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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (91058)	3/24/2017 10:40:46 PM
From: Underexposed	Respond to of 218589

That may be true in the USA but medicare in Canada has an 82% approval rating, so I don't agree all governments are as bad as you claim.... France has a stellar universal healthcare system I was there...I saw it , England as well has had such a system too. from what I've seen, anything the federal government does is a disaster

To: GROUND ZERO™ who wrote (91058)	3/25/2017 9:48:11 AM
From: GoodGord	4 Recommendations Recommended By GROUND ZERO™ Katelew marcher mary-ally-smith Read Replies (1) \| Respond to of 218589

Machines and markets: 5 areas to watch ft.com The rise of algo trading and passive investing is bringing new patterns and pitfalls On Wall Street MARCH 17, 2017 by: Robin Wigglesworth In 1932 newspapers across the US carried a lurid story of a robot called Alpha suddenly coming to life and shooting his creator, the British inventor Harry May. The story captured the mounting fears of the dawning mechanical age, and how technology could turn against its makers. Of course, the story was the result of a febrile imagination and the excitability of journalists. In reality, the inventor had simply wanted to show off his contraption shooting a gun. It was accidentally discharged while being placed in the innocent Alpha’s grip, and only burnt Mr May’s hand. Yet similar fears can be seen in today’s finance industry. Many investors are concerned that the mounting dominance of computers is not only transforming markets but making them more unpredictable, chaotic and ultimately dangerous. That may be overdone, but here are just some of the myriad ways our new machine era is manifesting itself. 1. Beware the ramp The US stock market has a tendency to move strongly and on great volumes in the last half-hour of every trading day, which can often overpower or exacerbate swings and dips. The phenomenon has been particularly stark this year, with 37 per cent of New York Stock Exchange trading volumes now happening in the last 30 minutes of the session, according to JPMorgan. The chief culprit is the swelling exchange-traded fund industry. Despite their popularity, ETFs are essentially investment algorithms of varying degrees of complexity, and typically automatically rebalance their holdings at the end of the day. As they have grown in importance — the amount invested in US ETFs reached a record high of $2.8tn at the end of February — so has the last half-hour of the trading day. 2. Odd correlations ETFs are causing some oddities inside the US stock market. First-generation products that track the S&P 500 are fairly blunt tools for today’s investors, with many turning to sectoral ETFs or next-generation “smart beta” ETFs that surf certain equity characteristics, such as volatility or value. This can lead to some seemingly inexplicable movements. For example, a boring utility stock might suddenly become very exciting if “low-volatility” ETFs that invest in staid companies fall out of favour. Equities can suffer particular jarring, mysterious moves at the end of a month when various factor-based quantitative strategies rebalance Related article Goldman Sachs’ lessons from the ‘quant quake’ Nearly 10 years after its nadir, quantitative investing is again the hot trend in finance 3. Flash crashes Sudden, inexplicable and sharp movements are becoming more common. The 2010 “flash crash” in US equities is the most well-known example, but Christopher Giancarlo, the nominee to head the Commodity Futures Trading Commission, said this week that there had been at least 12 major flash crashes and “several dozen” minor ones since the introduction of the Dodd-Frank batch of regulations. This is a natural result of the explosion of hyperfast, computer-powered trading outfits, which now account for about half of all US equity trading, according to Credit Suisse, which noted: “We’re all high-frequency traders now.” This has battered down trading costs for bigger stocks, but worsened them for small ones, and sometimes trading algorithms can go haywire. 4. Evaporating earnings drift Markets react more quickly to news than ever before, wrongfooting even the swiftest human traders. While on a micro-market level this is caused by HFTs, it is also apparent in the evaporation of “earnings drift”, which is a broader phenomenon. Typically, when a company announces its earnings the stock would, after the first knee-jerk reaction, float higher and lower as fund managers explored the results in more depth over several days. But during the past decade this earnings drift has now pretty much disappeared, notes JPMorgan’s chief quant, Marko Kolanovic. 5. Turnround times Sell-offs appear more severe but are reversing more quickly than in the past, with markets recovering their footing after shocks such as Brexit, the US election and the Italian referendum within days or even hours. Mr Kolanovic estimates that these turning points are now coming at the fastest pace in three decades, driven by automated trading strategies that rapidly feed off news headlines. The rising popularity of momentum-surfing hedge funds is also contributing to “shorter and faster trends”, as strategies react quicker and lead to both over and undershooting from fundamentally-driven levels. Of course, fears over the quantitative era are nothing new, and partly irrational. Traders did all sorts of dumb things long before computers came along, and a 2014 University of Pennsylvania study showed how test subjects lost faith in algorithmic predictions far more readily than they did human prognosticators, even after being shown that the computer’s predictions were far superior. They coined this illogical hatred “algorithm aversion”. But the fact that quantitative tools are proliferating far beyond computer-powered hedge funds — and reshaping markets in the process — is undeniable. And for better and worse, markets will evolve in tandem with their rise.