Another dire prediction!

[HFWR]

JP Morgan's top quant warns next crisis to have flash crashes and social unrest not seen in 50 yearshttps://www.cnbc.com/2018/09/04/jpmorgan-says-next-crisis-will-feature-flash-crashes-and-social-unrest.html

Sudden, severe stock sell-offs sparked by lightning-fast machines. Unprecedented actions by central banks to shore up asset prices. Social unrest not seen in the U.S. in half a century.

That's how J.P. Morgan Chase's head quant, Marko Kolanovic, envisions the next financial crisis. The forces that have transformed markets in the last decade, namely the rise of computerized trading and passive investing, are setting up conditions for potentially violent moves once the current bull market ends, according to a report from Kolanovic sent to the bank's clients on Tuesday..

 

[joeea]

Ooh social unrest - that sounds bad.
I need all the rest I can get these days.

 

[braumeister]

Thanks for the heads up. I'll take it under advisement.

 

[NW-Bound]

... In his report, Kolanovic explains how the major market trends that occurred after the 2008 crisis exacerbate selling during moments of panic. The massive shift from active to passive managed investments — he estimates that $2 trillion has moved that way in the past decade — has removed a pool of buyers who can swoop in if valuations tumble, he wrote.

The rise of automated trading strategies is also a factor because many quant hedge funds are programmed to automatically sell into weakness, he said. Together, index and quant funds now make up as much as two-thirds of assets under management globally, and 90 percent of daily trading comes from those or similar strategies, he wrote...

I guess having a big pile of cash and a strong stomach to buy may work out OK, if you trade against those who buy high/sell low using computers?

Or is the market going to be an L shape? Buy low, and it stays low or goes lower?

 

[Beldar]

Never heard the term "quant" before, thanks.



_B

 

[ERD50]

Ooh social unrest - that sounds bad.
I need all the rest I can get these days.

So the solution is to sleep with someone you like, socially? Social rest should counter-act social unrest, right?

-ERD50

 

[Red Badger]

I had a '69 Dodge truck with a 440 engine back in the day. It beat many (but not all) a Mustang, Camaro, Javelin, etc. It was a lightning fast machine, but I'm not aware that it ever caused a market sell off. Any big downturns in 75-76? If so, my apologies.

 

[zedd]

So coming from a quant :
leveraged synthetic collateralized debt obligation - GOOD
passive investing, an investment strategy to maximize returns by minimizing buying and selling - BAD

Got it