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Blame It on the Algos?

Traders Magazine Online News, December 7, 2018

John D'Antona Jr.

Is it ‘Algos Gone Wild’ part 2?

Are algos too efficient in what they do – execute trades faster than humans?

According to a recent report by CNBC, one fund manager told the outlet that upwards of 80% of trading is now controlled by machines that act immediately on pure data without any human finesse, attributes or feeling. This immediate machine processing, he added, could well be responsible for many of the year’s selloffs.

"Eighty percent of daily volume in the U.S. is done by machines, so what you get is a lack of focus on earnings, a lack of focus on outlooks and you just get short-term movements based on very specific data that is released every day and that creates noise," Guy De Blonay, fund manager at Jupiter Asset Management, told CNBC's "Squawk Box Europe."

De Blonay's comments come after U.S. stocks fell sharply last week, on the back of concerns regarding the bond market.

CNBC further added that back In February, when stock markets also saw a massive sell-off, a strategist told CNBC that the algo trading had sparked that overreaction.

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