Can a Machine Sniff the Market?

By Lloyd Graff

I am not a big stock trader, but I have a portfolio of stocks in my IRA, which is a backstop for the volatility of the used machinery business.

Or at least I used to think so.

I know stocks go up and down. I know that when stocks go up a lot, I break up my day to check them. It is usually a reliable sell signal. When they are trending down and I don’t want to look, it is a reliable buy signal. Of course, being a sheep like most people, I rarely do that. I am in the market for the long term (at 74?), so I generally follow the passive approach of buying a Vanguard Fund and sit and hold.

Lately, stocks have been a yo-yo on a long string — a thousand points up or a thousand down on the Dow almost every day. The trained seals on Bloomberg and CNBC and their lackeys from the big investment funds parade onto the sets to explain why the markets are headed up or down. It’s becoming ever clearer that they are even stupider than I am, or they are being paid to deliberately babble impenetrable nonsense.

The fact is that most hedge funds lost money in 2018. Some funds are shutting down. It is pretty simple to see what’s going on. Machines have taken over the stock market. Computerized trading now comprises 85% of the daily volume, and machines are ruthless, headless sheepherders. They sniff a trend (can a machine sniff?), and in a nanosecond they sell or buy a sheaf of stocks, at which point all the sheep follow them.

To push the metaphor to the ridiculous, the sheep are on a teeter-totter and Vanguard Funds are on a yo-yo. Algorithms rule and investors get more nauseous with each bounce.

The babblers try to rationalize the see-saw ride, but being rational about the irrational is folly. They cannot go on TV and admit that the great old game of investing has been usurped by algorithms and artificial intelligence which have institutionalized stupidity on Wall Street.

Folks, this is a bad trend, because rational human beings are going to sell their shares and put them into gold or Bitcoins or U.S. Treasuries, and a traditional trove of value, publicly held companies, will shrink in value. This would be a disaster for the economy because going public is a good way for small companies to attract capital for further growth.

However, there is a way out of this computerized trading mess — force the computers to wait. Let them trade every 15 minutes. If they violate the rules call a personal foul on them. Five fouls and they are out of the game for a week or a month. Hire some good referees and pay them a million bucks or two to make sure the game goes back to human beings. This is what the casinos in Vegas would do if machines were screwing up their businesses.

While we are at it we can straighten out the destruction of privacy by Facebook, and the obliteration of small retail stores by Amazon.

Let 2019 be the year people strike back at the tyranny of technology. The new password is HUMANSWINONE.

Question: Which investments do you put money in?

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3 thoughts on “Can a Machine Sniff the Market?

  1. Misterchipster

    I see your line of reasoning but governmental intervention comes at a price. How much are you willing to give up to these “regulators” or “regulations”? Private enterprise has always been better at curing problems and in today’s world faster also. Why not join in with things as the are now rather than how they were before? This is the new norm and it will have it’s own set of pitfalls just like the the old set. I believe is is better to adapt and thrive than to wish for the past. At 74 I see your concern but I still believe that Warren Buffet’s view of the market is applicable “buy quality and hold” It’s when your investment window is too short that you are most likely to lose. That requires a lower yielding investment with more stability.


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