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Charlie Munger Slams HFT: "They Are Like Rats In A Granary"

Tyler Durden's picture




 

None other than status-quo-hugger Berkshire Hathaway's Charlie Munger took aim at the scourge of HFT this morning; blasting high-frequency traders as "the functional equivalent of letting rats into a granary," and exclaims "it does the rest of civilization no good at all." Buffett reminds that HFT is "not a liquidity provider, " explaining that while it does produce volume, that is not the same as liquidity; and while the Oracle opines (incorrectly) that the small investor has never had it so good, Munger is quick to point out that the money HFT makes does not come from heaven and in fact it is the small investor who is hurt by the fact that large investors (who mostly act on small investors' behalf) are severely impacted. Even the usually abstinent Bill Gates remarks upon HFT as "adding no value.. because when the liquidity is needed, it isn't there." Munger sums it up: "I don't like it."

 

 

Buffett added, "It's not a liquidity provider. It may create more volume but that's not the same as being a liquidity provider,"

In addition, "To the extent that it is front running, I think society has generally been against front running for good reasons... Here they've gained an advantage by figuring out how the system worked and getting there first and that adds nothing to economic activity."

 

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Mon, 05/05/2014 - 09:39 | 4728082 CPL
CPL's picture

And they've eaten all the grain for a coming winter.  Nobody wins, everyone loses something.

Mon, 05/05/2014 - 09:41 | 4728095 Sudden Debt
Sudden Debt's picture

That's why the crickets should tax the ants more and also impose a fairness cut on their supplies

Mon, 05/05/2014 - 09:41 | 4728100 Stackers
Stackers's picture

So says King Rat himself.

Mon, 05/05/2014 - 10:04 | 4728187 MontgomeryScott
MontgomeryScott's picture

Buffett and Munger are just pissed because they didn't think of doing it first.

Mon, 05/05/2014 - 10:09 | 4728201 Pure Evil
Pure Evil's picture

I don't get it.

HFT is the moral equivalent of Federal and State governments.

They front run your paycheck every week while telling you they provide services.

You would think these state apparatchiks would be all for it.

Oh, I get it, they don't like it cause the HFT rats are also infesting their granaries.

Guess they don't like to pay out more than anyone else.

Mon, 05/05/2014 - 10:32 | 4728261 boogerbently
boogerbently's picture

It's unanimous, HFT's suck.

SOOOO...........?

Mon, 05/05/2014 - 11:37 | 4728488 jbvtme
jbvtme's picture

says the fox guarding the hen house

Mon, 05/05/2014 - 12:05 | 4728557 Soul Glow
Soul Glow's picture

"They are like rats with gold sewn into their colons."

- Charlie "Cockface" Munger

Mon, 05/05/2014 - 12:31 | 4728623 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Well Mr. Munger, I suggest you suck it up!

Mon, 05/05/2014 - 13:07 | 4728754 Four chan
Four chan's picture

who woke this guy up 10 years after the fact? go back to sleep charles.

Mon, 05/05/2014 - 12:31 | 4728624 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Well Mr. Munger, I suggest you suck it up!

Mon, 05/05/2014 - 10:35 | 4728269 imapopulistnow
imapopulistnow's picture

Buffet, Munger and Gates are three very wise and rational men.  They also are three very honest individuals.  

My only criticism is that Buffet and Gates are too diplomatic and subtle when discussing progressive policies and views that keep the economy from growing and creating jobs.  

But I suppose this is why they are successful and why I am posting on a blog site.

Mon, 05/05/2014 - 10:42 | 4728292 boogerbently
boogerbently's picture

Meh,

What does Gates know about business or Buffet/Munger know about investing ?

Mon, 05/05/2014 - 11:01 | 4728360 venturen
venturen's picture

Buffet is a Goldman enabler and whore!!!

Mon, 05/05/2014 - 10:54 | 4728338 Itchy and Scratchy
Itchy and Scratchy's picture

Nominated for comment of the month! Well done!

