Anthony Ward, famed London commodities trader, closed shop after nearly forty years of trading. His reason: he couldn’t keep up with computer trading.
According to Reuters, Ward blamed the rise of computer-driven funds and high-frequency trading. Other well-known commodities investors also threw in the towel. They are now looking for opportunities where machines can’t make a difference.
In January, commodity hedge fund Jamison Capital closed, telling investors that machine learning and artificial intelligence had eliminated short-term trading opportunities.
Also in 2017, renowned oil trader Andrew Hall, who earned $100 million in 2008, called time on his main Astenbeck Commodities Fund II.
In 2016, Michael Farmer, founding partner of the Red Kite fund that specializes in copper, also accused high-frequency traders using super-fast computers of distorting the market and getting an unfair advantage.
David Stockman, former Budget Director during the Reagan administration and publisher of Stockman’s Contra Corner, argues that “robo-trading,” schemes that simply follow momentum and ignores the fundamentals, will push stocks lower as this stock bear market sets in. One thousand point swings in the Dow Industrials have been common in the last two weeks.
Although gold and silver have not taken off during the early stages of this bear market, as fear sets in and investors look for safe havens gold and silver will benefit. Investors are not yet scared enough.