Quant Funds & High Frequency Trading

Re: Quant funds & high frequency trading - are they the reason that there issome perception that the market takes an appearance of "climbing smooth hills"(etfs). I heard that this presented a problem for some traders. It seems to meto be the opposite (nice and smooth, some etfs). I wonder if this would at somepoint smooth out the curves on underlying stocks and might be a reason that somecomment that sometimes earnings announcements, etc. seem to get ignored in termsof market action around them, e.g. the conflict between quant fund patternperformance and fundamentally oriented models, etc. My question: for those ofyou that are familiar with the quant fund domain, is it your opinion that the"smooth" price chart forms will continue (up or down). Or, do you think thatwith a down turn (future) that some of the inverse ETFs might smoothly rise. Itseems like 2008 was an extreme situation. I was wondering if a smoother bearmarket (future) would be possible with the new funds/etfs, etc. (wishfulthinking), e.g. rhythmic, etc.Asked by ksh 7 hours ago - 1 answers - 18 viewshttp://www.stockpickr.com/members/view/answers/70600/===============Response:A valid point! And the same can also be said for the timely creation and explosion inimplementation of the ETF and ETN markets. I always joked...that we will somedaysoon see an ETF comprised of holdings of other ETF's...lol...That by defaultbuying needed to underlie em...added a much needed liquidity to a market lastyear...that at times would've had the liquidity/volume of tumbleweeds blowingdown the street!...ie ghost town!....With regards to quant funds usingalgorithmic quantitative formulas to trade and stimulate the markets timely andwith agenda. I am always reminded or should say erily reminiscent of Long TermCapital Management LTCM /Robert C. Merton and Myron Scholes who id andultimately failed at same thing. Because no formula....quantitative or not cancalculate/equate nor assign true metric to the "H" or "X" Factor. That being theHERD and the HUMAN emotion or lack there of they bring with it or not.LTCM...by the way...received a New York Fed brokered bail out and they were a hedge fund Pete'ssake. Also a little different is the enhanced real time live time world we live in...receive trading info in....and REACT in!.... more quicker today than ever.....It has increased exponentially and aint stopping anytime soon. That is also how they bigger trading houses are screwing the little guy. In today's digital time micro second time and back to the implementation of decimal system trading and not fractional. You don have t be in front of trades by much....just in front period They always find a way. And two words I hardly ever use are NEVER and ALWAYS......just to definite for my liking in today's world!I also recommend reading with regards to above : Extraordinary Popular Delusions and the Madness of Crowds.... is a popular history of popular folly ....by Charles MackayAnswered by πsteve goff

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  • From : Mike Garcia... Steve, there actually is a fund of fund ETF. I don't remember the ticker, but I think the manager was on CNBC this week talking about it. Sold my AAPL long at the top. Went long BG.

    That is "example to"... and not "exception to" that proves the proverbial FACT... so to speak. ETF's are the digital do it yourself mutual funds of today. The Case for creation was to capitalize on the obsolescence of the conventual broker who was replaced by technology...ie home computing and leveling of the playing field for receiving stock related news and company events. And yes, these ETF's are just like CDO's..MDS's..CDS's...and every other ('s) ya can drum up for liquidity's sake...large pools of CASH....that can be ultra leveraged up to the eyeballs to make for nice bubble once again.To be taking full advantage of by the sharks (ME) when the olllllllllllll buy high and sell low of the general/average investor mind or mentality that has always been the proven case over time.

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