Daniël de Leeuw's tumblelog danieldl.

“ In the same fashion, if you assess the attractiveness of a trade based on historical data from a time when people weren’t really actively doing that trade, and then suddenly everybody’s doing that trade, the behavior of the trade will be different. And if you’re trained the same way as everybody else, in general you’re all going to behave the same. And when everyone behaves the same, that makes trades a lot riskier: everybody’s buying at the same time, you get bubbles, everybody’s selling at the same time, you get crashes. ”

Interview with a hedge fund manager