T Driven By Fundamental Investors Executing Buys And Sells

Category: Finance.

It s been quite a wild week in the markets. And they weren& #146.

Exchange volumes boggled the mind on January 24th& #150. T driven by fundamental investors executing buys and sells. Have you ever wondered why on one day Asian investors cheer US Federal Reserve policy and the next, jeer it? Let s look at global statistical arbitrage and what it means from( or to) the comfort of your investor relations chair. Or why European investors one day zig with US markets and another, zag inversely against them? Markets rebounded today on renewed enthusiasm over Fed policy& #133; ” You& #146.

Market observers and 24- hour news pundits often attribute these curious, seemingly bipolar activities to juking and jiving investor sentiment: “. Ve seen it, right? S no such thing. Well, we submit that most of the time it& #146. Rather, we believe this thrashing can be tied directly to global statistical arbitrage. And why should you care, there in the IR chair? (That rhyme would work well in an official investor relations ditty. ) One major reason, so you have answers when your execs and board members wonder why investors are selling shares of a business with outstanding fundamentals and economically resilient drivers. In the simplest of terms, arbitrage is the efforts by traders to take advantage of minute speed, time- zone and informational inefficiencies at various planetary market entry points.

How to arrive at the answers? Re listed on the Nasdaq or the NYSE( both give you the means to do this) . Watch the NATURE of the participants in your market, whether you& #146. Note the trading activity of firms in context of global daily ups and downs. Odds are, you& #146. If the big Prime brokers, anonymous platforms and well- known arbitrage systems like Lime Brokerage, and ITG and Pulse Trading and on it goes, play dominating roles in your marketplace and lead your stock up and down& #133. Re largely a reflection of macroeconomic factors.

Re simplifying of course. We& #146. And, answers and knowledge, really can be remarkably precise, given the anonymous nature of today& #146. Yes, it takes a little time, a bit of education& #133. S markets. But you can increase your influence. Also, you must remind the hand- wringers that it& #146.

We believe IROs have the capacity to exercise more influence now than ever. S best, to use what may seem a mixed metaphor, to allow smoke to clear before opening fire.

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