In a press release from Dow Jones, things are not well for one Wall Street Trader.
LaBranche & Co. blamed difficult market conditions and challenges posed by electronic trading as the specialist firm warned it would post a loss on a 57% decline in its primary market-making business on the New York Stock Exchange.
So, it might pay to keep a close eye on your investment company.
Investing is still more like gambling that some would care to admit.
The specialist firm said it saw a decline in its principal trading revenue and market-making business to approximately $20 million dollars, from $47 million.
That's bad, but what's really scary is what the CEO had to say.
Michael LaBranche said the market maker made bad trades amid a steep sell-off in the market in May, particularly in overseas stocks listed on the NYSE. LaBranche said some of the days were the worst he'd seen in 19 years.
"We did very poorly in a lot of our emerging market ADRs (American depositary receipts), where the markets really just plummeted," he said. "We were going through periods where ... our longs outnumbered the shorts by 20 to 1 and it goes on for four or five days at a time. I haven't seen that since like the crash of '87."
Now to be honest, I'm not entirely sure what he just said. But for me, it's the obvious point that even the "experts" don't have it all together. And they don't have it all together with someone else's money.
LaBranche said the specialist business continues to be in transition as trading moves to electronic platform and the New York Stock Exchange introduces it hybrid marketplace and other securities, such as exchange trades funds or ETFs, become more popular.
So while they're working out the IT bugs, they're hemorraging cash.
"What we need to do now is to implement the proper technology that will allow us to interact in the market and stay so that we can be at the point of sale injecting our capital at the point of sale to make a difference in the markets," he said.
Boy does that sound like CEO-speak.
A penny saved is still a penny earned. But if I were you, I'd keep a good eye on your pennies.
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