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Friends don't let friends get into finance

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Re: Friends don't let friends get into finance

#71

Post by [deleted] »

prodigal_erik wrote: post #58
Dilpil wrote: post #51

If investment banking is so needless, why did the economy falter when lehmen brothers went bankrupt? If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Most importantly- if these products are useless and harmful, why do people keep buying them?

> If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Because HFTs, who enjoy the privilege of walking away from the market at the worst possible moment, had largely displaced traditional market makers who make expensive commitments not to do that. Nobody specifically chooses to do business with them, they're exploiting flaws in the wa…

[deleted]

Re: Friends don't let friends get into finance

#72

Post by [deleted] »

prodigal_erik wrote: post #58
Dilpil wrote: post #51

If investment banking is so needless, why did the economy falter when lehmen brothers went bankrupt? If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Most importantly- if these products are useless and harmful, why do people keep buying them?

> If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Because HFTs, who enjoy the privilege of walking away from the market at the worst possible moment, had largely displaced traditional market makers who make expensive commitments not to do that. Nobody specifically chooses to do business with them, they're exploiting flaws in the wa…

[deleted]

Re: Friends don't let friends get into finance

#73

Post by [deleted] »

prodigal_erik wrote: post #58
Dilpil wrote: post #51

If investment banking is so needless, why did the economy falter when lehmen brothers went bankrupt? If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Most importantly- if these products are useless and harmful, why do people keep buying them?

> If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Because HFTs, who enjoy the privilege of walking away from the market at the worst possible moment, had largely displaced traditional market makers who make expensive commitments not to do that. Nobody specifically chooses to do business with them, they're exploiting flaws in the wa…

[deleted]

Re: Friends don't let friends get into finance

#74

Post by yummyfajitas »

prodigal_erik wrote: post #58
Dilpil wrote: post #51

If investment banking is so needless, why did the economy falter when lehmen brothers went bankrupt? If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Most importantly- if these products are useless and harmful, why do people keep buying them?

> If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Because HFTs, who enjoy the privilege of walking away from the market at the worst possible moment, had largely displaced traditional market makers who make expensive commitments not to do that. Nobody specifically chooses to do business with them, they're exploiting flaws in the wa…

...they're exploiting flaws in the way trades clear to front-run them and become unwanted middlemen.

Could you explain the mechanics of how this works?

Near as I can tell, the only way to become a "middleman" is to offer a better price than your competitors or to offer the same price at an earlier time. Is there a "front-run my competitors" FIX command I'm not aware of?

Re: Friends don't let friends get into finance

#75

Post by gfodor »

techcrunchtroll wrote: post #39

Some career advice for all of you on Hacker News. This advice may be two years too late, but may help someone just getting in now. The decision to leave a high-paying Wall Street firm is foolhardy and one that you will more than likely live to regret later. It would be much more prudent for you to stick around at a firm for 5-6 years, put away $500K-700K in cash, get some experience, make connections and then make yo…

"Life is what happens to when you are busy making other plans"

No better way to ensure you'll never follow your dreams than set yourself up to be dependent upon a large salary and plan on pursuing them "a couple of years later."

Re: Friends don't let friends get into finance

#76

Post by shareme »

fleitz wrote: post #65

Perhaps it's not a problem with finance but a problem with other industries that don't pay their people well. Who is to say that a CDO isn't a valuable economic activity? If creating a CDO creates more value to the economy than designing an automobile why shouldn't engineers focus on building those? People forget that prices and money are essentially information about the supply and demand of a good. As we progress i…

all derivatives are not coupled to supply and demand hence their economic value as less than zero...

Once you get off being coupled to supply and demand the cost of bailouts far out weighs any short term value

Re: Friends don't let friends get into finance

#77

Post by rbarooah »

yummyfajitas wrote: post #66
rbarooah wrote: post #55

Earlier quoted context omitted.

If you see finance as infrastructure to help other businesses grow (as I do), then it's growth should result in the growth of other industries. Instead what we see is finance growing and other industries declining. To me that suggests a general dysfunction in the role of finance. It simply isn't doing the good it's supposed to. There may be many or even most individuals who are acting in good faith, but the sector as…

What industries are declining? As far as I know, virtually every sector of the economy has grown. Manufacturing, medicine, education and technology certainly have. What industries are declining, and why do you believe that finance has failed them?

The private goods-producing sector value added fell 6.4 percent in 2009, after a 4.2 percent decline in 2008. The private services-producing sector declined by 2.1 percent, after a 0.4 percent increase in 2008. The finance and insurance industry grew 6.1 percent in 2009, partially offsetting the widespread economic decline. The increase was primarily driven by the strong recovery of the insurance carriers industry.

That's a quote from a December 2010 report from the government's bureau of economic analysis.

Re: Friends don't let friends get into finance

#78

Post by secretasiandan »

prodigal_erik wrote: post #58
Dilpil wrote: post #51

If investment banking is so needless, why did the economy falter when lehmen brothers went bankrupt? If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Most importantly- if these products are useless and harmful, why do people keep buying them?

> If high frequency trading is so needless, why does the entire market go into shock when the traders panicked and left on may 6th 2010? Because HFTs, who enjoy the privilege of walking away from the market at the worst possible moment, had largely displaced traditional market makers who make expensive commitments not to do that. Nobody specifically chooses to do business with them, they're exploiting flaws in the wa…

Can you tell me more about these commitments and what makes them expensive?

No one may explicitly choose to trade with HFT firms, but that doesn't mean they don't value their presence

"Although Vanguard does not engage in "high frequency trading" and does not operate a "dark pool," we believe much of the public concern over "high frequency trading" is misplaced and believes such activity, appropriately examined, contributes to a more efficient market that benefits all investors."

http://www.sec.gov/comments/s7-02-10/s70210-122.pdf

Re: Friends don't let friends get into finance

#79

Post by asanwal »

rbarooah wrote: post #67
asanwal wrote: post #60

Earlier quoted context omitted.

When the collapse of Facebook presents systemic risk (or the illusion of system risk depending on your perspective) to the US, I'm sure it will get a "bail out" as well.

Seriously? You're saying that it's fine for the financial industry to hold the country hostage when they fail because there's equal opportunity for other industries to do that too if they too can become large enough?

Not justifying it, but when people think the whole system could break down, crazya$$ isht happens. The rightness or wrongness of what was done is not what I was getting into.

Merely commenting on your point as to why the "finance sector is protected by the government whereas startups are not".

Re: Friends don't let friends get into finance

#80

Post by [deleted] »

shareme wrote: post #76
fleitz wrote: post #65

Perhaps it's not a problem with finance but a problem with other industries that don't pay their people well. Who is to say that a CDO isn't a valuable economic activity? If creating a CDO creates more value to the economy than designing an automobile why shouldn't engineers focus on building those? People forget that prices and money are essentially information about the supply and demand of a good. As we progress i…

all derivatives are not coupled to supply and demand hence their economic value as less than zero... Once you get off being coupled to supply and demand the cost of bailouts far out weighs any short term value

[deleted]
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