- My diagnosis is as follows. There are fewer people analyzing securities than there used to be.
Basically, banks and big hedge funds are spending lots of money on technology and less and less on human capital. Co-locating servers so you have a 3-microsecond latency is sexy.
Some 31-year-old dude from Wharton sitting in his office until midnight, ordering Seamless, poring over company filings, is not sexy… but that is how you figure out that there is a problem at Toys “R” Us. All the computational power in the world isn’t going to help you.
Of course, as I say this, some quant reading this letter is pretty certain he can program a robot to take the analyst’s job. You know, some things you just can’t (and shouldn’t) automate.
I can't find the quote, but David Rosenberg asserted on Twitter that something like 60% of brokers out there right now started work after the 2008 crash. In other words, there is scant institutional memory of the last bloodbath... none of the lemmings remember what cliffs are for.