Black market humor

10 Comments

  1. Gianfranco Pedron said:

    “My take: We live at the mercy of the algorithms.”

    Things could be worse, we might otherwise be living at the mercy of humans.

    2
    February 9, 2018
    • Bob Van Valzah said:

      Having worked on algorithmic trading myself, I’d say that stock market values are now, and always have been, at the mercy of humans. An algorithm may compute a theoretical value for a stock, just as a human (trader or analysist) may think that the market overvalues or undervalues a stock. But the only way I know to move the market to match a theoretical value or gut feeling is is to spend capital buying shares or selling borrowed shares. Only a foolish human would give an algorithm a blank check to move the markets to match its expectation. Far more likely, algorithms preserve their capital, learn from their mistaken theoretical values, and let the price be set by humans.

      0
      February 9, 2018
  2. John Kirk said:

    Resistance is futile. I, for one, welcome our new algorithm overlords.

    2
    February 9, 2018
  3. Fred Stein said:

    OMG: AAPL is only up 20% from a year ago.

    OMG: At today’s price Apple can buy 21% of shares outstanding.

    1
    February 9, 2018
    • Jonathan Mackenzie said:

      Not from me they can’t 😉

      2
      February 9, 2018
  4. Robert Paul Leitao said:

    Over time algorithms have virtually no impact on the market. They might move prices up and down more quickly during brief periods of high volatility. For long-term investors this is of no consequence. For highly leveraged market “gamblers” (for whom I have little sympathy), algorithms are one more risk that needs to be factored into their wagers.

    1
    February 10, 2018
    • Mark Visnic said:

      I agree with you Robert, but for one significant qualifier: For long term investors, the rapid price movement in volatile periods can be of great (favorable) consequence. I frequently use short-term pricing inefficiencies of the order we saw this week with AAPL at 150-155 to add.

      Corrections that took weeks and months to play out when men in coats, holding up their hands and shouting, stood on trading floors now are compressed to minutes and days. That compression produces more fear that causes deeper inefficiencies. I like that.

      1
      February 10, 2018
      • Robert Paul Leitao said:

        Mark:

        I agree with you. Although the recent pullback has been unpleasant, it’s created an excellent buying opportunity for long-term investors.

        With December quarter results and March quarter guidance released, in my view there’s no better time to acquire shares of Apple than now. During the recent conference call with analysts Tim Cook couldn’t have been more clear about management’s vision for the company and business strategy long-term.

        In late April Apple will announce updates to the company’s capital return program. In the meantime, at the end of the December quarter there was $34 billion remaining under the current share repurchase plan. I’m sure management sees today’s share price as an unusual buying opportunity as well.

        1
        February 10, 2018

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