My November newsletter was aptly name the Rise of the Machines.
And last Wednesday was Early Warning.
In essence I wrote the new algorithmic trading and ETF will wreak havoc once they decide to attack.
And they decided provoking immense and rapid losses.
From JP Morgan quant desk (today, not over 3 months ago)
<<JPMorgan’s quant strategist Kolanovic said spike in market volatility will probably trigger some $100B of outflows from US stocks by funds following so-called systemic approaches. Said selling from trend-following strategies contributed to Monday afternoon’s selloff on Wall Street and unwinding of positions betting on continued low volatility — known as index-option gamma hedging, short-volatility trades and volatility-targeting strategies — were also behind the outflows. However, noted recent selloff will likely draw fundamental investors and even trigger pension fund rebalances. ” In a separate article, Bloomberg discussed how momentum-chasing quants were actually ready for the sell-off with Commodity Trend Advisers’ (CTAs) reducing their equity exposure from a three-year peak on 24-Jan while raising their commodity exposure to a six-year high.>>
Moreover I must add that it is clear that ETF (exchange Traded Fund) are selling under robotic advice parameter.
For my clients only, I also explained how to fight the machines. Very similar to the movie, indeed – the future of stock market war is here.
investorpolitico 