Mon, 05/05/2014 - 11:31 | 4728473 Canadian Dirtlump
Canadian Dirtlump's picture

NO kidding. THere is a disturbing amount of satanic horsepower on that panel.

Mon, 05/05/2014 - 12:03 | 4728554 U4 eee aaa
U4 eee aaa's picture

LOL!

I had that same thought

Mon, 05/05/2014 - 09:42 | 4728103 negative rates
negative rates's picture

Just like we should do to your artery?

Mon, 05/05/2014 - 09:42 | 4728099 Pinto Currency
Pinto Currency's picture

But the Fed and other cb's blowing bubbles for decades is okay.

 

Mon, 05/05/2014 - 09:43 | 4728107 Ignatius
Ignatius's picture

Talk about anything but their bailouts.

I just flushed a munger minutes ago.

Mon, 05/05/2014 - 09:44 | 4728113 Greenskeeper_Carl
Greenskeeper_Carl's picture

It's cute when guys like him jump on board with this kind of stuff. As if they weren't entirely dependent o the rigged system. I went to the Florida campaign for liberty a little but ago, and they had a warren Buffett guy there, pushing the warren Buffett term limits plan. Couldn't even take the guy seriously because he was there at the behest of the biggest corporate welfare queen on the planet, mr TARP himself. These guys act like they want to change things, when in reality they are entirely dependent on the status quo.

Mon, 05/05/2014 - 09:46 | 4728123 LawsofPhysics
LawsofPhysics's picture

Apparently you have never had the pleasure of tasting a brazed rodent...

Mon, 05/05/2014 - 11:14 | 4728406 CPL
CPL's picture

I wish I could say I haven't but it taste's fine depending on the street meat vendor and where you are in the world.

Mon, 05/05/2014 - 12:26 | 4728609 Greenskeeper_Carl
Greenskeeper_Carl's picture

I probably have too. There is no telling what kind of 'meat' they were using in shwarma alley in Bahrain. It was quite tasty though.

Mon, 05/05/2014 - 10:52 | 4728329 Herodotus
Herodotus's picture

Rats loose in a granary...reminds me of the opening scene in one of those famous Third Reich propaganda films that they show on the History Channel with rats scurring about between the bags of grain... I wonder if that was the image that old Charlie had in his mind from the 1930's?

 

Mon, 05/05/2014 - 09:39 | 4728084 negative rates
negative rates's picture

That's the same term i use for the Fed.

Mon, 05/05/2014 - 09:39 | 4728086 Sudden Debt
Sudden Debt's picture

http://youtu.be/fmO-ziHU_D8

these kids are our future... I wonder how they would adress a problem like HFT robbing...

ps: those are national speaker winners...

 

Mon, 05/05/2014 - 09:43 | 4728110 negative rates
negative rates's picture

Those are orphans there Einstien.

Mon, 05/05/2014 - 09:51 | 4728139 Sudden Debt
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ehe... those are students who had to take on 150K of student debt each to arrive there...

The 2014 Cross Examination Debate Association's national championship was held at Indiana University. The all African American female team from Towson University defeated the all African American male team from the University of Oklahoma. Though this may be a first for African American women, it is not a real win for women or African Americans, but a loss for collegiate debate specifically and America in general. I am not sure what the winners won, but it certainly wasn't a debate. However, to be fair to the participants, the quality of collegiate debate began to deteriorate long before 2014. All white teams won prior championships using a similar fast-talking style. However from what I can tell, in the past the fast talk, what little could actually be understood, was at least related to the topic supposedly being debated. This farce would be funny if it wasn't so sad. However it does provide a shocking example as to why America is a nation in decline.

Mon, 05/05/2014 - 09:54 | 4728157 Chief Wonder Bread
Chief Wonder Bread's picture

That is way scarier than what's happening in Ukraine imho.

Mon, 05/05/2014 - 10:10 | 4728204 espirit
espirit's picture

Lowering the bar has advantages for the oligarchs.

Mon, 05/05/2014 - 11:10 | 4728389 negative rates
negative rates's picture

Like I said, future orphans.

