Niche Exclusion

作者:Victor Niederhoffer
日期:2011/08/26

It is interesting to see niche exclusion, the tendency for a species most suited to a particular niche or habitat relative to its competitor to monopolize the particular niche, work itself out in the markets. We saw how New York gold crowded out Chicago gold, and how the electronic trading excluded the pit trading for all but options.

For example, only a handful of old lions trade the S&P pit any more and it used to be in its days as a den of thieves, the abode of at least 500 vipers. Now one sees that happening in the battle between 10 year and 30 year. True, they are different animals in part. And one frequently can go to 5 or 7 points over or below the other. But now the 10 years trades 1 million contracts a day, and the 30 year lucky to do 250000. Given the coterminous correlations between changes of at least 95%, who would wish to trade the 30 year versus the 10? Only old fashioned men who are stout-hearted men.

Are there other examples of competitive exclusion working themselves out that one should be cognizant of so as not to bring up the rear?