Trader Warns Algos Have "Fooled Us Into Thinking Facts, Details Don't Matter"

Passive investing is valuable, big and growing. It isn’t going away. And sometimes funds do indeed have positions because they have no choice. Actually scanning the offering circular is worthwhile. But we’ve gone way overboard by seeing the entire investing universe as behemoth indexes moving their component parts around in lock-step. Ask me where stocks are going and I have a strong opinion. Ask about an individual company’s shares and I haven’t a clue. I wonder how many people with ruble or lira longs saw the carry as “compelling” and jumped in having asked, “What do you think about emerging markets?”

Being right on where the market is going shouldn’t be a burden placed on the shoulders of economists. They should be expected to be smart. And able to lay out the facts clearly. Traders are the ones who should have to figure out what it all translates into. CFTC data is something an economist shouldn’t be concerned with. And traders have a right to expect the economist to know how the numbers, big and small, are trending. It may be an unrealistic economic proposition given current constraints but the lack of distinction of responsibilities isn’t a step in the right direction...

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