By Irene Aldridge While recent press in the U.S. (erroneously) reported the near-death of HFTs due to rising costs of fast communication and other new barriers to entry and survival and the industry, the press across the pond believes that HFTs are still taking over the U.S. markets and blames the HFTs for all the possible wrongs and evils in today’s financial markets. To wit, an article from March 17, 2017 in none other than the venerable Financial Times, held HFTs responsible for flash crashes, the disappearance of trading opportunities relating to post-earnings announcements, and the dominance of “shorter and faster trends” that preclude long-termRead More →

A recent Vanity Fair article by Bess Levin reported that when Steve Cohen, the veteran of the financial markets, reopens his hedge fund in January 2018, it will be a leader in automation.  According to Bloomberg, the fund is pursuing a project to automate trading “using analyst recommendations as an input, the effort involves examining the DNA of trades: the size of positions; the level of risk and leverage.” This is one of the latest innovations in Steve Cohen’s world, a fund manager whose previous shop, SAC in Connecticut, was one of the industry’s top performers. What enables Mr. Cohen to introduce scores of computers andRead More →

By Irene Aldridge Twenty years ago, television told women to buy extraordinary quantities of shoes. There was the holy grail of happiness, according to the absolute hit “Sex in the City”. For today’s generation of women “Sex and the City” is out, and a new trend is in, marching in protest. The marching is against the dominant male stereotype, but also explicitly asking for the government (another patriarchal authority?) to provide certain services, higher wages, better working conditions, and the like. How about taking charge of our own future in a constructive meaningful way? An interesting study is the Big Data Finance conference at NewRead More →

By Irene Aldridge “The Trump effect” has captured news headlines. The unprecedented rise in the U.S. stock markets following the November 8, 2016, election has taken many investors by surprise. Some portfolio managers and commentators question how long it will last. Others proclaim it a bubble that has just hit a natural ceiling for stock prices. Still others call it a “suckers’ rally”, a stock rally with little fundamental information to back up the price movements. Even the legendary Carl Icahn himself proclaimed on December 10, 2016, that “The Trump rally in stocks may have gone too far” (http://www.businessinsider.com/carl-icahn-trump-rally-2016-12). Of course, the market has reachedRead More →

By Irene Aldridge President Trump has announced sweeping deregulation and the financial services industry rejoiced. While I am personally a strong proponent of free, deregulated markets, one of the proposed deregulation measures may simply be outdated, even before the underlying regulatory measure is still to be enacted. Of course, I am talking about the Department of Labor’s (DOL) Fiduciary Rule. The rule, scheduled to go into effect beginning April 10, 2017, will require all investment professionals who work with individuals’ retirements accounts to legally uphold the retiree’s interests ahead of their own. It may come as a surprise to some readers, but at present, financialRead More →

An Analysis of Institutional Activity in October 2016 Adapted from Real-Time Risk: What Investors Should Know About FinTech, High-Frequency Trading and Flash Crashes (forthcoming, Wiley, NJ). Pre-order on Amazon.com. “Money talks, bull*%$# walks”, says a classic Wall Street proverb. The expression has a lot of merit: nothing reflects one’s beliefs more than a financial bet on the markets. The larger is the bet, the stronger is the belief. AbleMarkets research indicates that institutional money sold off when negative news affected Donald Trump in October 2016, but when Hillary Clinton’s negative news emerged later in the same month, there was very little reaction from institutional money.Read More →

An interview with Prof. Marco Avellaneda, Professor of Mathematical Finance at New York University Courant Institute of Mathematical Sciences, as told to Irene Aldridge. With 2016 registering levels of volatility in the U.S. markets not seen for a long period of time, we sat down with the volatility expert, Prof. Marco Avellaneda of NYU Courant Institute for Mathematical Sciences to discuss what is underpinning developments in the markets. Prof. Marco Avellaneda is an internationally recognized figure in the field of computational volatility modeling. Some of his latest research will be on display at the Big Data Finance Conference to take place at New York UniversityRead More →

If you live in Asia, you will hear this refrain about the Chinese stock market again and again: that it is the government casino. The way the casino works is through guanxi, a set of connections to the higher authority and a network of favors, if not bribes. According to locals, Guanxi permeates pretty much every aspect of the Chinese society. And the Chinese stock market, in particular, has proven to be beholden to Guanxi: those with connections and, as a result, in the know about upcoming government moves make a ton of money. The regular folks are pure gamblers, placing their money on theRead More →