In the past, people traded paper on the New York Stock Exchange. Transactions were handwritten on a pad and reconciled at the end of the day. Those transactions are now done with computers. You can call your broker and say, “I want to sell 100 shares of Apple.” The broker asks if there is a relative price range, they put the order out and boom – it goes to market and is sold.
As an individual investor, you’re not necessarily sensitive to small movements in your stock. If it goes from $94.00 to $94.25, the net effect on 100 shares is relatively small. In the big trading houses, large blocks of stock are traded throughout a day as the market constantly shifts in price. They have customers who sell hundreds or thousands of shares that yield huge volumes of transactions on the various stock markets.
Michael Lewis, author of Moneyball, recently wrote an article about how electronic programs have changed the face of trading. Brokers can look on their screens, see the stock is at $44 and execute the trade.
They eventually saw that in practice, when they clicked to execute a $44 trade, it didn’t always trade at $44.
Part of the reason for this is fiber optics – how the country is wired. The order arrives at different exchanges in various locations, microseconds apart. Somebody figured out how to make money within that microsecond – the minuscule difference between the expected price and the actual trade price for a particular transaction.
It’s as if they were legally skimming money off the top. Somebody created a business that doesn’t necessarily add value to the community or economy, but is efficient at exploiting a minor opportunity, maximizing value, getting rich, and then moving on to the next “big idea.”
How did this enterprising individual recognize the opportunity? Simple. It is the ability to think outside the box. It’s about looking at different kinds of problems and using different kinds of approaches to find solutions.
Truly, it is about recognizing special opportunity in the midst of everyday life. I recently read Tim Ferriss, author of the New York Times Best Seller “The 4 Hour Workweek – Escape 9-5, Live Anywhere and Join The New Rich.” With the “Working Smarter, Not Harder” concept in mind, I help individuals and teams achieve their goals, while making time for career and personal development.
How can you find new trends in your everyday life? Contact me to explore the possibilities.