Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Pricing Money: A beginner's guide to money, bonds, futures and swaps

jdawiseman.com

Post reply on HN
Print view View original

301–310 of 316 posts

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#301

Post by scubbo »

NoboruWataya wrote: post #80
scubbo wrote: post #69

Earlier quoted context omitted.

Quite. The general response I get from questions like this to financial folks is that these markets and vehicles and products are important "for liquidity", but they can never quite tell me who liquidity benefits other than the system itself.

It benefits people who need to raise cash, because they can do it more quickly and generally with lower financing costs than in an illiquid market. It benefits people who have cash that they want to invest, because they have more opportunities to do it and more visibility over which investments are safe and which ones are risky. Therefore it benefits society by transferring cash from people who have it now but need i…

Interesting - I'll definitely have to think on that one, thank you! I suppose another required assumption (implied but not explicitly stated) is that the activities undertaken by "people who need to raise cash" are, on balance, good things for actual people. Despite the fact that we overwhelmingly hear about the negative examples, I guess this is _probably_ true? Ugh, I suppose so.

I wonder if there's a way to derive those same benefits (people doing useful work have access to funds) without the exploitable loopholes (sufficiently clever and evil people can shuffle numbers around and fabricate wealth without _actually_ affecting loan-availability)? I suspect that's probably a provable invariant - you can't have one without the other. Shame.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#302

Post by spopejoy »

soVeryTired wrote: post #255
alecco wrote: post #218

All these Financial guides are very interesting. But beware of falling into the illusion of being a good-enough active investor. It's like entering the Pro league as an overconfident amateur. The other players are the best in the universe. And they have cybernetic extensions: algorithmic trading with virtually limitless amounts of resources and information. And sometimes they have "alpha" you'll never, ever get your…

I’m not going to argue that asset managers and trading desks have plenty of resources and that they can transact very quickly and cheaply. But having been on the inside of small and large asset managers for almost ten years, I can say there’s a lot of groupthink and rather brain dead behaviour to be seen on a trading floor. Call me jaded but I’ve worked with both systematic and discretionary traders. The algos I’ve s…

Indeed, institutional traders and asset managers are still the "buy side" and as such are not crazily more informed than retail.

The real sharks are on the sell side, using low-latency arbitrage and massive leverage, and have the ability to unwind risky positions over months. Fleecing buy side and retail is highly profitable for them.

In their defense of course they'll say they're "providing liquidity", and given how much buy side tends to pile up on one side of the trade, you can see their point: somebody's going to take the other side of these big moves.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#303

Post by vecinu »

alecco wrote: post #295
vecinu wrote: post #277

Earlier quoted context omitted.

Hot take but I'll bite, what's your rationale? We're only ~9% down from VTI's ATH and what happens now doesn't matter when your investing horizon is 15+ years.

This is terrible advice BTW. I got it in 2007, also HN and FT forums convinced me. So I put significant savings in a couple of index funds. I lost 40% within months. Left it there and recovered only after 8 years (and that's not even adjusting for inflation or MM rate). Please be a bit more self-aware. I spent many years in finance and the more I learned, the more I realized how much I don't know.

I don't think I'm following, you didn't "lose" anything if you didn't sell.

Even if you invested in 2007 at the peak and lost 50% of a 100% S&P500 portfolio by 2009, by now you'd be extremely wealthy, adjusting for inflation.

A $10k investment in 2007 is now worth $27k and that assumes you didn't contribute another penny for 16 years.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#304

Post by vecinu »

alecco wrote: post #292
vecinu wrote: post #277

Earlier quoted context omitted.

Hot take but I'll bite, what's your rationale? We're only ~9% down from VTI's ATH and what happens now doesn't matter when your investing horizon is 15+ years.

- Core inflation not going down - Recession now undeniably starting (several friends in Tech are losing their jobs in companies doing well) - Ballooning deficits and debt at every level - High rates making debt ballooning faster - USD dominance decreasing That's known and now not matter of opinion but hard facts. Now, where to invest? I have no idea (and I'm pretty sure traditional investment knowledge doesn't work a…

Core inflation is going down, just not as fast as other sectors. People losing their jobs is not a hard fact of a recession, we have one of the lowest unemployment rates in history.

I'm just indexing and staying happy, worry free, it worked for the last 100 years and I'm sure it'll work for my lifetime.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#305

Post by boppo1 »

jdaw1 wrote: post #212
boppo1 wrote: post #170

Earlier quoted context omitted.

The book is from 2001; are there any substantial changes in the landscape a motivated finance student should be aware of?

There’s a free HTML version on my website, which has some green-boxed updates. But even without those, the book is an excellent beginner’s guide to the interest rate markets. (I am the author, so might be thought not to have a NPoV.)

Thanks for your effort!

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#306

Post by boppo1 »

beefield wrote: post #179
boppo1 wrote: post #170

Earlier quoted context omitted.

The book is from 2001; are there any substantial changes in the landscape a motivated finance student should be aware of?

As a beginner book, no there are no substantial changes on what a beginner should read. However, while the simple discounting formulas described (likely, haven't read other than the list of contents) in the book were at the time actually used more or less as-is to value instruments in the derivative markets, nowadays they are seldomly used on their own. Two major developments there are multi curve discounting taking…

I had wanted to work in markets, but my GPA (& now post-grad resume) didn't quite work out for it. I don't do well in the lecture-homework format. Nonetheless I'm interested in the minutiae, so thank you for the elucidation!

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#307

Post by CRConrad »

heywhatupboys wrote: post #213
consilient wrote: post #184

Earlier quoted context omitted.

Ownership and allocation mechanism are mostly independent axes. Consider for instance Norway (extensive state ownership but highly market-oriented; in certain respects more liberal than the US) contemporary China (state control of most major firms but mostly market-oriented), Gaullist France (nationalized infrastructure plus minority state shares in other sectors, markets supplemented with indicative planning and sta…

> in certain respects more liberal than the US why would this be surprising? Don't believe for a second that the USA has a generally more liberal financial market than Scandinavia. Employment laws, trade, regulations, etc. are often wayyy less strict in Scandinavia.

Employment laws “wayyy less strict” in Scandinavia than in the USA?

Where in Scandinavia would that be?!?

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#308

Post by Breza »

MrPatan wrote: post #261
notahacker wrote: post #252

Earlier quoted context omitted.

The "social stack" is what actually makes finance's "application layer" happen, because it turns out that blockchains can't actually enforce delivery of barrels of oil or sue ICO recipient for spending their proceeds on coke and hookers, and things like hiring and receiving goods and valuing insurance losses all involve counterparties. Much as you would like to personalise this debate, it's not about my level of agre…

Nobody is saying delivery of assets is done on chain. That's a strawman you've skewered twice already, well done. What we're saying is: a lot of the low level infrastructure used now in finance (brokers! Dealers! Clearinghouses!) is easily replaced by some code, once you have trustless decentralized computers. Which we do now. Then your oil barrel market is just some code nobody needs to trust, and yes, the "last mil…

All those levels of infrastructure already run on code. There's no tech reason that Robinhood can't sell you stock that it holds. The FTX situation shows you why they aren't allowed to do that.

Re: Pricing Money: A beginner's guide to money, bonds, futures and swaps

#309

Post by Breza »

MrPatan wrote: post #226
croes wrote: post #192

Earlier quoted context omitted.

There is no such thing as trustless

Where's the trust in a bitcoin tx?

You have to trust that the restaurant where you're having lunch will accept BTC as payment. In reality, using Bitcoin requires the same trust-based infrastructure as everything else because the only way to buy anything with it is to trade it for fiat.
Post reply on HN