A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Allen, Re: Robot Trading vs Smart (AIM) Investing..........

This article by Jim Cramer about his view of the markets echos my own.

https://www.cnbc.com/2018/12/04/cramer-this-sell-off-was-caused-by-a-computer-driven-footrace.html

It is my belief the "Smart Money" uses its own trading programs to take advantage of the robots' actions. Yesterday's sell-off and Monday's rally were both driven by computer programs making very short term decisions. A longer term investment model, such as the one I've used since January of 1988 (created in 1977 by Robert Lichello) is custom built to let the short term trading play out without panic. It, instead makes rational and proportional changes to one's holdings based upon where the markets 'have gone' rather than attempt to 'predict' where they are going.

Prediction is mostly a 50/50 game of chance. 20/20 Hindsight can beat that game of chance most of the time. If we're not looking at the markets every millisecond we see a different picture. The element of Time is very important. If doctors looked at patients as often as the robots looked at the markets they would pronounce the patient dead in between every single heart beat and resurrected each time the heart again beat. Nonsense!

Right now the "Yield Curve" is the boogieman. Looking only at the numbers without understanding the irrational depression of short term rates by the FED since the start of the New Millennium is a mistake. Never before have we had such a situation, so how can the robots know any more than we do? Previous yield curve inversions were slow moving items reacting to market forces, not untested FED policy. The robots don't understand the difference.

Best regards,
Tom