{"id":189890,"date":"2021-02-26T22:17:00","date_gmt":"2021-02-26T19:17:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/gamestop-saga-illustrates-rising-noise-trader-risk-that-could-feed-market-volatility-warns-quantitative-analyst\/"},"modified":"2021-02-26T22:17:00","modified_gmt":"2021-02-26T19:17:00","slug":"gamestop-saga-illustrates-rising-noise-trader-risk-that-could-feed-market-volatility-warns-quantitative-analyst","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/gamestop-saga-illustrates-rising-noise-trader-risk-that-could-feed-market-volatility-warns-quantitative-analyst\/","title":{"rendered":"#\n  GameStop saga illustrates rising \u2018noise trader risk\u2019 that could feed market volatility, warns quantitative analyst"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a40e5c3b0f24\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a40e5c3b0f24\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/gamestop-saga-illustrates-rising-noise-trader-risk-that-could-feed-market-volatility-warns-quantitative-analyst\/#%E2%80%98Volatility_would_beget_volatility%E2%80%A6leading_to_wildly_mispriced_assets_Wellingtons_Lamont\" >\u2018Volatility would beget volatility\u2026leading to wildly mispriced assets\u2019: Wellington\u2019s Lamont<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/gamestop-saga-illustrates-rising-noise-trader-risk-that-could-feed-market-volatility-warns-quantitative-analyst\/#William_Watts\" >William Watts<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">Game<\/a>Stop saga illustrates rising \u2018noise trader risk\u2019 that could feed market volatility, warns quantitative analyst<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"%E2%80%98Volatility_would_beget_volatility%E2%80%A6leading_to_wildly_mispriced_assets_Wellingtons_Lamont\"><\/span>\n  \u2018Volatility would beget volatility\u2026leading to wildly mispriced assets\u2019: Wellington\u2019s Lamont<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000181433\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       The wild trading saga surrounding GameStop Corp. and other meme stocks targeted by bands of individual investors ostensibly out to prove a point, rather than make a profit, could signal an important change in the way parts of the market function \u2014 or, more precisely, don\u2019t function, warned a veteran market analyst.<\/p>\n<p> \u201cMy concern is that this may create what academics have called \u2018noise trader risk,\u2019 in which rational traders exit asset classes that are dominated by irrational traders because the risk is too high,\u201d said Owen Lamont, associate director of multiasset research for Wellington Management\u2019s Quantitative Investment Group, in an interview published in Goldman Sachs\u2019s \u2018Top of Mind\u2019 <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letter Friday.<\/p>\n<div class=\"paywall\">\n        \u201cAs a result, volatility would beget volatility in certain markets, leading to wildly mispriced assets,\u201d he said.<\/p>\n<p>\u201cNoise trader\u201d is the polite academic term for market participants whose trading decisions tend to be erratic. But the concept may be taking on additional meaning after investors organized via <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Reddit<\/a>\u2019s WallStreetBets forum fueled a spike in shares of videogame-retailer GameStop<br \/>\n        GME,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/203755179\/composite\" class=\"negative\">-9.92%<\/bg-quote><br \/>\n       last month. The move, fueled by individual investors out to punish short sellers who had driven short interest in the stock to 140%, sent shares soaring. <\/p>\n<p>Some short sellers took painful hits and the resulting \u201csqueeze\u201d sent ripples through the stock market as hedge funds moved to decrease leverage. But other hedge funds also made a killing, joining in the ride higher. And some individual investors who joined the party late suffered steep losses when shares fell back to earth. <\/p>\n<p>GameStop, which ended last year near $18 a share, soared as high as $483 in late January before falling back, trading below $40 a share last week. GameStop and other popular stocks targeted on Redditt jumped again this week. GameStop fell 20% on Friday but remained on track for a weekly gain of around 111%, trading near $87.50.<\/p>\n<p><strong>Read:<\/strong> GameStop Round 2? How an options-buying frenzy is providing another jolt to meme stocks<\/p>\n<p>The phenomenon has brought increased scrutiny on a range of practices, including short selling; the gamification of online trading; settlement procedures; and payment for order flow, in which market makers pay brokers to direct orders to them, a practice that has helped enable the push toward zero-fee trading.<\/p>\n<p>It\u2019s also prompted discussions over the role of individual investors, who have shown renewed interest in the market. \u201cNoise traders\u201d aside, many analysts see this new cohort of market participants as more savvy than past generations, with less propensity to chase returns.<\/p>\n<p><strong>Read: <\/strong>Individual investors are back \u2014 here\u2019s what it means for the stock market<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p><strong>Also see: <\/strong>A new wave of fearless retail investors could be ready to pour $170 billion into stocks, says Deutsche Bank<\/p>\n<p>Lamont said it was unclear whether the trading raids organized via social media will be a lasting phenomenon.<\/p>\n<p>\u201cThe internet has allowed decentralized bands of activists to coordinate their actions in both politics and finance, and it\u2019s difficult to say if social media-induced trading will end up being a fad like hula hoops or is here to stay,\u201d Lamont said. For now, the trend <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears to have decreased liquidity and increased volatility in financial markets, he said, noting that it\u2019s difficult to tell whether the lack of liquidity is leading to higher volatility or vice versa.<\/p>\n<p>Either way, prices look less and less like the outcome of an orderly process, Lamont said.<\/p>\n<p>\u201cThe more that traders are motivated by something other than profit, such as excitement, group loyalty or an antiestablishment sentiment, the more likely this is to occur,\u201d Lamont said. \u201cI see a good chance of rolling disruptions, especially in illiquid names or in obscure corners of the market, as well as broader market flash crashes like the one we saw in 2010.\u201d<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"William Watts\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"William_Watts\"><\/span>William Watts<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D2C4B9C4CB0C%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# GameStop saga illustrates rising \u2018noise trader risk\u2019 that could feed market volatility, warns quantitative analyst &#8221; \u2018Volatility would beget volatility\u2026leading to wildly mispriced assets\u2019: Wellington\u2019s Lamont The wild trading saga surrounding GameStop Corp. and other meme stocks targeted by bands of individual investors ostensibly out to prove a point, rather than make a profit,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":189891,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-189890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/189890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=189890"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/189890\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/189891"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=189890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=189890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=189890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}