For example, AI’s usage has been building for years. The emergence of ChatGPT is its coming-out party. Assessing AI’s value, however, is fraught with skyhook assumptions, which makes stock movements hypersensitive to changing narratives. Nvidia Corp. was perceived to be a winner in the AI race and its stock shot up. Alphabet Inc. stumbled out of the gate and its shares got dinged.
Dave Picton, chief executive of Picton Mahoney Asset Management, talks about how the market has gone through structural change. Volatility is higherAdvertisement 4Evidence bears this out. The tech wreck in the early 2000s played out over two and a half years. The decline related to the 2008 financial crisis was over in less than a year. The corrections in 2016 and 2018 lasted a couple of months. And in March 2020, the market was back on a tear within a matter of weeks.
The gamification of investing is part of the change. I’m referring to the “go big or go home” approach pursued by phone-toting day traders using slick apps, free trades, options and social networks such as Redditt. In particular, trading in short-dated options has contributed to volatility.Article content
For example, there are long/short managers using leverage to enhance returns, which means their bottom lines can swing wildly, and there are more shares to buy or sell when they pivot.First, expect the market to be dynamic and volatile. The ride has gotten bumpier.