A boating analogy

Andrew Lo, a professor at MIT, is that rare individual who is, at the same time, a big time trader, a technical analyst and a top academic researcher. Pretty much anything he says about the financial markets is of value but I have singled out this little gem from a NYT article:
“Now that we have so many boats in the harbor, you can’t whiz by at 50 knots without rocking a few boats. In the middle of the ocean, your wake has no impact, but in a crowded harbor, a fast exit can cause quite a disruption.”
You can guess what he is talking about, namely what happens when too many hedge funds using the same strategy panic and/or need to get out of their positions all at once.

If we must stay with the boating analogy and I am by no means a boating expert, I would say the solution to this problem would be to either leave the crowded harbor and find a new, isolated part of the wide ocean (i.e. find a new strategy out of the infinite universe of profitable trading strategies, no limit there but the human imagination) or lower your speed big time and be very very mindful of what the other boats are doing (de-leverage and improve your risk management). Both solutions can be implemented in parallel. However, finding a new winning strategy requires creative thinking, even contrarian thinking, something big institutionalized funds will have trouble with, leaving opportunities to new (or not so new but reinvigorated by the new found volatility), smaller and more nimble operators.