Are there too many inexperience and young traders and hedgies out there now? You see it in the bond markets, where you have blow ups all the time now, in the commodity markets where people misinterpret oil data because they are new to the game, in the stock market, where hedges on paper dont work out. Are there just too many young people and people who are inexperienced making the markets of any kind too volatile, and one of these days one of these bigger young hedgies will just blow up and take the markets with him.
mahram, Just for your info, small lot traders do not move markets.. so they have no effect on the market.
mahram, Yes , then there are an overbundant of hedge funds out there right now. Most of them don't even have a good strategy just trying to ride the band wagon, I'm sure there are quite a few hedge funds who have worse trading plans then some amateur traders.
Obviously, he is not talking about small lot retail traders. He may have a point. With the number of hedge funds opening shop each year and attracting more capital, it's probably safe to assume there are a number of less experienced traders at these funds making decisions. Couple that with the boom in derivatives prop firms over the past 3-4 years and it could become pretty ugly. Not to say it will, but there is alot of potential when you have this level of complacency built into the financial markets.
I just find it wierd that so many of these young guys put so much stock on their theories, like this such and such arb play is unbeatable, it cant fail, and then it does. I know more then you and Im gunning this stock, because no way it goes up *down*. Its not just conjecture that there are too many young and inexperienced guys *woman* out there now when you have the hedge fund industry grow so fast in the last 10 years.
What blowups have there been in the bond market? I think hedgies have been underperforming the markets but its not that much.