LEONID BERSHIDSKY: The stock market? It's a lot like bitcoin
'Thanks to the algorithmic shift, the stock market has become more like the one in bitcoin, also driven largely by algorithmic trading'
Just as President Donald Trump had nothing to do with the stock market's rise, despite the almost 60 boastful tweets he has posted about it since being elected, he has nothing to do with the recent stock crash. Instead, praise the machines -- and blame them, too. Last year, Marko Kolanovic, global head of quantitative and derivative research at JPMorgan, estimated that stock pickers -- those who trade on stock-specific fundamentals -- account for just 10 percent of today's stock market trading volumes. Some 60 percent of trading -- twice the share of 10 years ago -- is "passive and quantitative investing." Nearly half is high-frequency trading by algorithms; though its share is down from the 2009 peak, it's responsible for pretty much all of the stock market's volume gains this century. The industry and its regulators have accepted this because the algorithms have been shown to improve market liquidity as they search for speculative opportunities. It's highly likely, however, that t...
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