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My Time at Lehman

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Re: My Time at Lehman

#161

Post by Evbn »

ig1 wrote: post #37
crazygringo wrote: post #24

Earlier quoted context omitted.

> simply transferring wealth from the less sophisticated investors often teachers’ pension funds and factory workers’ retirement accounts, to the more sophisticated investors... Exactly. Wall street and investment have wonderful effects -- funneling money towards companies that can use it in amazingly productive ways. It provides an incredibly valuable service. But the flip side is exactly this, that pension funds, o…

Because people are different, if you're 20 year-old healthy female you'll have a completely different risk profile from a 64 year-old male with health problems. If you work in the government you might want to avoid your pension being in your own government bonds because you don't want all your eggs in one basket. If you're an immigrant who plans to retire back to your home country you might want to limit you exposure…

That's not possible with a pension, since members don't direct the investments.

Re: My Time at Lehman

#162

Post by Evbn »

harryh wrote: post #30
crazygringo wrote: post #24

Earlier quoted context omitted.

> simply transferring wealth from the less sophisticated investors often teachers’ pension funds and factory workers’ retirement accounts, to the more sophisticated investors... Exactly. Wall street and investment have wonderful effects -- funneling money towards companies that can use it in amazingly productive ways. It provides an incredibly valuable service. But the flip side is exactly this, that pension funds, o…

If you're investing over the long term and can afford to ride out the shocks then historically speaking stocks have always out performed bonds. That's not gambling. It's not a zero sum game between you & Goldman. In a growing economy everyone can win by investing.

In the modern era of retail investing and hedge funds and liquidity providers, I don't know if stocks and "betting on American industry" are the long term value they were in the past.

Although, if you take the view that corporations are pillaging America and its taxpayers, then owning stock maybe just the hedge you need. If those corporations' managers aren't pillaging the corporations.

Re: My Time at Lehman

#163

Post by alexsilver »

tomkarlo wrote: post #130
mapgrep wrote: post #110

Earlier quoted context omitted.

You bring up a great point, which is actually an excellent alternative answer to OP's question, "what do you expect?" What we should expect is for banks to protect themselves as businesses by changing compensation to account for long term risk. And if they fail to do that organically, we should acknowledge that the market is failing in a dangerous way and more regulation around compensation is needed.

I don't know that you need to regulate compensation. You just need to not bail them out when they blow up, and it will self-correct. And you shouldn't let them gamble with federally insured (FDIC) money - either be a investment bank or a commercial bank, but not both, so that regular consumers don't get caught in the middle.

I totally agree. Had everyone been allowed to fail, we would've been well on the way to recovery already. It's frustrating to watch the government keep this pathetic lifeline going which will fail in the end anyway.

Re: My Time at Lehman

#164

Post by ced »

michaelochurch wrote: post #89
ap22213 wrote: post #29

Earlier quoted context omitted.

I know several people who make a lot of money in trading, and I hear the liquidity argument constantly as the justification for their behavior. They describe the millions that they make as payment for all the 'value' that they've given to everyone; But, as an ignorant, I can't see how those millions could have come from anywhere than other (less informed) peoples' pockets. To me, the worst part (again, as an ignorant…

I know several people who make a lot of money in trading, and I hear the liquidity argument constantly as the justification for their behavior. They describe the millions that they make as payment for all the 'value' that they've given to everyone; But, as an ignorant, I can't see how those millions could have come from anywhere than other (less informed) peoples' pockets. Trading is a legitimately socially useful bu…

If Bob is a little better than Mark, Bob will get 100% of the business and Mark will get nothing. At this point, to do arbitrage you need to be thinking about microseconds. If Bob can execute in 75 mcs and Mark takes 100 mcs, then Bob is going to get all the trades.

If Bob were to be kidnapped by aliens, would society be poorer for it?

Re: My Time at Lehman

#165

Post by Evbn »

ig1 wrote: post #17
edw519 wrote: post #14

Earlier quoted context omitted.

Just because Oracle sells into companies that could just as well have used postgres that doesn't mean that Oracle aren't producing anything of value,.. Oracle doesn't sell software. They sell risk reduction. Someone to sue or blame. Once you understand that, you see how brilliantly they've achieved product/market fit in a way many people here can only dream of.

