Friends don't let friends get into finance
techcrunch.com
Friends don't let friends get into finance
1–10 of 147 posts
Re: Friends don't let friends get into finance
#2Only way you compete with Wall Street is you increase the utility of expected payoffs, not just the wage. People who are going to WS have different risk profiles than entrepreneurs. You can have low participation in entrepreneurship as long as participating ones are competitive and innovative. It is better use of talent and time if those who would have failed anyways (because they don't have the guts, etc) go and make themselves useful elsewhere.
Re: Friends don't let friends get into finance
#3the quant finance that takes the best and the brightest (as opposed to the bankers and sales traders), uses informational and computational advantage to make money.
How are internet startups any different?
Also, even the bankers and sales traders are providing a service that apparently people want. If you can judge them as not creating societal value, why can't I say that the Nth photo sharing website is not creating value?
Re: Friends don't let friends get into finance
#4the quant finance that takes the best and the brightest (as opposed to the bankers and sales traders), uses informational and computational advantage to make money. How are internet startups any different? Also, even the bankers and sales traders are providing a service that apparently people want. If you can judge them as not creating societal value, why can't I say that the Nth photo sharing website is not creating…
People generally won't use your site unless it helps them in some way. It makes their life easier, it helps them move information around, or they enjoy it. It's debatable whether the specifics represent a net good for humanity (cough Zynga cough) but there's at least a decent chance that you're helping folks out.
Some financial organizations provide important liquidity. They offer you a loan when you need one. But many exist only to shuffle around money in a clever way, so that some percentage of that money goes into their coffers. And it seems like the smarter the employees, the less likely they are to actually be providing any real services to people. After all, smart employees are the ones who can make truly spectacular exploits of the game... exploits that are lucrative but pointless.
And I don't know anything about the details, but I can't help but wonder... when you write a brilliant algorithm that scrapes money out of the markets... or you set up a clever instrument that lets you capitalize on structural regularities in the market... whose hide does that money come out of? I honestly have no idea, but my instinct is that it's coming from people who are already disenfranchised.
Re: Friends don't let friends get into finance
#5the quant finance that takes the best and the brightest (as opposed to the bankers and sales traders), uses informational and computational advantage to make money. How are internet startups any different? Also, even the bankers and sales traders are providing a service that apparently people want. If you can judge them as not creating societal value, why can't I say that the Nth photo sharing website is not creating…
People generally won't use your site unless it helps them in some way. It makes their life easier, it helps them move information around, or they enjoy it. It's debatable whether the specifics represent a net good for humanity ( cough Zynga cough ) but there's at least a decent chance that you're helping folks out. Some financial organizations provide important liquidity. They offer you a loan when you need one. But…
"And it seems like the smarter the employees, the less likely they are to actually be providing any real services to people"
I would call this a negotiation that they are winning. Just like startup founders win in their negotiation with employees for equity.
"People generally won't use your site unless it helps them in some way."
And people generally won't trade with you unless it helps them in some way. Again, how is this different?
Re: Friends don't let friends get into finance
#6Only way you compete with Wall Street is you increase the utility of expected payoffs, not just the wage. People who are going to WS have different risk profiles than entrepreneurs. You can have low participation in entrepreneurship as long as participating ones are competitive and innovative. It is better use of talent and time if those who would have failed anyways (because they don't have the guts, etc) go and mak…
I think you have it backwards. It's not about max_a U(E(a)), but of max_a E[U(a)]. Otherwise insurance wouldn't work.
Let's illustrate with an example. Suppose you buy theft-insurance, there's 10% chance of being robbed and the cost of robbery is $100000. Then, E[a] = 0.1 * -100000 = -10,000. So you'd be maximizing U(-10000). This is different from maximizing E[U(a)] because in this case it's 0.1 * U(-100000) + 0.9 * U(0).
It's different if you are not completely neutral.
Re: Friends don't let friends get into finance
#7"They note that the finance sector today produces a greater percentage of GDP than at any time in history."
This is not an effective argument. The computer software industry is also producing a larger than ever percentage of GDP. In other news, the building wooden ships sector is not responsible for much of the GDP in recent years. Is that a problem?
Re: Friends don't let friends get into finance
#8Earlier quoted context omitted.
People generally won't use your site unless it helps them in some way. It makes their life easier, it helps them move information around, or they enjoy it. It's debatable whether the specifics represent a net good for humanity ( cough Zynga cough ) but there's at least a decent chance that you're helping folks out. Some financial organizations provide important liquidity. They offer you a loan when you need one. But…
"And it seems like the smarter the employees, the less likely they are to actually be providing any real services to people" I would call this a negotiation that they are winning. Just like startup founders win in their negotiation with employees for equity. "People generally won't use your site unless it helps them in some way." And people generally won't trade with you unless it helps them in some way. Again, how i…
people generally won't trade with you unless it helps them in some way
Not necessarily. People engaged in real trade set up financial institutions, but once these institutions are set up, a game is in place. That game may be beneficial overall to the businesses, but individual players aren't necessarily beneficial... even if they are participating according to the agreed upon rules.
It's like cashing in a Groupon deal and then never returning to that business. The company loses money on you and they only agree to serve you because it works for them at scale. But at the micro scale you are hurting them.
People who do so have every right to, but they are not contributing to the economy. They are just making a lot of money by making other peoples' lives more difficult.
Re: Friends don't let friends get into finance
#9The report was produced by the Kauffman foundation, a foundation dedicate to improve entrepreneurship. It's not exactly an unbiased piece of research.
Attacking finance is the popular theme of the days, but finance has done a huge amount in supporting global economic growth. From providing debt and capital financing to reducing foreign exchange costs.
Re: Friends don't let friends get into finance
#10Earlier quoted context omitted.
"And it seems like the smarter the employees, the less likely they are to actually be providing any real services to people" I would call this a negotiation that they are winning. Just like startup founders win in their negotiation with employees for equity. "People generally won't use your site unless it helps them in some way." And people generally won't trade with you unless it helps them in some way. Again, how i…
people generally won't trade with you unless it helps them in some way Not necessarily. People engaged in real trade set up financial institutions, but once these institutions are set up, a game is in place. That game may be beneficial overall to the businesses, but individual players aren't necessarily beneficial... even if they are participating according to the agreed upon rules. It's like cashing in a Groupon dea…
That's like saying someone who listens to a sales pitch and then doesn't buy the product isn't adding value to the economy.