I am really starting to think something has changed. Not only are the stocks not working as well but the price action is different.
I will note here that some excellent Designers are doing best in the micro, micro-cap models that even include OTC stocks where institutions may not play.
While the market makes new highs some of our models are suffering. Mine are. The Designer Models could be doing better. There is one thing that has truly changed as far as data.
Robinhood sells its trading data. Not just the order flow but the data. It is a type of alternative data that Renaissance Technologies, D.E. Shaw & Co., AQR Capital Management and all the rest of the Quant Hedge Funds now have access to.
I do know that Renaissance Technologies has found that newsreaders can be used as a signal. Supposedly the number of times a stock is mentioned—without need to know if the comments were good or bad—is a useful signal. No doubt they have looked at social media where “You Are the Product.” Can you imagine what you could do if you had real-time insight to what people are actually doing with their money?
There is no reason to think RobinHood is the only one. A Forbes article that supports what I am saying: HERE
From the article:
“Another means of making money without charging the customer is to sell order-flow DATA. This can disadvantage you too, because the data can be used by other market participants to arbitrage activity around short-term trades, potentially your trades.” Emphasis mine, of course.
Anyway, some of the Quant Funds named above may know what you will be doing today. Maybe before you do. I do mean in general terms—to the extend that the people at Robinhood are trading like us. And again, I am not sure that it is just Robinhood.
They will have a tougher time moving ETFs with their $$TRILLIONS. $2 Trillion is a conservative floor just adding the assets of the big names. This is not counting leverage. If things do not change I will be moving to ETFs. I am still hopeful. I have not moved out of my ports—not completely anyway.
-Jim