Mon, 05/05/2014 - 09:48 | 4728132 Chief Wonder Bread
Chief Wonder Bread's picture

Jesus H Christ. I'm gonna shoot myself in the head.

Mon, 05/05/2014 - 09:55 | 4728158 Snidley Whipsnae
Snidley Whipsnae's picture

Sudden Debt... I listened to the 'debate' on a FS link. I could not determine how the winners were selected... Unless it was the greatest number of times one particular word, allowed to be used only by one ethnic group, was used during the 'debate'. 

After listening to the debate twice I didn't have a clue what the hell they were debating.

Thats probably a good thing.

Mon, 05/05/2014 - 09:58 | 4728176 Ralph Spoilsport
Ralph Spoilsport's picture

Multiculturalism in action. Here's an example of where this crap comes from:

http://www.med.umich.edu/multicultural/files/resources/campinha_bacote.pdf

"The Process of Cultural Competence in the Delivery of
Healthcare Services
(Campinha-Bacote, 1998a) is a model
that views cultural competence as the ongoing process in
which the health care provider continuously strives to achieve
the ability to effectively work within the cultural context of
the client (individual, family, community). This model
requires health care providers to see themselves as
becoming culturally competent rather than already being culturally
competent. This process involves the integration of cultural
awareness, cultural knowledge, cultural skill, cultural
encounters, and cultural desire."

Mon, 05/05/2014 - 10:06 | 4728193 Snidley Whipsnae
Snidley Whipsnae's picture

"This model
requires health care providers to see themselves as
becoming culturally competent rather than already being culturally
competent. This process involves the integration of cultural
awareness, cultural knowledge, cultural skill, cultural
encounters, and cultural desire."

Ralph... I am not an anatomy whiz but always thought that the anatomical make up of all humans, regardless of ethnicity, were very similar if not identical.

Where did I go wrong?

Mon, 05/05/2014 - 10:27 | 4728226 Ralph Spoilsport
Ralph Spoilsport's picture

It's all about the money as well as telling health care workers they better tow the multicultural line when dealing with patients. The verbal diarrhea of Josepha Campinha-Bacote  is inflicted upon nursing students and doctors as required reading. Students have to purchase her study "tools" to take exams. You have to give her credit for realizing that she can peddle her wares better by using the word "cultural" as many times as possible.

Mon, 05/05/2014 - 10:42 | 4728291 Snidley Whipsnae
Snidley Whipsnae's picture

Ralph...

I can see where I went awry. All the time I have been thinking in terms of health care being the goal to keep all the people as healthy as possible.

I didn't realize that a different set of health procedures would be needed for green people than for purple people and that Dr.s and nurses better damn well know it and act accordingly.

In hindsight it's so obvious that an ingrown toenail for a green person would need completely different treatment than the same ailment for a purple person.

Thanks for getting me current on how fubar the entire system has become.

Poster above is correct... this is scarier than Ukraine situation.

Mon, 05/05/2014 - 10:54 | 4728337 Ralph Spoilsport
Ralph Spoilsport's picture

On a lighter note, here's one of her cheerleaders who is so competent that she can't spell competent correctly in the title to the article she got paid to put up.

http://www.workingnurse.com/articles/Josepha-Campinha-Bacote-and-Cultura...

Mon, 05/05/2014 - 11:13 | 4728403 negative rates
negative rates's picture

Next the high wire at the 3 ring circus.

Mon, 05/05/2014 - 11:14 | 4728405 Snidley Whipsnae
Snidley Whipsnae's picture

"She spends much of her time consulting for the Department of Health and Human Services on HRSA grants, working with universities to make sure concepts such as ethnopharmacology are integrated into the curricula."

Busy lady that has carved out a niche for herself with HRSA grants and other troughs. You're right, her cheerleader needs spell check. lol ... She will probably soon be head of NIH or something similar.

btw... Once I was looking at various university endowment funds and Case Western Reserve popped up as the leader (most money). At the time I had not heard of CWReserveU. They do a good job of staying below the radar.

