Many market analysts have been predicting a crash for months or longer.  Sure, some stocks will go down but I don’t believe any existing models take in account 3 major things accurately: lack of fees, the increase in traders, and social media.

Fees No More

I remember trading several years ago.  I had no idea what I was doing, didn’t do research about companies, and barely knew how to trade in general.  I do remember the cost per trade was $6.95.  That number seems so ridiculous now.  You had to stick it out for several days or weeks hoping to break even from the fees.  Now – there is no or little fee and trading in general is a lot quicker.  Without the fees it is a lot easier to make money.  Even for newcomers.  And, as someone who writes computer programs, I can’t think of how to successfully factor this change into historical models.

New Traders

Robinhood took on a lot of criticism related to setting restrictions during the Game Stop thing.  Say whatever you want but Robinhood took a huge chance by offering free trading.  Vlad and Robinhood did it and the game has been changed forever.  The entire payment for order flow argument makes sense but, let’s be honest, the concern of a platform looking at your trades existed way before Robinhood came along.  With increased AI day by day it is not the platform you need to worry about.  It is anyone, everyone, and every thing you now need to worry about.  Basically, anyone who takes the time to write the script and crunch the data.

The door is open to anyone with a computer or device.  That’s everyone.  Platforms specifically not only are measured by money numbers they are now measured by users on the platform.  Platforms will do whatever they have to do to increase that number each quarter.  If someone has an email, a bank account, and $10 dollars it is safe to say they can trade stocks.  It wasn’t like that 5 years ago.

Social Media

There is no limit to what can be said and how quickly that message can be spread.  The machines are taking in all the information and spreading it for us.  Denzel Washington said it about the news.  It’s not if the information is correct that is important anymore.  It is who was first to report it, second, and third… deal with the consequences later.  It can’t be stopped.

The Crash Prediction

Anything can happen.  With so many traders in the market I feel that the any crash would be rebounded by other traders buying everything up preventing a full on crash.  Add in the fee change and social media and it just seems unlikely.