Quant meltdown danger growing
I think I said it before about quant robots:
“This is made worse by the fact that the increase in algorithmic trading means that a small number of firms may account for a large proportion of trading volume. When this happens quant-driven hedge funds are their own worst enemies — it’s the market equivalent of the Tragedy of the Commons…….
With this in mind, it shouldn’t come as a surprise that before the market meltdown there were concerns about crowded trades and stern warnings that it was just a matter of time before the system went to hell in a hand basket.”
Robotic selling by quantitative investment funds tuned to volatility and price trends contributed to last month’s losses in U.S. stocks and is only about halfway completed, according to a JPMorgan Chase & Co. strategist.
While selling by the first is “largely out of the way,” trend followers and risk-parity users have more to do, Mr. Kolanovic wrote: as much as $60-billion for the former and the rest of the forecast related to the latter.
“We expect elevated volatility and downside price risk to persist,” Mr. Kolanovic wrote. “In our view, the risk/reward for equity investors remains in favor of waiting, rather than being fully invested until there is more clarity from macro data and central banks.”
These articles are listed here:
These articles highlight my point remember. Check out my previous article at:
Trend following quant robots overdone
Have you seen how I was able to push Redis? I will say it was a close one
Lesson in Pushing Redis to its limits
I now post my TRADING ALERTS
into my personal FACEBOOK ACCOUNT
. Don't worry as I don't post stupid cat videos or what I eat!