Bronte Media

Machine vs Machine

August 24th, 2007

Interesting article in the Wall Street Journal about mob behavior amongst the machines. Essentially, the huge decline in quant funds (who electronically trade based upon computer models) in recent times was to do with the funds owning the same shares and selling on the same signals. That is, the humans who create the models, codified a characteristic of human behavior perfectly: the fact that mobs panic.

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