Zig Zag in Volatile Manic Markets

Mean reversion heaven today again. After having put the worst Thanks giving week since 1932 behind us, we put in the best day since 2009 today. Markets are manic,and investors are forced chasing their tail, still dominated by HFT Algos. Dynamic hedging is almost impossible for any big investor, as lack of liquidity drives prices both ways. Below from Bloomberg. Picture by Banksy.

The swings have taken a toll on professional investors. Less than 24 percent of 542 categories of funds tracked by Morningstar Inc. have topped their benchmark indexes this year, the fewest since at least 1999. A Hedge Fund Research Inc. index of industrywide performance has fallen 3.3 percent this year. It’s only the third annual loss since 1990 and the biggest decline since 2008, when it plunged 19 percent, according to data from the Chicago-based firm.

“We had the worst Thanksgiving week since the ’30s and then you turn around, you have a 8 percent rally in three days,” William Nichols, senior managing director in equity trading at Cantor Fitzgerald LP in New York, said in a phone interview today. “Everything is great in terms of this nice move, but you look year-to-date, the Dow is up 3 percent, the S&P is still down and the U.S. is outperforming other markets.” (Full article here).

And some insight on Wall Street Wankers by the ordinary man.