It all depends on how you look at it, Rhosty.

>>Share trading by computer generated programs, that completely distort the market by massive movements, for just a tiny percent increase or decrease<<

The real issue is that of the self-fulfilling prophecy.

Let's say that there is a rumour in the "physical" market that the Facebook's prospectus contained some dodgy numbers. A few pension funds get nervous, and sell their holdings into the market. This movement is picked up by a hedge-fund's computer, that initiates some put options to sell the stock short, which are picked up by another institution's computer that sells their holdings... and so on. Because Facebook is big enough to influence the Index as a whole, before you know it, a whole bunch of institutions start betting the index will fall... which it duly does, and everyone starts to panic.

The next day, the rumours turn out to be false, and everything goes back to normal. The shares are bought back, the put options expire, the index recovers...

Each individual transaction was designed to protect someone's interests. The pension fund didn't want a fall of Facebook shares to affect its client's retirement lifestyle. The hedge funds were looking to make some money for its own investors, and the "betting" on the movements of the Index as a whole was also an insurance policy, adopted by the pension funds again, as a perfectly legitimate risk-minimization strategy.

Hedging is an activity that you would insist that your own pension fund uses, in order to protect your pension. Without it, you are merely gambling.

>>Are you sure the number quoted was 647.8 trillion rather than 64.78 trillion? Just imagine the compounding interest on 647.8 trillion; and or, who would pay it!<<

Yep. $647.8 trillion.

But since it is only a notional number, and the money doesn't exist in anyone's bank account - or even the sum total of everyone's bank accounts - you won't be able to get any interest on it I'm afraid.