# Re those sophisticated stock timing programs - Did they work when the market tanked? **URL:** \ **Category:** Factual Questions\ **Created:** [December 14, 2008, 12:48am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069 "2008-12-14T00:48:40Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\ **Post date:** [December 14, 2008, 12:48am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/1 "2008-12-14T00:48:40Z")
Many wall street companies spent hundreds of millions of dollars over the last few decades or so hiring very high IQ math whizzes (ie Wall Street “Quants”) to design and implement extremely sophisticated stock & equities buy-sell timing programs that would protect their assets. Is there any indication of how well these programs worked for their users in the recent market meltdown. Did they help or not? ---
**Author:** ![IAmNotSpartacus](https://avatars.discourse-cdn.com/v4/letter/i/cc9497/32.png) [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)\ **Post date:** [December 14, 2008, 1:00am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/2 "2008-12-14T01:00:31Z")
Some assert they may have exacerbated the problem. A majority of trades on the major US exchanges are performed by automated trading programs, retail investors (you, me and Joe Schmo) account for only a small portion of trading activity. No one can answer your question for certain. Maybe the market would have tanked even further without those algorithms. Maybe it wouldn’t have. No one knows where the stock market would go without those trades occurring. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [December 14, 2008, 1:10am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/3 "2008-12-14T01:10:19Z")
Computer trading was also a major suspect in the crash of 1987. IMHO, trading algorithms aren’t any smarter than by-your-gut speculators in the pits, but they are _a lot faster_. Any damage that a trader with a bad day can cause can be caused 100-fold by an algorithm with itchy bits. That’s not to say computer trading is necessarily a bad thing, because the opposite is also true when the programs are successful. ---
**Author:** ![hibernicus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hibernicus/32/2802_2.png) [@hibernicus](https://boards.straightdope.com/u/hibernicus)\ **Post date:** [December 14, 2008, 1:23am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/4 "2008-12-14T01:23:55Z")
> [@IAmNotSpartacus](#): > > No one can answer your question for certain. Maybe the market would have tanked even further without those algorithms. Maybe it wouldn’t have. No one knows where the stock market would go without those trades occurring. That’s not really the question the OP asked, though, which was how well the transaction-timing systems worked _for their users_. ---
**Author:** ![ultrafilter](https://avatars.discourse-cdn.com/v4/letter/u/3d9bf3/32.png) [@ultrafilter](https://boards.straightdope.com/u/ultrafilter)\ **Post date:** [December 14, 2008, 1:39am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/5 "2008-12-14T01:39:58Z")
You wouldn’t expect them to have worked well. But most of the quant funds that lost money in July-August 2007 had made it back by October or so. I don’t know off the top of my head how they’ve been faring lately. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [December 14, 2008, 2:18am UTC](https://boards.straightdope.com/t/re-those-sophisticated-stock-timing-programs-did-they-work-when-the-market-tanked/477069/6 "2008-12-14T02:18:20Z")
actually they work quite well, especially in very volatile markets. monkey wrench in the system was when short selling of finance stocks was banned temporarily. most algorhythmic trading programs were not designed to quickly agjust for this. no doubt that only slowed things for a couple days.