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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (84017)	7/22/2007 6:37:06 AM
From: Real Man	Read Replies (1) \| Respond to of 110194

Humans program the computers. These are not "smart", they are black boxes reacting to prices, which adds to the disconnect developing between prices and reality, IMHO. There is no ideal program, cause only a finite amount of money is for grabs. 1) Hedge funds bubble, many use automatic trading black boxes, based on some TA models, which trade in both directions. The result? Less volativity, less profits for each one of them, IMHO. That's what we have seen so far. 2) A different type of programs, LTCM-like, which is based on an assumption that the market is a random walk. Those robots have been winning the game for the past 5 years, more dough to them. The proverbial picking up nickels in front of the steamroller. What is the event that will cut the profits for this one? The steamroller. Is it coming? I believe so. When? Who knows. Why? Cause you can't get something out of nothing. Once the other side of the trade becomes broke, the game is over, stuff collapses under its own weight. Can you make money on "random walk"? You sure can, and tons of it, but I just think that trade is very crowded right now.