Why The Market Is Slowly Dying

Saturday, April 14, 2012
By Paul Martin

by Tyler Durden
ZeroHedge.com
04/14/2012

From Morgan Stanley: “In our mind, many of the approaches to algorithmic execution were developed in an environment that is substantially, structurally different from today‚Äôs environment. In particular, the early part of the last decade saw households as significant natural liquidity providers as they sold their single stock positions over time to exchange them for institutionally managed products… While the time horizon over which liquidity is provided can range from microseconds to months, it is particularly shorter-term liquidity provisioning that has become more common.” Translation: as retail investors retrench more and more, which they will due to previously discussed secular themes as well as demographics, and HFT becomes and ever more dominant force, which it has no choice but to, liquidity and investment horizons will get ever shorter and shorter and shorter, until eventually by simple limit expansion, they hit zero, or some investing singularity, for those who are thought experiment inclined. That is when the currently unsustainable course of market de-evolution will, to use a symbolic 100 year anniversary allegory, finally hit the iceberg head one one final time.

The Full Piece…HERE

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