Dear America,

Yes today is sad day.   Sad indeed.   Yesterday once again a disturbed young American opened fire on innocent children and staff in a school killing seventeen people and wounding others. What started out as a normal school day at Majory Stoneman Douglas High School in Florida turned into every parent’s worst nightmare.   Senseless death of children who have not had the ability to achieve their dreams.   It is not right everyone and has to stop immediately.

Once again in our country we have allowed ourselves to become victim to a deranged young gunman. Armed with the civilian version of the M16 Assault Rifle, an AR-15, he began his shooting spree.   Armed with multiple magazines of ammunition, Nikolas Cruz, 19 years old started shooting students and faculty without any apparent motive or understanding as to why.

But I ask you all, does it matter what the motive was? Does it matter if Nikolas Cruz was actually suspended or expelled from school? Does it matter what the actual motive was in his disturbed brain.   No it doesn’t.   It is actually quite irrelevant.   What matters ladies and gentlemen, is that this keeps happening and we stand powerless to stop it. We refuse to pay attention to the warning signs of mental illness.   We refuse to get those in need help for their mental and emotional problems.  The amount of our tax dollars spent to diagnose and help those in need is laughable at best. That needs to change immediately as well.

We also fail to do the one thing that would have saved more than half of the people massacred in Florida yesterday. School boards are against it.   We do not like to talk about it and no one wants to believe it has come to this, but there is no other solution.   What is that solution? Well, someone entering a school must be met with an equally opposing force. Period the end.

First, more gun control will not stop a deranged person from getting a gun. That is the first statement you need to understand.   Gun laws need to change, no question. You should need to have a psychological evaluation or have to pass a test in regard to purchasing or owning a gun.   That is most definitely something that has to happen.   But that isn’t going to stop someone who wants to get a gun.   Criminals. Drug dealers. Terrorists. They all do not go to the local gun store and apply to buy a firearm.   Sorry ladies and gentlemen but they do not.   Guns are available illegally in any city to anyone looking to buy them.  They can also be stolen from a legal owner, which happens more than we care to realize. An individual like Cruz who wants to go kill innocent people, most of those children, doesn’t care about legally owning a gun. Or having large magazines and enough ammunition to take Pork Chop Hill.

Second, and this has been the topic of many debates, is armed security must be put in each and every school nationwide. I am sorry everyone, I know every school administrator, politician, school board member and the like who are reading this is shaking their head.   I am sorry. What you all do not get I do not understand.   The only way to stop this insanity of a 17-year-old kid being able to get a semi-automatic weapon, ammunition and go into a local school and massacre our children is to allow security personnel to be armed. Hire the right security people who are trained former law enforcement personnel.   People who are armed and ready to respond to any threat. Or better yet, mandate that each and every school has to have two armed law enforcement personnel from the local jurisdiction on duty at all times. Armed and ready.

You see, what you all who are up in arms about what I just said do not get is this situation yesterday would have been over a lot faster if an opposing force could have been there at the onset. If someone who was armed was on staff or at a post in the school.   It only takes one or two shots from an opposing force to put the would be gunman down. Or wound them enough to become less of a threat and before he was able to kill 17 people.   Maybe, just maybe if we think logically about it we would have saved those children and staff members.   Maybe, just maybe we should have learned from the deaths that came before.   Until we are capable of identifying those with mental issues that should never be allowed near guns and we are capable of changing gun purchasing, ownership rules and regulations; the only viable solution is very clear.

The school in Florida lost its beloved Assistant Football Coach who shielded students from being shot by giving up his own life as a human shield. He was also the school’s security guard.   Imagine if he was armed and able to return the fire when he first found the shooter.   No, he may not still be with us. But then maybe 14 of the 17 that perished may be.

While this is not what we want to see happen in our schools everyone, the choice is clear.   There is no other way to safeguard our children. Unless we can abolish firearms in their entirety.   Which would violate the basic tenants of the Constitution and isn’t happening tomorrow.

Please stand with us to support allowing law enforcement or trained armed security professionals in our schools.   Think of all of the lives that could have been saved.   In the era of terrorism and homegrown dissent, the answer seems as clear as day.   You may not like, trust me I do not either. But I know that logic dictates we have reached the end of the line on the solutions that do not work.

Our prayers and condolences go out to the families who have lost loved ones yesterday and all those who have lost someone in these senseless acts against society.

We pray for you and hope that we find a solution now so that this does not happen again.

 

Our thoughts are with you,

The Ribotsky Institute

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When we were growing up market volatility could be easily witnessed at trading desks and on the floors of the various exchanges, as well the trading floors of large trading firms.   People were responsible for the buying and selling that took the markets to new heights and also dropped the market to new lows. In today’s technologically advanced society, computers armed with algorithmic trading models have shown us they are the new masters of the market universe.

If you are wondering how we got here, well this is not the first time that the market has been rocked by autonomous or algorithmic trading.   If you think back several years ago to the “Crash of 2:45” is the moment in 2010 when computerized trading models trading Exchange Traded Funds (“ETF’s”) took the market down significantly. The Dow Jones Industrial Average had its second largest intraday drop losing about 9% within minutes. The markets recovered quickly but this event gave rise to the new market shift of computerized trading models reacting to market data.  The crash is so named for the time of day that it occurred. What is most important to take away from it is the amount of time it took for the market to drop so significantly. A matter of minutes.

