61–70 of 90 posts
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Learn c++, real-time programming, finance math, move to chicago.
How much finance math do you need ahead of time? Is it enough being a great developer who is willing and able to learn the financial side quickly?
As a soon to be graduate, how do I go about getting my foot in the door of a high frequency trading shop?
I've sadly lost touch with him, but there are a number of financial math grad programs out there. If you're really passionate about this technology, try one out and do some internships. Oh - and don't do it because you think you'll make millions.
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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…
Not every investment strategy: http://unqualified-reservations.blogspot.com/2009/12/gold-an...
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> 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 ....
Didn't the decision from the representatives of the taxpayers come in partly from both regulatory capture and sheer extortion?
As to extortion, the "everything is failing" stuff came from regulators who are still in place. By contrast, the admiral and general in charge of Pearl Harbor on Dec 6, 1941 were replaced almost immediately....
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…
They are part of society and it's worthwhile to them. What they do with their wealth is up to them as indeed it is for you. Who knows what is necessarily good for 'society'? Politicians are constantly telling us what's good for society and they get it wrong most of the time IMHO.
As you say what they do with their money is up to them.
I say that they shouldn't earn as much money, and that they should be more like Bill Gates.
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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.'
Because then the very wealthy scalper has a monopoly, and the monopoly power allows for profit-maximizing pricing, which causes dead-weight loss. It's better the scalper sell 50% of the tickets at 10x (and let 50% rot) than all of the tickets at 2x (and have nothing rot). The scalper will let some tickets rot to preserve the 10x pricing because this is a repeated game. If people know that he'd rather let tickets rot…
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…
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…
Anyway, I think most people are confused because they think of Wall Street as though it is all about equities. Equities are a casino because the public treats them that way. If people learned not to throw their money away in the stock market, maybe equities traders would be in fixed income and derivatives instead, where they provide a much more important service.
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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.
Taking small amounts from very large numbers of other market participants trades, and doing nothing else justifies being removed from the trading arena. I understand that large market participants are starting to do this, setting up 'dark trading pools' where leaches are excluded. Large fund managers also do internal crosses I think to avoid fees, but avoiding leaches might be part of it. What would justify their ear…
You want algos.
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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…
That depends. Their profit comes from somewhere, and it's everyone else's trades. The average investor is giving the HF traders a few pennies on each trade.
The average investor, however, doesn't care about the loss of Hedge fund traders do actually make markets more efficient, and so those who trade on them get better deals. This is not to justify finance having been enormous talent sink that it has been for the past 30 years; society would probably be better off with these people in science and technology, but the net benefit to the world produced by these people is positive.
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Taking small amounts from very large numbers of other market participants trades, and doing nothing else justifies being removed from the trading arena. I understand that large market participants are starting to do this, setting up 'dark trading pools' where leaches are excluded. Large fund managers also do internal crosses I think to avoid fees, but avoiding leaches might be part of it. What would justify their ear…
Algos provide liquidity and speed far more efficiently than any other category of traders. And, since they don't market time or trade swings, they can't contribute to bubbles. You want algos.