The Wall Street Journal reported that Mr. Jim Simons gave an interview on CNBC in regards to high frequency trading (HFT) and the flash crash.
During the interview Mr. Simons stated that HFT helped the market recover quickly compared to how long it took the market to recover from the 1987 crash. I find this interesting. I respect Mr. Simons and admire his success, but I feel his opinion is biased and flawed. Renaissance Technologies, his firm, is known to use HFT, so how can he be objective? How can you respond to what happened after the crash and not address what or why it happened before it occurred? How can you feel HFT helped the situation, when in fact, HFT was one of the major reasons of why the crash occurred in the first place?
For example, if you cannot swim and I push you into the water, then I jump in and save you, should you consider me a hero? In my opinion, Mr. Simons would have been better off not making any public comments in regards to this matter. HFT is here to stay, but the public’s confidence in the market and the system has been shaken by it.
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