Why Stock Market Has Been Stable During Economic Chaos: Quants
- Amid a chaotic few months in the US economy, the stock market has remained relatively stable.
- Quant funds, which use computer models to trade, are helping calm the markets, The Wall Street Journal reported.
- Here’s how quant funds work and the impact they’re having on the market.
Economic pandemonium has swept our financial systems for the last few months: We entered the year with stubborn inflation; the March collapse of Silicon Valley Bank spurred fear for investors, business owners, and bankers alike; and recent discussions on breaching the debt ceiling have caused uncertainty about the future of Social Security or potential job loss, among other scares.
Yet still, the stock market has remained somewhat calm.
In fact, the S&P is up nearly 10% year to date, as of May 29. Meanwhile, the VIX, also known as the volatility index, has remained below 20 — a level that suggests a relatively stable market — every trading day but two since March 28.
That stability is at least in part thanks to quant funds, according to The Wall Street Journal. Quant funds, or quantitative hedge funds, are investment funds that use computer-created algorithms, mathematical models, and artificial intelligence to make stock predictions.
While some investors have stepped back from equity…
