By Matthew Goldstein, Lauren Tara LaCapra, Jennifer Ablan and Joseph Giannone – Experts say investors should expect even more volatility in stocks, as herd trading by hedge funds, knee-jerk trader reaction to news and lightning fast computer programs combine to make for a new and uncomfortable normal on Wall Street. This new trading frontier even has its own signature milepost, something called “a liquidity black hole.”
“The market we are operating in is markedly different from five years ago,” says Andrew Lo, a professor of finance at the MIT Sloan School of Management, who frequently writes on hedge fund trading strategies and markets. “We are seeing extraordinary emotional reactions from central banks, politicians, regulators and investors. That kind of reaction is not conducive for building long-term wealth. We have an environment that is highly unstable.” more> http://is.gd/w0E44v
