Five Things You Need to Know from this Week (Look What Gold Just Did!)

Hedge Fund Managers Pour SALT on U.S. Stocks, Look to Europe

It’s been a whirlwind week. After attending two big conferences, I landed in Vancouver today where I’ll be presenting at the International Metal Writers Conference. Markets continue to close at record highs, even as political uncertainty remains and the threat of terrorism looms large over Western nations. On Monday, gold flashed a bullish signal we haven’t seen in over a year.

There’s much to talk about! Below are five things you need to know from the week now behind us.

1. Quants Now Control Wall Street

A special report by the Wall Street Journal this week confirmed what I’ve been saying for a while: Wall Street is now run by the quantitative analysts, or quants. Numbered are the days when traders and fund managers picked stocks on gut instinct. Today, a decision is made only after whole oceans of data have been processed using sophisticated algorithms.

And yet quants’ role has even further room to expand. As the WSJ reports, quant hedge funds now represent 27 percent of all U.S. stock trades by investors, up from 14 percent in 2013.

To get some idea of the type of analysis quants conduct, take a look at the matrix below. Of course, their methods are far more sophisticated, their data crunched in a matter of nanoseconds, but it’s helpful to see how they might codify many points of data.

Investment analysis decision matrix

We aspire to conduct the same sort of analysis, from technical to tactical, to make better, more strategic investment decisions.

2. Paul Singer Says It’s Time to Build Up Some Dry Powder

Paul Singer

This week at a Chief Executives Organization (CEO) event, I had the privilege of hearing billionaire hedge fund manager Paul Singer speak. His firm, Elliott Management, has one of the most impressive long-term track records, generating a compound annual growth rate (CAGR) of 13.5 percent since its inception in 1977, with only two down years.

Elliott Management currently manages close to $33 billion—not including the $5 billion it raised this month in as little as 24 hours. Yes, billion with a b. Singer, suggesting a potential investment opportunity in distressed stocks could soon open up, recently called on investors to commit a fresh infusion of cash. The resultant $5 billion in dry powder, the most ever raised in the firm’s history, is expected to be deployed at some later date.