Nothing new per se, but the charts are interesting. Also probably means that any moves up or down will quickly become rather exaggerated once computers catch up to discresionary traders ... which also probably explains some of the completely INSANE daily price moves on single stocks in recent weeks/months, too. (It was annoying but bearable - if not predictable at times - when trading before/during the GFC when algos were first taking off, but nowdays the dial is turned to 15 on these things!)
Computer-guided traders haven’t been this bullish on stocks compared to their human counterparts since early 2020, before the depths of the Covid pandemic, according to Parag Thatte, a strategist at Deutsche Bank AG.
The two groups look at different cues to form their opinions, so it’s not a shock that they see the market differently. While computer-driven fast-money quants use systematic strategies based on momentum and volatility signals, discretionary money managers are individuals looking at economic and earnings trends to guide their moves.
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I recently bought TRTY which diversifies broadly across global equity and fixed income markets. Claims to have 35% in a momentum based strategy. Ummm … call me Dufus!
Fund lost only 3.3% in 2022. Hasn’t made much lately either. Somehow, M* has seen fit to elevate it to “gold” status, despite their uneasiness with Cambria. Am well diversified, so the actual trend-following component works out to .35% X 14% / or about 5% of my portfolio.
Worth noting that trend-following works in down-markets also. So we may indeed see the markets “turn on a dime” one of these days. Is it possible that TF was an element in the Liberation Day(s) market fiasco? Perhaps a larger player than we assumed at the time?
Remember October 1987?
A word from Franklin: “Experience keeps a dear school. But a fool will learn in no other.”