Doesn't matter at this point, (for a while) Adam Smith's Hidden Hand
is in charge. Asset Prices are Temporal, Contextual and based on
Perceived Priorities-Review 8/22/05 Entry
People, AND NOW MACHINES, are being conditioned. Everybody is riding the predictable churn of autoregressive behavior by the market. As it always does, it will work, until it doesn't, Catostrophically. Of course, the other side of the coin is the old admonition to Short Sellers; That the market can stay irrational longer than you can stay solvent.
The dearth of liquidity is being caused by the increasing integration of A.I. into High Frequency Systems, and its corresponding increasing rapidity of stepping away from the market. This increases frequency of "Flash Crashes", from which we recover. My concern is what will happen the next time the System has again Self Organized to the point of Criticality, and is Susceptible to a Six Sigma Volatility event, and the Machine Firepower is potentially overwhelming combined with the normal endogenous phase transition forces.
