“Machines do not have a conscience” – Cramer says algorithmic buying and selling fueled inventory shopping for on Wednesday
CNBC’s Jim Cramer tried Thursday to explain why the stock market seemed largely unaffected by the Capitol Hill riots. Most of the Wall Street purchase came from algorithmic computer trading.
“The people were stunned and the individuals were stunned … but the machines are not stunned because the machines have no conscience,” he said on Squawk Box.
Cramer did not say that he believed there should have been a sell-off of the market, just offered reflection for Wednesday’s market move.
The Dow Jones Industrial Average closed at a record high on Wednesday afternoon when a violent pro-Trump mob overtook the U.S. capital and disrupted the constitutional session of Congress to confirm the victory of Joe Biden’s electoral college.
“I don’t think the market is divorced,” said Cramer. “I think the machines are divorced. They didn’t see what happened in the Capitol. They weren’t shaken … because in the end they are machines and they don’t think. They just do it.”
Later on at CNBC, Cramer also noted that the time for the Washington riots came at the start of a new year, usually a time when people could put money to work in the market. This could be another factor that helped keep the market going on Wednesday, the Mad Money host said.
“You need sellers to knock down a market, and we just don’t have a lot of sellers. We’re going to have this reflation trade, rotations in and out,” Cramer said. “One of the things we’ve learned over the past decade is that at the beginning of the year you buy stocks because you have to invest.”
“You’re going to retire one day. You took your kids to college,” he added. “These are the things that are causing the steady rise in prices.”