Mark Cuban: trading is shifting to a macro-view.
Over just the past 5 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game that I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.”
Personally, I’ve blamed the phenomenon of micro-second trading for the death of the buy and hold investment strategy, and seen traders make billions short term while the world slowly erodes just beyond their vision, but what do I know? I’m no trader. But I do know a lot of traders, and some of them display no knowledge of history, economics, philosophy (it’s still relevant, long term) or current events beyond what flashes across their Bloomberg screens. Hell, they couldn’t even name the vice-president of Iceland! (joke).
Will knowledge regain its role in determining who succeeds and who fails on Wall Street? I’m skeptical, because regardless of what they may know about events happening beyond their trading desks, these people are super-smart and fiercely determined to win – they’ll figure out a way to (continue to) make a buck on ignorance.