Mon, 05/05/2014 - 09:59 | 4728178 NotAMathWhiz
NotAMathWhiz's picture

These kinds of things make me wonder about the future for 'The Onion'.

Mon, 05/05/2014 - 11:33 | 4728419 Boxed Merlot
Boxed Merlot's picture

these kids are our future...

 

Not mine. 

Absolutely incredible.  And that's to be celebrated?  I was taught the louder and faster one spoke, the less credible the information.  Not only that, but their repetition even lacked the necessary cadence to allow the use of their words to function as possible jingoes.  (I must confess, I only lasted for less than a minute)

This is not to say the 3 blind mice being interviewed on CNBC are any more credible by speaking in more "civil" tones.

 

Whatever happened to purpose and reason?

 

jmo.

Mon, 05/05/2014 - 12:34 | 4728631 Greenskeeper_Carl
Greenskeeper_Carl's picture

Ya that's how I was taught too. Resorting to telling and talking really fast pretty much means you lost. And they didn't even mention restricting the presidents war powers that I noticed. Just talked about 'racism', which is funny. Read schiffs article on lewrockwell.com about these people, and these so called debates. This is sad if this is the future of this country, but I'm afraid it is. Giving minority children special treatment just because they are minorities is giving them a license to underachieve.

Mon, 05/05/2014 - 09:45 | 4728089 LawsofPhysics
LawsofPhysics's picture

This is an age old problem for us, damn rodents.  Do what others have done in the past.  Should the granaries get emptied, eat the fucking rats...

meh, same as it ever was.

Mon, 05/05/2014 - 09:46 | 4728124 TeamDepends
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A little salt, a little honey........magic!

Mon, 05/05/2014 - 09:41 | 4728092 james.connolly
james.connolly's picture

Buffet's WIFE MUNGER speak's my gawd she is butt ugly ... I have been hearing about her for years, but never seen her ugly face.

Poster bitch for Steve Job's 1984 she is .. :(

Mon, 05/05/2014 - 09:41 | 4728098 Fuh Querada
Fuh Querada's picture

Replaced Becky Quickasshit.

Mon, 05/05/2014 - 09:42 | 4728093 Fuh Querada
Fuh Querada's picture

So Berkshire doesn't do HFT themselves ? Hardly credible. Probably sour grapes after they fucked it up.

Mon, 05/05/2014 - 09:49 | 4728137 james.connolly
james.connolly's picture

Munger/Buffet dont' DO "HFT" they just own it, and apology that only a Unicorn could feel comfy about.

 

Mon, 05/05/2014 - 09:41 | 4728096 nmewn
nmewn's picture

The Trouble with Tribbles.

Mon, 05/05/2014 - 11:18 | 4728425 csmith
csmith's picture

Scotty:  They called the Enterprise a garbage skow!

Kirk: And that's when you hit the Klingons?

Scotty:  Why no! I'm man enough to take a little insult!

 

Mon, 05/05/2014 - 09:44 | 4728114 kridkrid
kridkrid's picture

"Front running banker bailouts is OK, because we were the ones front running... HFT front running is bad because...???" I guess I'll assume buffet didn't have any skin in this game.

Mon, 05/05/2014 - 09:44 | 4728116 SheepDog-One
SheepDog-One's picture

'The small investor has never had it so good'....well yea that's the illusion, just wait until the small investor is trapped like rats in a burning granary.

Mon, 05/05/2014 - 09:45 | 4728117 thatthingcanfly
thatthingcanfly's picture

General: "You told us Windows 98 would be faster, and with better access to the Internet!"

Bill Gates: "It is faster, over 8 billion..."

General pulls gun: BANG!

Mon, 05/05/2014 - 09:46 | 4728120 Dr. Engali
Dr. Engali's picture

This coming from the assholes who never met a politician they didn't try to buy.

Mon, 05/05/2014 - 09:47 | 4728127 eddiebe
eddiebe's picture

The guy looks like a toad. He is probably closely related to Yellen.

