Algorithmic Trading

• It has reached a point where stock prices are heavily influenced by automatic trading systems used by short-term traders. This is also known as algorithmic trading. These systems make assessments about the stock market based on historical performance patterns and execute buy and sell trades in the stock market without any human intervention. It is widely used by the biggest players in the industry, including pension funds, mutual funds and institutional traders. Their computers are programed to nibble away at the profits that should be going to long-term investors looking for steady rising appreciation of their stocks.
  
  

Baby Boomers Will Sell

• Baby boomers born between 1946 and 1964 will start reaching retirement age in 2011, and when that happens they will begin pulling the bulk of their nest eggs out of the volatile stock market and placing them in more safe and secure assets, such as bonds and bank CDs. One of the reasons the stock market has grown so much over the past several decades is because these baby boomers have led the way in buying stocks for retirement. When they reach retirement and start leading the way in selling stocks, it will create downward pressure on stock prices.
  
  

Flash Crash

• On May 6, 2010, the Dow Jones Industrial Average plunged more than 600 points in five minutes for a nealy 1000-point loss for the day. Although the market quickly recovered most of the 600-point loss, it can't be too reassuring to know your hard-earned money could be wiped out so fast for reasons you don't understand. Securities and Exchange Commission investigators found the flash crash was caused by a single large trade--one large mutual fund that sold a sizable number of E-Mini S&P 500 contracts and sent the whole market on a roller coaster ride.
  
  

It's Gambling

• Investing in the stock market is risky business and the potential for losing money is always there. Like all gamblers, the stock market has good days and bad days. It has always been a challenge to figure out how the stock market works, and recent innovations on Wall Street have made it hardly no different than placing your money on a roulette wheel and hoping for the best.