“It’s really happened, the robots have taken over investing/trading” by Graham Murray
The World of technology has changed. It’s ever evolving cycle has now in fact changed the World. I, for one try to embrace the advances which happen at an alarming rate. In my 50’s, the only disappointments I hold are the fact we are all not flying around like the Jetson’s, and 3D glasses at the movies still suck. It is imperative that we all try to keep up with these changes to remain competitive, and valid in our existence. Jobs, careers, and Industries have been streamlined and even wiped out, as we make way for the modern World.
The technological revolution in the Capital Markets has been devastating. Much like automated tellers and checkout lanes, the roles of an Equity Trader have been surpassed by the abilities of intelligent mathematicians and their aptitude to apply their skills to take advantage of Markets with lightning quick speed. I use this only as an example because I am, or perhaps was an Equity Trader. Flash crashes are real-keep that in mind!
The dependence of algorithmic programming on Trading desks has, and continues to reach ultimate capacity. To give credit where due, the individuals who create the programs have worked hard to achieve their goals, and in some ways have led to liquidity. Unfortunately, the “auto-pilot” use of program trading has brought us to an extremely unfair playing field for other investors.
As I write this, all Major Markets have been reaching record highs on a daily basis. This phenomenon is all taking place as a new President-elect builds his administration. Markets used to act in a predictive manner to uncertainty. If this environment is not uncertain, please explain hysteria en masse in the Streets. The differences between Main Street and Wall Street have now widened to what seems like a path beyond repair.
Are the United States investing at an excited state? Judging by the rise in the Markets, they are. Is this epic run fueled by Main Street Investors, so enthralled by the prospects of an economic blitz? Probably not! Not at all. I am not buying into this, and unless you have a program to parallel the Indices, you are probably not either. So who is? Some Managed Funds must participate alongside this type of move, contrary to what their individual belief may be. It is their mandate-they must invest! The robots are leaning on the buy button. For now, that is their mandate.
Please don’t assume this piece is written to whine about the current status of the Markets. It’s actually a feel-good situation. I do not have a biased short position, nor am I trying to persuade any opinions. After playing the Markets for 30+ years, I have never witnessed a like move, nor have I ever been more confused by it. Obviously there are many factors at play here. My sincere feeling is that that the robots and programs have brought us to such lofty heights that it only makes me want to solidify my seat before the music stops in this game of financial musical chairs. I don’t intend on holding the bag when the robots stop buying. They are now firmly in control. Thank you, Graham Murray, British Columbia, Canada……Graham is a professional market maker and trader for over thirty years.
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