Tuesday, November 17, 2015

"The market is tough, but we're fine"

Following up briefly on yesterday's market comment, it is interesting that investors who are interviewed on CNBC or Bloomberg almost all forecast a potential poor market, say it's been tough this year, but "we're fine".  Maybe only people who have done well dare to come on the programs, but that's unlikely.  Is it possible that all investment managers who come on the shows are there to tout their product, an opportunity that they need to take.  They can find a way to look at the best of what they have to be positive about and at the same time not look naive.

The other thought here is that this has possibly been a market in which individual investors have an advantage over institutional investors.  Individual investors, or perhaps more specifically retail investors, have limited ability to be as networked as hedge fund managers or traditional institutional investors, but they can do their own research and rely on their experience.  What they have that is a big advantage is liquidity.  They can move in and out of the market unseen and without impacting the price except in the smallest of stocks.  They have no one to answer to but themselves and maybe their family or a few friends.  Hmm, that's important but not job threatening.

Recent performance of hedge funds even suggests that being networked is not necessarily a positive. In the old days before Reg FD and more regulatory oversight, being networked could mean trading insider information with the network and coordinated spreading of rumors to move a stock one way or another.  This was mostly confined to some hedge funds and hedge fund wannabes.  The now departed SAC was the leader of this behavior.  Of course, no one would be doing that now, we wish. Today though, as more hedge funds just play follow the leader, they may not know where they are headed.


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