Media Updates, page-172

There is an interesting article in Real Clear Markets by Byron Wien called "We're In The Correction Phase of a Bull Market Run". I think Byron's analysis is comprehensive and pretty accurate.  He covers everything from "soup-to-nuts" in a macro economic sense.  Towards the end of the article he even addresses a topic that is near and dear to many HC posters - corporate influence and computer trading that influences SP movement.

https://www.realclearmarkets.com/articles/2018/10/26/were_in_the_correction_phase_of_bull_market_with_room_to_run_103463.html

With all the talk on HC about corporate influence and shorting of A2M, here are a couple paragraphs that are particularly interesting:

"The February andOctober market corrections reflect the volatility risk stemming from theproliferation of passive and computer-driven programs. One such strategy, RiskParity, popularized by firms like Bridgewater and AQR, has amassed over $400billion in AUM. This approach makes allocations based on risk, rather thantraditional stock and bond weightings. When volatility in one asset classincreases, the portfolio is shifted to less volatile assets in order tomaintain optimal risk levels, typically without much human intervention.

Similarly,recent research suggests that 60%–90% of daily equity trading is now performed by algorithmic trading, up from 25% in 2004.Meanwhile, passive exchange-traded funds have directed trillions of dollarsinto equity markets since 2009, and the percent of the U.S. equity market sharecaptured by passive strategies has increased from 26% at the start of 2009 to47% as of 3Q’18. All of these trends are likely to increase volatility movingforward. One result is to discourage investors who base decisions onfundamentals like earnings, but feel that the market is being controlled byprofessionally run, computer-based forces which they do not understand and, insome cases, fear."

So for me the bottom line as a long term holder is to hold fast, its probably going to be a bumpy ride as we climb the mountain.  Over the past year I've enjoyed reading the discussions on fundamentals vs. technical analysis.  At times the daily movement of SP didn't make sense to me but I continue to see the market penetration and acceptance of A2 and think that the upcoming AGM will truly be spectacular.  All IMO, of course.