Many Traders Have Never Experienced Rising Interest Rates

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by Adam Taggart

Here’s a frightening series of stats I posted on the site three years ago (so you can bump the percentages up a bit):

A new report by Bloomberg shows that the average Wall Street trader is 30 years old. Given that:

  • 30% of traders are so young they have NEVER experienced anything other than zero interest rates.
  • 66% of traders have no adult memory of the dot-com crash of 2000.
  • Only 43% of traders are old enough to remember the 2000 dot-com crash and the 2007 credit crisis — the two most significant economic cycles of the last 15 years.

Simply put, the majority of humans responsible for trading — or coding the algorithms that trade — in our financial markets have very little experience doing so in an environment of rising interest rates. Or put another way, as interest rates begin to rise (as they must do for one reason or another), the traders in control of our system are uniquely unqualified. All their muscle memory has been developed with the tailwind of a liquidity-happy Fed at their backs. When that tailwind switches to a headwind…

What could go possibly go wrong?

Read the entire Bloomberg article here

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