Mon, 05/05/2014 - 09:47 | 4728125 james.connolly
james.connolly's picture

Buffet/Munger destroyed the AmeriKKKan insurance industry, changed it from 'acturial' to "DENY CLAIMS, COLLECT PREMIUM".

They for 1950's-2000's destroyed 1,000's of company's stole the PENSION cash and left worthless IOU's for widows.

Now this BITCH 'munger' talks about Rat's, ...

Who is the fucking Rat munger? and fuck your fuck-bitch Buffet, as we know your the brain's behind the fucking master-blaster.

Cherry Coke and Raw Steaks, my ASS here are TWO PEDOPHILE' of OMaha, and in a fair and decent universe these bitches would have been hog tied and 'flayed' long ago.

Mon, 05/05/2014 - 09:54 | 4728155 thatthingcanfly
thatthingcanfly's picture

James,

I like your posts. But apostophes are for possessive forms and contractions, NOT for forming plurals. It's  just "1950s," "IOUs," and "rats." You got it right with "widows" and "steaks."

Best regards.

Mon, 05/05/2014 - 10:48 | 4728321 Bay of Pigs
Bay of Pigs's picture

+1

Nice we can still learn and stay sharp on our writing skills here at ZH while unloading on pieces of shit like Charlie "sew the gold into the hemline" Munger.

Mon, 05/05/2014 - 09:49 | 4728135 1stepcloser
1stepcloser's picture

So he is saying to sew grains into my jacket now???

Mon, 05/05/2014 - 10:00 | 4728140 Fiscal.Enema
Fiscal.Enema's picture

Munger sez Gold is a "barbarous relic". Hey Charlie! Lets see if those rats can eat physical GOLD...

Mon, 05/05/2014 - 09:57 | 4728142 Mercury
Mercury's picture

HFT is the symptom not the disease Charlie.

 

They are playing on the official playing field and by the official rules. HFTs aren't responsible to the public for how the market is structured or what regulations govern it. So, direct your wrath accordingly.

Mon, 05/05/2014 - 11:27 | 4728460 csmith
csmith's picture

It is illegal to pay for order flow in Canada and Australia.

Mon, 05/05/2014 - 09:50 | 4728143 percyklein
percyklein's picture

Corruption in the markets and the overseers, and abandonment of "ordinary investers" to the savagery of the pros, used to be things we were opposed to. No longer? Now we're in favor of it?  

Mon, 05/05/2014 - 09:51 | 4728146 Seasmoke
Seasmoke's picture

I guess Munger doesn't own a townhouse outside the Holland Tunnel. 

Mon, 05/05/2014 - 09:53 | 4728153 vyeung
vyeung's picture

where were they when HFT was milking the small investor. NOWHERE!

Buffet/Munger/Gates have run their course.

Mon, 05/05/2014 - 09:57 | 4728168 SanfordandSon
SanfordandSon's picture

Charging HFT's for releasing news early...  

Mon, 05/05/2014 - 09:56 | 4728161 Rising Sun
Rising Sun's picture

But the exchanges that offer their raised floor available to HFT firms at an enormous fee - they're innocent.

 

HFT is the headline to distract bagholders from the reality that their financial advisors are losing their money everyday, but still collecting their enormous fees.

 

And this is how it's done folks.  Get it???  They steal from you and blame someone else.

Mon, 05/05/2014 - 09:58 | 4728173 OC Sure
OC Sure's picture

Liquidity? ...Like counterfeiting, ya mean? Counterfeiting adds "value" to the system?

If getting somewhere first adds nothing to economic activity, then what is the purpose of competition?

...Whatever side you fall on regarding HFT, it is not the government's responsibility to "fix." It is the owners of the exchanges decision to make.

Mon, 05/05/2014 - 10:05 | 4728189 wisefool
wisefool's picture

So what would that make billionaire "traditional" investors who pay lower effective tax rates than their lower middle class house servants?

Foxes gaurding the hen house?

Or

Wolves (billionaires/corps) gaurding the Fox house (congress critters, lobbyists, and IRS agents, who recieve record bonuses despite being they themselves being the largest cohort of the most egregious tax deliquents)

?