Fast forward to 2018 and the market’s new traders are not only part of the reason the market has gone to new heights but have also been a main catalyst to the market having a volatile trading range. Additionally, these models that track indexes and look for specific data that signals a market move are the largest factor in the momentum movement we have seen over the past week to ten days.

Unfortunately, most human traders had become complacent in the market continually moving up and having an even keeled trading range.   Once there was a fundamental shift in market sentiment and/or market movement the algorithmic trading models that follow indices and the products built around them, ETF’s and ETN’s were responsible for increasing momentum almost exponentially as they trade faster than humans.  They also think geometrically and can plot trading three to four trades out not just one trade at a time.

These newly minted products that Wall Street has cooked up are responsible for approximately 30 plus percent of the total market trading in the past ten days.   Think about the record volume that was generated over the past week and that is a significant amount of trading.   Take that to its inevitable degree and that makes the firms running these products some of the largest market participants ever.

Moreover, the trust that the street has put into investing into these products where the overall strategy is to follow an index or invest against it autonomously is a new paradigm shift in investing.   Following indexes is nothing new nor is betting against them. But for the past fifty years or so that is something human beings would do.   There was a level of thought process a human trader must go through as well as some emotion mixed in there as well.   What has happened now is autonomous trading that has been programmed, so well as a matter of fact that it performs outside the scope of mental and emotional decision making. What you have witnessed this past week are these models taken to their farthest point.   Protecting and defending the capital they trade on by exponentially accerelating the market direction as they vie for their position of defense or offense.

According to market pundits these publicly traded funds have had investments made in them equaling trillions of dollars. Whereby these types of funds now own close to 35% of all equities in the United States, which is a staggering number.   So one can see why when they have a change of direction or their algorithmic model reaches a trigger; their trading decisions majorly affect the overall market.

This past week the world’s largest ETFs that were traded heavily are those of one of the world’s largest asset managers, none other than BlackRock.   They have approximately over $5 trillion in total assets and have a bit over $1 trillion of that in their ETF sector. (yes that is Trillion with a T)   These dominant market forces have set the new paradigm for how equities will be traded. There was no pandemonium during the market hours on the ETF section of the BlackRock trading floor.   There were just technicians watching as computers executed trades based on their programing. This my friends is the new way of the trading world. Eventually, humans will have much less to do with trading, as computers will be able to learn from each market day and figure out nuances in each and every market segment.  Or so the theory goes…

What is most important to remember during this new frontier in trading is not to get sucked into the market shift based on computerized trading. What changed over the past week or so besides the question of three rate hikes to four rate hikes this year? Most likely nothing.   The market is weary of its meteoric rise over the past several months and market factors like inflation and interest rate hikes loom.   All in all individual investors should be careful not to risk too much in these uncertain market conditions.  The other piece of the ETF or ETN pie we have witnessed is the exorbitant use of leverage attached to ETF and ETN trading.  Some of what we witnessed this past week is the deleveraging and decoupling of linked trades in the algorithmic matrix of many of these funds.  What does all that mean?  Well it is quite technical and will be the focus of some future articles here at The Ribotsky Institute, but it is something that creates movement in indexes that cannot be specifically correlated to fundamentals.  So you are are sitting at work and/or home looking at market information and wondering why the index is moving here or there as there is no known fundamental change to shift it.   (now you know why)

One thing is for sure, is that different forces are driving the market and the rest of Wall Street is trying to catch up….

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Too Good to Be True….

February 2, 2018

The day of reckoning for the continued run up of the market has finally reared its head.

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It’s Time to Act like Americans…

January 29, 2018

What is wrong here? This is the United States is it not? Last time we looked it is America correct? So why are we continually allowing the constant berating of our current elected President? Why is it that we continue to hear self absorbed stars babble about the current administration? Can’t we realize that Donald […]

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The Runaway Train — The Dow’s Rise to 26,000

January 17, 2018

It took approximately seven days for the Dow to rise from 25,000 to 26,000. Certainly one move for the history books, as this was the fastest rise in one thousand point numbers in history.  

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Its not just Bitcoin…

January 1, 2018

It is only a day into 2018 and already the markets are creating some possible backdraft.   Bitcoin has already dropped today from its recent high.   Surprised?  We are sure you aren’t.    There is no secret the monumental rise of Bitcoin’s price has created a feeding frenzy that is not set in reality. […]

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A Win for Everyone…..

December 20, 2017

Stimulating capital formation and reducing taxes over time will allow tax payers to save money and increase discretionary spending.   All of these facets will have real potential to stimulate the economy and bridge a new era of expansion.

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The Internet of Things…the Next Revolution

December 10, 2017

Make no mistake our fellow humans, a revolution is coming.   You may think we are a little wet behind the ears but trust us we are not at all.   You see the next leg up the food chain of technology is a network of physical devices, vehicles and home appliances. All of these pieces of […]

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The Upper Middle Class….Just isn’t what it used to be…

December 3, 2017

If you are lucky enough to be earning $100,000 annually or over you are technically in the Upper Middle Class in the United States.   That number puts you at double the average annual income in our country, which may sound great on paper, but when it comes to financial stability it just is not enough. […]

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Singles Day………and $25 Billion

November 11, 2017

It seems that Alibaba has booked over $25 billion in sales for this years Singles Day online shopping day that has always rivaled Black Friday and Cyber Monday here in the United States.

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