I describe to them how as much as 70% of the trading activity in markets today – activity that generates the constantly changing up and down arrows and green and red numbers they see and react to on CNBC – is just machines talking to other machines, shifting shares around for “liquidity provision” or millisecond arbitrage opportunities. The trappings, the facades, the faux this and faux that, the dislocation between public narrative and private practice … I understand that authenticity has always been a rare bird on an institutional or societal level. If you’re reading Epsilon Theory I’m pretty sure that I don’t have to spend a lot of words convincing you of that fact. Sorry, but being a revolutionary is a young man’s game, and the pay is really bad.
But marketers also are confronting an uncomfortable reality: rampant fraud.
Billions of dollars are flowing into online advertising.
Or at least it helps keep me from shaving my head and going rogue. What else have I been told or led to believe about the Web is a lie?
The WSJ article cited above – where it now seems that more than one-third of all Web traffic is fake, generated by bots and zombies to create ad click-throughs and fake popularity – is a good example of what I’m talking about. But then I remember conversations I have with non-investor friends when I describe to them how little of trading volume today is real, i.e., between an actual buyer and an actual seller. My sense is that if you talk to a professional in any walk of life today, whether it’s technology or finance or medicine or law or government or whatever, you will hear a similar story of hollowness in their industry.
You're an errand boy, sent by grocery clerks, to collect a bill.
But there is a quality to Willard that I find useful in recalling whenever I am confronted with hard evidence that the world is playing me falsely. I’m sure that anyone in e-commerce or network security will chuckle at my naïveté, but I was really rocked by this article.Kurtz: Did they say why, Willard, why they want to terminate my command? I don’t want to say that I admire Willard, because there’s nothing really admirable there, and this isn’t going to be a web-lite note along the lines of “Three Things that Every Investor Should Learn from Apocalypse Now”. I understand how it’s technologically possible, but how is it possible that this sort of fraud has been going on for so long and to such a gargantuan degree that I don’t know about it or somehow feel it? They had no illusions regarding the essential hollowness of the entire enterprise, and they saw clearly the heart of darkness and horrific will that was left when you stripped away the surface trappings. How was Willard able to navigate within a world he knew was playing him falsely, while Kurtz could not?Inevitably these non-investor friends are as slack-jawed at my picture of modern market structure as I am when I read this article about modern Web traffic structure. So given that we are stuck in the world as it is, my question is “How do we adapt to a Hollow World? As Conrad wrote, the question is not how to get cured, but how to live. Over the last decade, institutional management of equity portfolios has increased from 54% to 81%. Institutional buys and sells accounted for 47% of trading volume between 20, but only 29% of trading volume since 2008. One of the most significant results of the tension between fewer market participants and larger parent order sizes is that the share of ‘real’ trading volume has declined by around 40% in the last five years. About 36% of all Web traffic is considered fake, the product of computers hijacked by viruses and programmed to visit sites, according to estimates cited recently by the Interactive Advertising Bureau trade group.