High Frequence Trading and A Book Recommendation

This article on High-Frequency Trading over at Balkinization (a collection of legal scholars and lawyers) caught my eye. It is a subject that I think we need to think about a lot more as a nation - executing market trades is a fundamental aspect of capitalism as we have designed it, but is buying, holding, and then selling stocks in only 11 seconds (or less) beneficial? Does it smooth the market value function, or does it instead introduce noise and volatility, and create possibilities for sabotage? Read author Frank Pasquale's thoughts at: http://balkin.blogspot.com/2010/11/martial-finance-case-of-high-frequency.html

The whole thing made me recall a book I read two years ago: The Tenured Professor, by economist John Kenneth Galbraith. Galbraith buried insights into our markets and our behavior that it has taken me time to appreciate, but the one of the themes of the book, that we behave relative to investing more based on what others are doing and less on what we think of as value, is especially pertinent to the subject of computer based trading, and High Frequency Trading in particular.