Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

April 1, 2019 | Attention Investors: What Does The Word ‘Virtual’ Mean?

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

Image result for what does the word 'virtual' mean

My investor friends at the clubhouse lack understanding about our virtual markets. Most claim that our Fed ‘prints’ our money and they do not recognize that our electronic markets are now ‘virtual’ markets! The word ‘virtual’ is not understood. Could this lack of comprehension be prevalent among traders in all our markets? Let’s talk about this word ‘virtual’ for this missive.

 

VIRTUAL
existing in essence or effect though not in actual fact.
The word ‘virtual’ is key to understanding today’s financial markets. Since 2008 our markets have transitioned from the Open Out-Cry system to an Electronic system. Human beings (traders) used to negotiate prices and trades via a vocal human process without algorithms or high frequency computers. All this changed with the advent of computers and electronic trading.
Today (2019), most every trade is done electronically. Traders punch in symbols and numbers into a computer screen to execute their trade. Execution is done within this space called ‘cyberspace’. It’s all done in milliseconds or microseconds. Cyberspace is a ‘virtual’ space which technically does not exist (within our observable universe). It works within a computer network not within observable space/time. And the network is electronic.
There is no ‘printing’ of notes to create our ‘virtual’ money units today. Printing is not a word which describes what happens as the money units are now ‘virtual’. The trading symbols are virtual. Our money units are virtual. The circulation of money units is done within this ‘virtual’ space called cyberspace. We need to drop words which are no longer relevant as we now live in a cyber world of virtual numbers and symbols.
Some 95% of all money transactions are now ‘virtual’ transactions. When I trade a stock symbol I do this via my computer. I merely type my symbol into a blank space and click my computer mouse to execute the trade. The trade executes in milliseconds. Many traders use high frequency trading which executes trades in microseconds. This is done electronically and within this virtual space called cyberspace.
We need to drop words which are no longer relevant for today’s cyber markets. My investor friends at the clubhouse are investing their virtual money daily, trading symbols daily, playing with their computers daily, and yet they do not comprehend what they are doing. Amazing. When I teach them about the changes which have occurred since 2008 they seem to lack comprehension of these changes.
I will point to the TV screen and the electronic numbers and these investors still think that our banks are ‘printing’ all this money for investors to invest. They think our Fed is ‘printing’ money and forcing the markets upward. I am shocked at the lack of understanding by intelligent investors who act daily to invest yet have no understanding of what happens.
Yes, our banks used to ‘print’ money. Yes, we used to transact business with ‘printed notes’ and metal coins. But this has all changed these past 15 or so years. Our markets are now electronic. Some 65 electronic exchanges display stock prices to the investor and the public. The DOW is an electronic index. The S & P 500 is an electronic index. The Nasdaq is an electronic index. There is no ‘printing’ to create these indices. Who understands?
We live within our minds (our extended consciousness) as we trade and invest our virtual money units today. Our markets live within this space called ‘cyberspace’. Cyberspace is not a thing which ‘exists’ within our observable universe. Read the definition of cyberspace below to comprehend this concept:
CYBERSPACE
The notional environment in which communication over computer networks occurs. Cyberspace is widespread, interconnected digital technology. The term entered the popular culture from science fiction and the arts but is now used by technology strategists, security professionals, government, military and industry leaders and entrepreneurs to describe the domain of the global technology environment.
A consensual hallucination experienced daily by billions of legitimate operators, in every nation, by children being taught mathematical concepts… A graphic representation of data abstracted from the banks of every computer in the human system. Unthinkable complexity. Lines of light ranged in the nonspace of the mind, clusters and constellations of data. Like city lights, receding.
In this silent world, all conversation is typed. To enter it, one forsakes both body and place and it becomes an experience of words and symbols alone.
CONCLUSION: Investors need to start thinking about today’s reality and forget these old concepts of yesterday. Our banks do not ‘print’ our money today (with minor exceptions).  They type numbers into a computer account. Our Bureau of Engraving and Printing still prints some money notes but the % relative to the overall money transactions is miniscule (only some 5% of all money transactions). In Sweden some 98% of all money transactions are now virtual/cyber/digital (within cyberspace).
The trend is toward a CASHLESS world of virtual money symbols and virtual trading symbols. Printing of money is a yesterday concept. The word for today is VIRTUAL. Virtual means inner. Trading and money transactions are now inner. We need to think differently today due to the many changes which have occurred in just the past 15 years. Reread this missive a couple of times. Look at your computer screen and ask these question: What am I looking at? What is a digital $? What is a electronic digit? Where is this space called ‘cyberspace’? What does this word ‘virtual’ mean? Enjoy this day!
I am: https://kingdomecon.wordpress.com.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

April 1st, 2019

Posted In: Kingdom Economics

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.