High-Frequency Trading

After listening to Henry's explanation, someone else asked, "But you also said that if the plan fails even once, he might not have a chance to recover. So why is he worth investing in—ah, that's why you said he's suitable for short- to medium-term investment, right?"

"That's right," Henry added. "Moreover, the company that is primarily responsible for the space station construction is not publicly listed. I suggest that the investment target be other publicly listed companies under Victor von Doctor Doom."

"These companies all have good profit performance. In terms of their business nature, they are also likely to become beneficiaries of the space program and obtain the transfer of new technologies."

"Most importantly, it's the recent media's assessment of him—a business genius comparable to Howard Stark. This isn't my opinion; it's the media's assessment after uncovering his background."

He graduated from Hegeman State University in New York State. During his university years, he was able to publish quite profound papers in the field of theoretical science. His amazing faculty regarded him as a scientist on par with Albert Einstein.

This genius did not pursue further studies in academia, but instead entered the business world after graduation. Each of his ventures grew rapidly and eventually went public.

After going public, if he still had the resources, he would create a second company with a different business nature, and then achieve success. After several such attempts, the prototype of a business group took shape under his leadership in just a few years.

The last man to achieve the same feat was Howard Stark in the early 20th century. And it took Old Man Stark much longer to reach the same level of achievement as Victor von Doctor Doom today.

In contrast, Tony Stark led an already established empire, the difficulties posed by this upstart were incomparable. Therefore, the young master's reputation in the media was subtly overshadowed by Von Doctor Doom's.

One major reason for this difference is that Victor von Doctor Doom did not resist Wall Street capital. He knew how to leverage resources and lead a group of people to make money; this was much more popular than the Old Man Stark's approach of focusing solely on manufacturing.

It's fair to say that this person enjoys a very high reputation, both in the market and in Henry's own words. Therefore, some people have asked with doubt, "Henry, What If...? you think so highly of him, why do you say he's only suitable for short- to medium-term investments?"

Henry frankly said, "Although I am optimistic about it, the risks of the space station project should not be underestimated, which is why I think short- to medium-term investment is acceptable."

"If we take a longer timeframe, we'll have to see how he performs afterwards. In comparison, Apple's risk isn't that high; they've always just been selling consumer products."

Let's not talk about how this business genius will be ruined by Mister Fantastic in the future. No one could predict that today, unless it's just some charlatan or fortune teller spouting nonsense.

Then someone else asked, "Henry, do you invest your own money? You have so much wealth, you can't just keep it in the bank earning interest, can you? Which stocks do you buy? Or futures?"

Although he initially stated that he didn't want to get involved in Wall Street's financial games and abide by the rules set by a group of Jews...

But after Sony's compensation arrived, so much money was sitting in the bank, and Citibank kept calling Henry every few days with financial advisors checking on him, which annoyed Henry to no end. So, relying on his technological advantage, he started playing the stock market as well.

When someone asked, Henry glanced at the people present, put a finger to his lips, and solemnly said, "Please keep this a secret."

Everyone was eager to get their hands on this confidential information. They nodded hastily, eager to hear what juicy tidbits Henry had to share.

Henry then began to explain. "From 1971 Nasdaq established its electronic pricing system, to 1977 when Toronto pioneered the electronic pricing system, and New York launching a fully electronic marketplace."

"By 1980, the Cincinnati Stock Exchange had become a fully electronic exchange, allowing people to trade via telephone or internet services. Recently, North America has completed its full electronic setup."

"The advantage of this system is that stock price changes across different exchanges can be synchronized, reducing the chances of someone exploiting information gaps to profit between different exchanges. But is this really foolproof?"

Someone with some computer technology knowledge asked, "Is there a bug in this?"

Henry replied, "It's not a bug, but data transmission also takes time. For example, from New York to Chicago, the data transmission speed is sixteen to seventeen milliseconds."

"So as long as the latest information is obtained faster than this time, we can make a profit by taking advantage of the price and time difference between the two places."

"For example, if a stock is listed at 10, and someone on the Nasdaq in New York is offering 11, and I get the information first in Chicago, I can buy it at 10.5 and then sell it to the buyer in New York at 11. The profit is 0.5."

"Of course, the actual operation is even more complicated. Moreover, it uses a pre-programmed computer program to automatically conduct transactions, and all of this can be completed in 15 to 20 milliseconds for a buy and a sell."

"However, the profit margin in this transaction is very thin, requiring a large number of trades to accumulate a decent profit. The advantage is that regardless of whether the stock market rises or falls, whether it's a bull or bear market, a certain profit can be guaranteed, unless a circuit breaker is triggered."

This kind of operation is what is known in the 21st century as high-frequency trading. But in this era, it is still a secret weapon of certain large securities firms, and only a very few people know about it.

As for how Henry gained an advantage in data transmission, the answer is that it combined alien technology with satellite transmission, allowing Henry to achieve synchronization at the microsecond level. What might slow him down is the processing speed of the electronic exchange.

After explaining his actions, the audience seemed to understand but not quite. Someone asked, "With such frequent trading, didn't the exchange notice anything wrong?"

"So what if they found out?" Henry's rhetorical question immediately made everyone realize that the stock exchange could not possibly stop such a thing.

Every transaction incurs a fee. Frequent trading leads to an insatiable collection of fees. Only a stock exchange would be out of its mind to prohibit such practices.

But some people still asked the question that mattered most to them, "Henry, how much profit do you make doing this?"

"It's probably between 0.8% and 0.9%."

Henry's answer disappointed everyone.

To illustrate this, consider this statistic: at this point Federal Reserve's federal funds rate was 5.5%, meaning a one million dollar time deposit would yield approximately $55,000 in interest annually. Specific rates vary depending on the bank and the program.

Henry, of course, understood where everyone's disappointment lay. So, with a smug smile, he added, "Every month."

Everyone's eyes lit up, their interest piqued. A monthly interest rate of 0.8% translates to an annual interest rate of 9.6%. This rate of return is comparable to some medium-risk funds, and even then, there's always the possibility of profit or loss; it's also much higher than bank fixed deposits.

Henry continued, "My initial investment in the stock market was ten million. Today, I've made a profit of about one million."

One major reason for paying attention to the stock market is the old saying, "The cicada senses the coming autumn wind before it blows, and death comes unexpectedly." The stock market is that omen, and we are more sensitive to it than any news media.

However, very few people can truly understand stock market fluctuations, and Henry is certainly among them. He wants to use this market indicator as a reminder to himself; making money through high-frequency trading is really just a side benefit.

Someone immediately asked, "Henry, could you lead us to make a deal like yours?"

Henry was, of course, prepared to bring this up. He said directly, "How about this, after the New Year, I'll look into the requirements for setting up a private equity fund and draft a standardized contract."

"If anyone is still interested, they can take a look. Anyway, everything will be done through proper channels, legally and compliantly, to avoid future disputes. Is that alright? But please don't tell anyone else, this trading method isn't very common in the market yet."

With someone leading the way to make money, who wouldn't be satisfied? Everyone nodded and smiled. "That's great."

"No problem."