SAC Charges Another Win for Machines Over Human Traders

SAC Charges Another Win for Machines Over Human Traders

In pursuing and winning an indictment of SAC Capital Advisors LP, federal prosecutors are intent on shuttering one of the largest and most successful stock-trading hedge-fund firms in Wall Street history.

If they succeed, it will also mark the effective demise of a whole mode of hedge fund investing, that which hunts for returns based on fleeting, human-driven information advantages – legal or, allegedly, not – from analysts, industry executives and brokerage-house trading contacts.

Since the tech-stock bubble burst in 2000, changes in regulation, stock-trading mechanics and the march of technology have increasingly squeezed the old ways of gaining and maintaining a trading “edge” that prevailed through the 1980s and ’90s, when Steven Cohen was building his remarkable track record of market-trouncing annual returns.

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