense of inefficiencies, therefore making the markets more efficient.
If someone writes some software, or grows some food, or balances some accounts, or paints a wall, they are all being endlessly more productive than someone who buys on a low and sells on a high and pockets the difference all within 100ms.
Investment means support and confidence in a venture or resource. I think a lot of the financial industry's problems arise from the switch from "investment in business x because I like what they're doing and am confident they'll succeed" to the mantra of "investment in business x because I don't actually care about the company but the stock history tells me I can make a quick buck". Market stability is a thing of the past, no wonder we're constantly on the edge of a recession.