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So the article seems to be saying that CTAs are failing which is true based on numbers and then claims this is because the environment is too random. But shoul
by galaxyLogic 8y ago
So the article seems to be saying that CTAs are failing which is true based on numbers and then claims this is because the environment is too random.
But shouldn't we consider as possible cause the fact that CTAs became common. When multiple parties use the same strategy it can not be winning any more for everybody.
- evrydayhustling 8y agoYes - and there is also a second order effect where latecomers to a well known strategy must focus on marketing and cost reduction to compensate for lower alpha, so each dollar flowing into the strategy is more likely to go to a less innovative, follow+on implementation (such as algorithms packages offered by big banks).
- plouffy 8y agoThe article notes this: > Part of the problem, according to critics, is too much money now chases the same trends, undermining what traders call "alpha" — the outperformance possible relative to a benchmark.