The Domination of Machine in the Stock Market
The advent of technology has made our lives easier and better than ever before. Back in the day, we have to toil and work hard just to get something out of life. But now, we can use computers and other gadgets that will help us with just about anything that we do- from work to entertainment and play.
Having these new technologies and machines were created with good intentions. However, some of them might have unintended consequences and we are paying for it.
Take for example the top stock brokers in Malaysia. There are plenty of investors and traders out there who are patiently waiting for the right time to strike. However, new developments in the way machines work have actually produced, you guessed it, unintended consequences.
Before, fundamental analysis, or the process of trying to predict a stock or shares intrinsic value, is a must before people are going to either buy or sell their investments. It is a way for traders to get the maximum profits they want and deserve.
However, that seems not to be the case anymore. In fact, traders scoff at the idea of using fundamental analysis because the data that are presented using such tools are irrelevant in this day and age.
You might ask why it is like that nowadays. Well, it can be attributed to some factors. One, there are now more passive investing accounts in the market. These are the so-called “buy-and-hold” investors who do not want to feel the pressures of active trading.
Second, it is increasingly challenging to make active trades because people are either reluctant to trade or they just want to make money from company dividends.
Third, software that is being used for trading has some certain parameters and algorithms that are reacting a little bit strange when it comes to doing things in the stock market.
Apparently, these programs- which happen to be created by the same people in the same business schools- have intended to create them to better the lives of investors.
However, the consequence is that because their programming and its features are the same, it produces similar results for everyone who is using it.
What is my point in saying this? My point is that because these programs give similar results, it means that investors really do not know if a certain stock is something that they want to buy or not.
This is where seasoned investors are getting worried. Because of the lack of use of fundamentals, who is going to change the prices in the stock market now?
Because of this, there is fear of trading and people who are going to invest in the stock market, hoping that they will amass a great fortune, will be disappointed to know that the only way for them to really earn money in this time would be to, well, buy and hold shares.
The only thing that we can do now is to hope that the programs will be revisited and reprogrammed in a way that still holds fundamental analysis an important aspect of stock market trading.