Sure some people buy Oracle for risk reduction after having done a sophisticated analysis, but plenty of people buy it because that's what the nice sales person tells them they need and the sales person obviously understand this techy stuff far more than they do. The dev team says they can just use this "postgres" but the sales person said he'd seen this situation a lot of times before and that dev team was too inexp…

That's what parent meant by risk reduction. Career risk reduction.

Re: My Time at Lehman

#166

Post by Evbn »

ig1 wrote: post #17
edw519 wrote: post #14

Earlier quoted context omitted.

Just because Oracle sells into companies that could just as well have used postgres that doesn't mean that Oracle aren't producing anything of value,.. Oracle doesn't sell software. They sell risk reduction. Someone to sue or blame. Once you understand that, you see how brilliantly they've achieved product/market fit in a way many people here can only dream of.

Sure some people buy Oracle for risk reduction after having done a sophisticated analysis, but plenty of people buy it because that's what the nice sales person tells them they need and the sales person obviously understand this techy stuff far more than they do. The dev team says they can just use this "postgres" but the sales person said he'd seen this situation a lot of times before and that dev team was too inexp…

Postgres is proffesionally supported by EnterpriseDB.

But postgres didn't have any horizontal scaling (multi-CPU master cluster) story until last year.

Re: My Time at Lehman

#167

Post by Evbn »

tomkarlo wrote: post #87
rayiner wrote: post #49

Earlier quoted context omitted.

Is having superior information and data not consistent with a level playing field? What about hiring up a significant portion of all the top college graduates and having them work around the clock to give you every possible advantage? Is that consistent with a level playing field? My point is that there are a lot of things short of fraud that we consider "meritocracy" (and having superior information and superior ana…

In theory, Wall Street should accrue value in two forms: as a tax for the liquidity they provide, and as compensation for the risk they take. It used to be that the investment banks were mainly middle-men, but increasingly they've also become essentially government-backed hedge funds. Unfortunately, they can use their position as middlemen to extra value from Main Street. Finance should not be like 10% of your GDP, u…

POI: the liquidity fee is the same as the risk compensation. They take the risk of the price moving before they can unload the stock.

Re: My Time at Lehman

#168

Post by Evbn »

rayiner wrote: post #136
penny500 wrote: post #129

Earlier quoted context omitted.

What specific law are you referring to that forces Main Street to invest in 401Ks?

The tax code, mainly (and remember attempts to privatize social security?). Not overt force, no, but intended to skew behavior certainly.

401k doesn't force you into wall street. You can buy govt securities or money market, unless your employer is awful.

Re: My Time at Lehman

#169

Post by Evbn »

jwb119 wrote: post #16
cadlin wrote: post #13

Earlier quoted context omitted.

I think American public policy has a hard time grappling with Wall Street because the financial sector has disproportionate lobbying power. Also, I don't think most Americans care about how free from regulation the financial sector is. Most people have a feeling that Wall Street is screwing over everybody and there's nothing they can do about it. I'm not exactly sure who you mean by "we," either. Hacker News commente…

> the financial sector has disproportionate lobbying power. I'm not sure that's true. If Wall Street really had some super lobbying power Dodd-Frank and Sarbanes-Oxley wouldn't have passed in their current forms. Regulating Wall Street is a pretty easy position to take if you're a politician.

SOX hassles businesses, not Wall Street.

Re: My Time at Lehman

#170

Post by Evbn »

penny500 wrote: post #61
pyoung wrote: post #42

Earlier quoted context omitted.

The reaction to SOX by Wall Street was fairly mixed, some liked it because it meant the could put more trust in corporate financial statements. Some did not support the bill because of the usual straw man argument that 'regulation makes us less competitive'. Regardless, the passage of the bill does not say anything about the lobbying power of Wall Street, because WS was fairly mixed on it to begin with. Regarding Dod…

How is "regulation makes us less competitive" a straw man argument? If your Singaporean or European competitors operate under a set of different and less stringent rules, that wouldn't increase your costs to doing business (and in effect making you less competitive relative to foreign competitors)? Even the regulators know about the costs of Dodd-Frank.

Regulation is also a hedge against the risk of fraud, providing similar function to a hedge fund or futures derivative.
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