31–40 of 90 posts
As a soon to be graduate, how do I go about getting my foot in the door of a high frequency trading shop?
Learn c++, real-time programming, finance math, move to chicago.
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If this were the only way that scalpers operated, then I would agree that they'd be a social good. Instead, there are a number of scalpers who wait in line, knowing full well that they're not going to the game/show and they'll sell the tickets to someone who wasn't fast enough to get in line. This sort of thing happened in Dubai, where some folks would buy shares in some real estate venture, and then flip it to someo…
True, but as much as we HATE those guys who line up for the first Xbox360 / Wii / Playstaion 3 trying for the ebay flip, they are technically not doing evil. The ebay flippers allow MSFT / Nintendo / PS3 to charge $1000 on launch day so that demand == supply, but the game companies won't do it for social / PR reasons.
The only winner here is the scalper though. The customer Microsoft, Nintendo and Sony are put in a lose/lose position.
The scalpers have the highest profit margin while the real fans who buy the extra games have $500+ less to support the companies that are bringing real value to the market.
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It's pretty well documented that value investing in general will beat the market over the long term. See: The Super Investors of Graham and Doddsville http://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-an... How the Small Investor Beats the Market by Greenblatt, Pzena, Newberg (Journal of Portfolio Management, 1981) More recently, James Montier has released research at Societe Generale reflecting the fact that…
Take a look at the publication dates of those articles. 1981 and 1984. Right after the "U.S. is going to hell and stocks will never be a good investment" years of the 1970s, and right before the "If I put my money in a good mutual fund and leave it there, I'm guaranteed to make money!" years of the late 1980s and 1990s. Any investment strategy becomes less useful when large numbers of people pile into it. They bid up…
To be contrary to this guy you would be short now:
http://www.nytimes.com/2009/12/03/business/economy/03econ.ht...
"There’s nothing here to support double-dip fears."
You want to be overall long volatility and short the market.
You can do that by buying some far out of the money puts, and possibly this fund by selling some in the money calls, and limit your down side by buying some out of the money calls.
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I won't defend all of finance / trading, but maybe this analogy will satisfy you. Think of sports tickets. There is massive inefficiency in the primary market, meaning tickets you buy directly from the arena or on TicketMaster. One inefficiency comes from all the season ticket holders who skip the majority of the games and only go to the ones they actually want to see. We can fix this inefficiency on a secondary mark…
I don't think they're evil unless the taxpayers happen to be bankrolling their downside.
The taxpayers made that decision, so it's unclear why you think that the recipients are evil.
I think that the taxpayers made the wrong decision, but ....
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The trader self-justification spiel is that traders provide liquidity; they tighten the spread, so you get a better price if you trade on the market. However, the actual effect of arbitrage is to make things that are already reasonably liquid much moreso, which means that the benefit to buy-and-hold investors is low. Illiquid stocks are avoided by arbitrageurs (too risky). So the net benefit to society is nonzero, bu…
You're right that the value of a trade is minuscule. But, a trade's value only amounts to only a handful of cents. The top high-frequency traders though multiply that minuscule effect by millions (amounting to a much higher-value add as a whole to society), which IMHO justifies their high earnings.
What would justify their earnings would be if they made less money than the humans that preceded them would have.
Two people want to exchange. If a algo trader might quickly hit the seller, then a second later sell at a higher price to a buyer who arrived later, the buyer is worse off in price than if the seller had to wait. The seller gets to sell a second earlier, they probably don't care.
You can't make money unless you are a mint. Traders extract money from the market that would otherwise go to others. They produce no goods that we can consume. There is value to allocating investment funds to useful endeavors. It is not clear that algo's do much of this.
Sure they're making money particularly from being smart, but would someone be able to explain to me how making money from money contributes to something worthwhile to society? Is it just that they're being that much quicker in smoothing out prices of stuff on the stock market? I'm not being snarky, would just like to know. Another slightly different topic: the trend during the Bush boom years is that the so-called 's…
I won't defend all of finance / trading, but maybe this analogy will satisfy you. Think of sports tickets. There is massive inefficiency in the primary market, meaning tickets you buy directly from the arena or on TicketMaster. One inefficiency comes from all the season ticket holders who skip the majority of the games and only go to the ones they actually want to see. We can fix this inefficiency on a secondary mark…
If you setup a fair exchange where genuine buyers bid and genuine sellers offered and everything cleared at a specific time at one price for everyone, sellers and buyers would get better prices, which everyone would think was fairer, and all possible exchanges could occur.
Earlier quoted context omitted.
True, but as much as we HATE those guys who line up for the first Xbox360 / Wii / Playstaion 3 trying for the ebay flip, they are technically not doing evil. The ebay flippers allow MSFT / Nintendo / PS3 to charge $1000 on launch day so that demand == supply, but the game companies won't do it for social / PR reasons.
The ebay flippers allow MSFT / Nintendo / PS3 to charge $1000 on launch day so that demand == supply The only winner here is the scalper though. The customer Microsoft, Nintendo and Sony are put in a lose/lose position. The scalpers have the highest profit margin while the real fans who buy the extra games have $500+ less to support the companies that are bringing real value to the market.
The customer has a choice on whether or not it's worth the purchase. To the customer who values the item (Wii/Sporting Event/whatever) over the (inflated) cost, it is a net gain, not a loss. To the person who doesn't value it above the asking price, they don't have to pay, and they don't have to get the item.
I bought my Wii for an inflated price on eBay and I have no regrets about it. I have a friend who bought her Wii at an even more inflated price (almost double the asking price, if I remember correctly), and she also had no qualms about it.
Furthermore, scalpers who wait in line for hours to buy tickets/game systems, and then flip it for profit are essentially providing a paid service to those who are too impatient, late, or otherwise incapable of buying said items when they go on sale, knowing that there is a limited supply that will not meet all the demand.
Sure they're making money particularly from being smart, but would someone be able to explain to me how making money from money contributes to something worthwhile to society? Is it just that they're being that much quicker in smoothing out prices of stuff on the stock market? I'm not being snarky, would just like to know. Another slightly different topic: the trend during the Bush boom years is that the so-called 's…
Earlier quoted context omitted.
I won't defend all of finance / trading, but maybe this analogy will satisfy you. Think of sports tickets. There is massive inefficiency in the primary market, meaning tickets you buy directly from the arena or on TicketMaster. One inefficiency comes from all the season ticket holders who skip the majority of the games and only go to the ones they actually want to see. We can fix this inefficiency on a secondary mark…
scalper can buy all the tickets to a popular game and sell them all at 10x the price How is this a problem, especially one requiring regulation? Nothing has changed from your original formulation, except apparently that he's now making 'too much money.'
Also, first-party ticket vendors have been known to actively partner with third-party resellers to essentially eliminate the original market. Ticketmaster, for example, owns an online scalping service (TicketsNow) and there have been repeated allegations that they give preferential treatment to their own scalping subsidiary.