Keynsian theory is very confusing to a simple man like me.

Mon, 05/05/2014 - 10:07 | 4728197 yogibear
yogibear's picture

He's in favor until he starts losing. Munger is just another cog in stealing wealth machine.

Evenrtually the whole sham will bring down Charlie's wealth. 

Mon, 05/05/2014 - 10:19 | 4728216 Quinvarius
Quinvarius's picture

Charlie Munger doesn't even know what HFT is.  He just wants something to blame for being a giant ball of suckass and he heard someone intelligent mention HFT once. 

Mon, 05/05/2014 - 10:18 | 4728218 Montezuma
Montezuma's picture

HFT is a mosquitos fart compared to the over blown derivatives market that lost its meaning of hedging. More money is the derivatives markets than there are wealth in the planet, maybe we should finally ask a question how the hell is that possible? And is someone going to do something about this imaginary money?

 

Mon, 05/05/2014 - 10:27 | 4728238 Quinvarius
Quinvarius's picture

Warren Buffet says HFT never cost the small investor a penny because he doesn't understand all the ways it is used.  It isn't just for front running you old codger.  It has other uses and techniques.

Mon, 05/05/2014 - 10:28 | 4728240 grid-b-gone
grid-b-gone's picture

Charlie always talks his own book, but he has nailed an important point that the talking head defenders never bring up.

The stretch for speed is the reason HFT exists. What appears to be liquidity on a daily basis, is provided by a system designed to pull and evaporate bids more quickly than any other method when the market turns down. 

 

HFT avoids catching falling knives, so there is no liquidity benefit of HFT when liquidity is most needed.

Mon, 05/05/2014 - 20:48 | 4730402 Papasmurf
Papasmurf's picture

HFT doesn't wait for the market to turn down to pull the bid off.  HFT removes the bid immediately when I enter a buy order.  I've seen it many times that my buy causes the market to evaporate.   Then I cancel my buy, and the market returns.  This is because I use limit orders, well I used to when I was trading. 

Mon, 05/05/2014 - 10:40 | 4728279 jmcadg
jmcadg's picture

Fuck Munger, Buffet and Gates.

Mon, 05/05/2014 - 10:40 | 4728280 bankonzhongguo
bankonzhongguo's picture

To Chuck and Warren, with G_d's grace you both will miss the Singularity and be dead soon with no chance of resurrection or life extension.

Everyone sincerely hopes that in your last conscious moments on Earth you will understand that all your endeavors to deceive, short-change and otherwise financially enslave others was for nothing.

Mon, 05/05/2014 - 10:55 | 4728342 Itchy and Scratchy
Itchy and Scratchy's picture

Did the Berkshire boys say anything about paying back their US$1b in back taxes they owe?

Mon, 05/05/2014 - 10:59 | 4728356 I Write Code
I Write Code's picture

Who put the HFT tribbles in the quadrotriticale?

Mon, 05/05/2014 - 11:19 | 4728432 BrigstockBoy
BrigstockBoy's picture

mung [muhng]
noun
1. Something disgusting or offensive, especially filth or muck.
verb (used with object)
2. To make dirty (often followed by up).
3. To spoil, ruin, or destroy (often followed by up).

Mon, 05/05/2014 - 11:25 | 4728451 Colonel Klink
Colonel Klink's picture

I'm sure these two transfuse baby's blood to stay alive, just like Soros.

Mon, 05/05/2014 - 12:06 | 4728558 pupdog1
pupdog1's picture

He and Captain Dilly Bar think Golden Sachs is the cat's meow.

Nuff said.

Mon, 05/05/2014 - 12:52 | 4728697 messystateofaffairs
messystateofaffairs's picture

Charlie Munger, so filled with dunger.

Mon, 05/05/2014 - 13:30 | 4728721 Emergency Ward
Emergency Ward's picture

Munger: "They're like rats in a granary so what am I?"

Mon, 05/05/2014 - 20:51 | 4730411 Papasmurf
Papasmurf's picture

There's an octagenarian in the granary!  

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