Google Inc (GOOG), Wal-Mart Stores, Inc. (WMT): Don’t Read the Wrong Signs About Technology

Google’s Adwords and Adsense are tools that support small-business owners. In fact, Adwords can be one of the strongest marketing tools for small and medium business owners. Google Inc (NASDAQ:GOOG)’s advertising services reduces the need to employ salespeople which increases the productivity of small business owners who want to write code, provide services, and sell intellectual property. In summary, Google Inc (NASDAQ:GOOG) saves money, as a result, business people are better able to invest money back into their businesses. Supply curve shifts to the right because of the lower cost of production, which increases real economic output, and the trickle-down effect continues to be felt.

Technology doesn’t make Wall Street that much better than the rest

The author argues that Wall Street is some casino that heavily favors the group that has the most money. Major Wall Street banks use technology like high-frequency-trading to make additional money from the stock market and launch an effective barrier of entry for the small-guy, according to Jaron Lanier. But if you look closely at Goldman Sachs Group, Inc. (NYSE:GS) latest earnings release. That is simply not true.

Upon closer examination of Goldman Sachs Group, Inc. (NYSE:GS), Goldman Sachs’ institutional client services reported a 10% decline in fixed income, currencies, and commodities trading on behalf of clients. The bank is full of talent, which includes these high frequency trading systems. The problem is that high-frequency-trading doesn’t really pad the banks’ bottom line. Over the first quarter of 2013, currency markets were extremely volatile, with the USD/JPY rallying by over 20%, the Gold market declining by 17.30%, and bond coupon values declining by 2%-3%.

Generally speaking, investment banks tend to benefit more in a bull-market rather than a bear-market. Trading in and out, going short, along with complex-hedging strategies clearly aren’t enough to stem the losses of a unfavorable trading environment, which clearly contradicts the blissful ignorance of Jaron Lanier and his version of Wall Street “high-frequency-trading.”

Conclusion

Technology is advantageous for the economy; it does more good than harm. Better technology will almost always benefit the economy.

The article Don’t Read the Wrong Signs About Technology originally appeared on Fool.com and is written by Alexander Cho.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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