Capital Is No Longer Scarce
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Capital Is No Longer Scarce
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Re: Capital Is No Longer Scarce
#2[deleted]
Re: Capital Is No Longer Scarce
#3> That means we have massive amounts of capital available to invest in new endeavors. It explains why interest rates are low and there is fairly little that central banks can do about it unless they figure out a way to dramatically reduce investable capital – they can certainly shorten their balance sheets but even that impact is likely to relatively small in the overall scheme of things (eg US Fed about $3 Trillion).
I'll never understand this line of reasoning. It's completely backwards. Does anyone really think it'd be so easy to borrow money for consumer goods with suspect credit or outlandish business ideas without central banks pumping liquidity into the economy? Anyone looked into savings rates lately? You know, where natural capital formation occurs?
Re: Capital Is No Longer Scarce
#4High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY.
High frequency trading is this, but with very high speeds and lots of competition. This means they have to exert value out of almost infinitesimal price changes.
>As HFT strategies become more widely used, it can be more difficult to deploy them profitably. According to an estimate from Frederi Viens of Purdue University, profits from HFT in the U.S. has been declining from an estimated peak of $5bn in 2009, to about $1.25bn in 2012.
That's 0,007% of U.S. GDP. And probably going down.
>"DEFINITION OF HFT: 1. a strategy which trades for investment horizons of less than one day 2. a strategy which seeks to unwind all positions before the end of each trading day thus HFTs can't deploy large amounts of capital"
Re: Capital Is No Longer Scarce
#5The point of the article seems solid, however I am wondering if there are any figure to compare.
How much was the "global investible capital" in the 1980's and in the WWII ? What about the Global GDP ?
Re: Capital Is No Longer Scarce
#6[deleted]
Re: Capital Is No Longer Scarce
#7High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY. High frequency trading is this, but with very high speeds and lots of competition. Thi…
Yes the value of notional sizes of derivative trades have little to do with either their actual values (which net to zero for all the parties involved), their risk or the amount of capital actually involved.
Re: Capital Is No Longer Scarce
#8High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY. High frequency trading is this, but with very high speeds and lots of competition. Thi…
Oh, and another round of "we HF-Traders are just misunderstood benefactors of the general public and helping markets being more efficient".
There are heaps of evidence HFT ruins markets, economies and nations, so I call BS.
http://www.zerohedge.com/news/2015-03-20/how-hft-destroys-ma...
Re: Capital Is No Longer Scarce
#9High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY. High frequency trading is this, but with very high speeds and lots of competition. Thi…
Oh, and another round of "we HF-Traders are just misunderstood benefactors of the general public and helping markets being more efficient". There are heaps of evidence HFT ruins markets, economies and nations, so I call BS. http://www.zerohedge.com/news/2015-03-20/how-hft-destroys-ma...
I'm not really knowledgeable to have an opinion on HFT, but there's something I'm still not clear about.
HFT firms are not that big; the ones I've seen pointed as the largest have net incomes of less than $100M. Why wouldn't the other market participants, particularly the largest Wall Street firms, allow HFTs to ruin their game? The link you posted mentions "corrupt SEC regulators", but why would they be corrupt in favour of HFTs?
Re: Capital Is No Longer Scarce
#10The point of the article seems solid, however I am wondering if there are any figure to compare. How much was the "global investible capital" in the 1980's and in the WWII ? What about the Global GDP ?
The huge capitals and the companies drowning in cash are certainly there, but the potentially profitable investment opportunities are scarce. Most of the infrastructure in the West has already been built, fertility is declining and no new groundbreaking tech is able to spur a new economic revolution. That gives rise to all kinds of speculative economic activity that are, at best, a zero-sum game.
Contrast that to the post-WWII years: you had an increasing population and a huge demand for new infrastructure. The Cold War space race was also a huge technological boost.