NEW YORK (TheStreet) -- Think I can't defend what feels like a rigged game? Read on.
My father, who worked in finance for more than 50 years, grew up in the country during the Great Depression as a Roosevelt Democrat. I asked him what he thought of high-frequency traders, the automated computer outfits that buy and sell constantly, utilizing minuscule split-second advantages. High-frequency traders are now the subject of the latest Michael Lewis book, Flash Boys, and the target of New York Attorney General Eric Schneiderman.
Dad replied that if someone worked to better educate and equip themselves to profit legally, then they should prosper. Here are three reasons why the Old Man is right.
1. It starts at the top.
Just as innovation in the space program ultimately impacted the entire society, nearly every major advance that has helped individual investors came from the resources only large institutions could muster. Computers, trading programs, specialized investment newsletters and the like were initially the province of larger, richer entities that could afford the research outlay.
2. High-frequency traders have tremendous weaknesses to exploit.
Earlier this year, I interviewed former Dallas Cowboy cornerback Aaron Kyle. Kyle theorized that more interceptions are returned for touchdowns by members of the secondary now that offensive lineman are so massive in size that they can't pursue relatively sprightly pass defenders after a pick-off.