Stock markets’ nearly 20% tumble since October can at least partially be blamed on the rise of algor

Altavest_Erik

Altavest_Erik

“If you can’t explain why the market is moving, you should be suspicious of the moves the market makes,” Sløk said, adding that the rise of algorithmic trading and rules-based investment strategies like risk-parity investment funds can likely take the blame for the outsized moves in the market we’ve seen in recent weeks.


These strategies, he argues, are causing momentum to be the most important force in markets. Investors, or their computers, “are selling because stocks are falling, not because of changes to the fundamentals,” he said

https://www.marketwatch.com/story/a...-2019s-top-risks-says-torsten-slok-2018-12-21
 
THe bull market from 2009 to 2018 can also be attributed to the algos. When market rises, algos are good. When market falls, algos are bad. So, are they good or bad?
 
helpme_please said:
THe bull market from 2009 to 2018 can also be attributed to the algos. When market rises, algos are good. When market falls, algos are bad. So, are they good or bad?
More...

Your quote is ill-conceived in that it implies that the market rose and is now falling because of algos. The truth is a little more nuanced: the market's rise was artificially boosted by algos on the upside beyond what the fundamentals would reasonably suggest and conversely the market's fall is now exacerbated beyond what the fundas call for.

Without the algos, the market would have risen, but not as much. And without them, the market would have fallen but not as sharply/quickly and especially not so detached from economic reality. That is why Stan Druckenmiller said that the market/sectors have lost much of their predictive power: in short, it's because the algos are distorting price signals that would have otherwise been helpful.

So what it comes down to is this: do you know how to read the chart? Because if you don't, you're in BIG trouble. Take Steve Cohen for example, he hired all the big quant honchos a while back to get a lead on all manner of consumer data. But what does it matter that you got all this data telling (based on satellite parking lot pics, credit card data among other bird entrails) you in late November/early December that retail sales is going to be up huge, +5.1% over last year? What did it matter? To go long retail stocks in late Nov/early Dec and then get stopped out immediately at -3 or -5%? Cohen just fired his head quant guy...

Rise of the Algors is it. We've seen this movie before and spoiler alert: the Algors end up eating each other alive...
 
Maverick1 said:
Your quote is ill-conceived in that it implies that the market rose and is now falling because of algos. The truth is a little more nuanced: the market's rise was artificially boosted by algos on the upside beyond what the fundamentals would reasonably suggest and conversely the market's fall is now exacerbated beyond what the fundas call for.

Without the algos, the market would have risen, but not as much. And without them, the market would have fallen but not as sharply/quickly and especially not so detached from economic reality. That is why Stan Druckenmiller said that the market/sectors have lost much of their predictive power: in short, it's because the algos are distorting price signals that would have otherwise been helpful.

So what it comes down to is this: do you know how to read the chart? Because if you don't, you're in BIG trouble. Take Steve Cohen for example, he hired all the big quant honchos a while back to get a lead on all manner of consumer data. But what does it matter that you got all this data telling (based on satellite parking lot pics, credit card data among other bird entrails) you in late November/early December that retail sales is going to be up huge, +5.1% over last year? What did it matter? To go long retail stocks in late Nov/early Dec and then get stopped out immediately at -3 or -5%? Cohen just fired his head quant guy...

Rise of the Algors is it. We've seen this movie before and spoiler alert: the Algors end up eating each other alive...
More...

I can't tell if you are being serious or having fun lol
 
Thanks for your insights.

I don't quite understand why Steve Cohen relied on the quants when he started off in tape/chart reading. He can rely on himself and I'm sure he can read the chart better than most people.

Maverick1 said:
Your quote is ill-conceived in that it implies that the market rose and is now falling because of algos. The truth is a little more nuanced: the market's rise was artificially boosted by algos on the upside beyond what the fundamentals would reasonably suggest and conversely the market's fall is now exacerbated beyond what the fundas call for.

Without the algos, the market would have risen, but not as much. And without them, the market would have fallen but not as sharply/quickly and especially not so detached from economic reality. That is why Stan Druckenmiller said that the market/sectors have lost much of their predictive power: in short, it's because the algos are distorting price signals that would have otherwise been helpful.

So what it comes down to is this: do you know how to read the chart? Because if you don't, you're in BIG trouble. Take Steve Cohen for example, he hired all the big quant honchos a while back to get a lead on all manner of consumer data. But what does it matter that you got all this data telling (based on satellite parking lot pics, credit card data among other bird entrails) you in late November/early December that retail sales is going to be up huge, +5.1% over last year? What did it matter? To go long retail stocks in late Nov/early Dec and then get stopped out immediately at -3 or -5%? Cohen just fired his head quant guy...

Rise of the Algors is it. We've seen this movie before and spoiler alert: the Algors end up eating each other alive...
More...
 
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