KOSS

Quants and High-Frequency Trading the Real Cause of the GameStop Frenzy?

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  Image: The cause of the GameStop trading frenzy remains largely unclassified as it appears to us that quant and high-frequency trading played a much bigger role in the market disruption than what is being reported. By Brian Nelson, CFA Third-quarter 2021 earnings season has been thrust upon a marketplace that has been preoccupied with talk over supply chain disruptions, increasing inflation expectations, unfortunate distractions from trading activity by key officials at the Fed, and Chinese regulatory unease. We think these items had largely been the key reasons for the pullback in the markets in recent weeks. However, with news that President Biden seems to continue to support Jerome Powell as Fed Chief (we’ll know for sure in February) and … Read more

ALERT: Bull Raids, Short Squeezes and Highly Unusual Market Activity

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We are putting short investors on high alert! By Brian Nelson, CFA In late 2018, Valuentum published Value Trap, a book that warned to all that would heed its warning that a collapse in the traditional quant value factor was coming and that excessive volatility in the markets caused by price-agnostic trading–or those that aren’t paying attention to fair value estimate calculations–would only build and build to eventually reach extreme and irrational levels. The book, while hugely successful winning award after award, was largely ignored by the media, despite our best efforts to get the word out. Now, the chickens are coming home to roost. Image Shown: The book Value Trap warned about the impending collapse of the value factor, … Read more