tag:blogger.com,1999:blog-6329595.post6074825784382473436..comments2024-03-29T00:04:32.434-05:00Comments on Althouse: "Since 2008, the financial industry has changed the way it does business. Can the S.E.C.’s Mary Jo White control it?"Ann Althousehttp://www.blogger.com/profile/01630636239933008807noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-6329595.post-41272714328798530882013-11-11T10:16:43.843-06:002013-11-11T10:16:43.843-06:00It's said that if you don't know who the s...It's said that if you don't know who the sucker at the poker table is, it's probably you.<br /><br />So, who's the sucker at this poker table?<br /><br />If there were no sucker, then one fast-trader's gain could only be another fast-trader's loss. But if this were, overall, just a zero-sum game then there would really be nothing overall to support all these aggressive, fast traders. . Yet overall they prosper. <br /><br />So, who's the sucker? Well, guess what- it's you, the sucker who's paying those princely fees to all those aggressively managed funds (who do this fast trading). <br /><br />Yet because this year's winner at aggressive, fast trading is likely to be next year's loser, practically everyone would be better off owning a basket of low-cost index funds. <br /><br /><br /><br />Peterhttps://www.blogger.com/profile/16099940931064117337noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-61706635747538776642013-11-10T09:13:08.003-06:002013-11-10T09:13:08.003-06:00The malignant influence of government and governme...<i>The malignant influence of government and government-driven institutions following policies driven by political needs, such as the Fed, utterly dwarfs what the HFT coders can possibly imagine. Sure, if Goldman-Sachs could print up $85 billion a month ...</i><br /><br />USA gooberment bugging of Angela Merkel's cell phone is relevant here. If Germany ever decides to change its policy regarding quantitative easing for the EU, firms such as Golden Sacks would very much like to know ... before other peepul do.<br /><br />NSA snoops on Angela Merkel's conversations --> maybe big Dem donors get some useful info.David Davenporthttps://www.blogger.com/profile/03315090179595817174noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-58528098944894713742013-11-10T07:27:23.402-06:002013-11-10T07:27:23.402-06:00 rhhardin said...
Incidentally insider trading doe... rhhardin said...<br />Incidentally insider trading does regular people a service as well.<br /><br />If a stock should fall, it will fall sooner than otherwise.<br /><br />If a stock should rise, it will rise sooner than otherwise.<br /><br />The price is fairer than otherwise for everybody.<br /><br />The disparagement of it is one of those mysterious things that make no sense.<br /><br />Like fining a company for cheating its stockholders. The stockholders pay twice. Idiocy.<br /><br />The government makes things worse, mostly.<br /><br /><br />One thing I noticed about this kind of trading.<br />It was/is wide open. No one has stepped in to regulate it except the players themselves. I think that was the attraction in the first place. <br /><br />Government hs never made anything more efficient.Rustyhttps://www.blogger.com/profile/00938263272237104128noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-18971005505426862242013-11-10T02:55:04.001-06:002013-11-10T02:55:04.001-06:00A magnificent piece of misdirection. As if the bi...A magnificent piece of misdirection. <i>As if</i> the big problems of the financial system these days stem from HFT and those nasty amoral arbitrageurs and bundlers of dodgy mortgages, and you need to place your faith in the plucky band of eagle-eyed government knights-errant in the DAs office and SEC.<br /><br />The ignored elephant in the room is, of course, Federal Reserve policy, not to mention the games government plays with its FHA, Fannie and Freddie, and the new CFPB, which I'm <i>sure</i> Elizabeth Warren will imbue with similar Ms. Smith Goes To Washington feel-good narrative for the rubes.<br /><br />The malignant influence of <i>government</i> and <i>government-driven</i> institutions following policies driven by <i>political</i> needs, such as the Fed, utterly dwarfs what the HFT coders can possibly imagine. Sure, if Goldman-Sachs could print up $85 billion a month on their color laser printers, they would, and who cares about the carnage that would wreak on everyone else? But...they don't have to! Their moles in the Obama Administration are doing it <i>for</i> them and letting them make $billions yearly at the expense of future taxpayers, mom 'n' pop bondholders, and savers everywhere -- while trotting out Jay Carney to haughtily insist the foxes are <i>fiercely</i> devoted to guarding the hen coop, you betcha.<br /><br />As Cicero says, cui bono? There's a solid reason the Wall Street "villains" of this piece were candidate Obama's #1 fan, and why they are quite happy to have his mouthpieces paint them as "villians" requiring <i>still more</i> government manipulation of the financial system. They're weeping all the way to their numbered Swiss bank accounts.Carlhttps://www.blogger.com/profile/10138276375040381842noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-75575198468402945852013-11-10T01:58:24.033-06:002013-11-10T01:58:24.033-06:00To what extent are market problems the result of h...<i>To what extent are market problems the result of high frequency trades made over changes in price that are fractions of cent per share?</i><br /><br />The smallest permissible price change is a penny per share. It used to be eighths of a dollar. The eighths rule allowed for a higher bid-ask spread, which generally benefitted brokers to the detriment of individual investors. <br /><br />The HFT generally makes the market closer to the perfectly competitive ideal. Maybe individual investors get nicked for a penny or two per share when buying and selling but it's better than the alternative. Ernst Stavro Blofeldhttps://www.blogger.com/profile/02237453525690607370noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-22615312132870632422013-11-10T01:58:13.033-06:002013-11-10T01:58:13.033-06:00To what extent are market problems the result of h...<i>To what extent are market problems the result of high frequency trades made over changes in price that are fractions of cent per share?</i><br /><br />The smallest permissible price change is a penny per share. It used to be eighths of a dollar. The eighths rule allowed for a higher bid-ask spread, which generally benefitted brokers to the detriment of individual investors. <br /><br />The HFT generally makes the market closer to the perfectly competitive ideal. Maybe individual investors get nicked for a penny or two per share when buying and selling but it's better than the alternative. Ernst Stavro Blofeldhttps://www.blogger.com/profile/02237453525690607370noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-12476973055395757642013-11-09T23:42:20.073-06:002013-11-09T23:42:20.073-06:00It was Ambrose Bierce in the 19th century who obse...It was Ambrose Bierce in the 19th century who observed: "The gambling of business looks with severe disfavor on the business known as gambling." bbkingfishhttps://www.blogger.com/profile/09837055667750129209noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-48830262137137716732013-11-09T22:18:06.632-06:002013-11-09T22:18:06.632-06:00Ah quants - the rock stars of finance. They do gre...Ah quants - the rock stars of finance. They do great until they don't. Nassim Taleb's famous fat tail lives here. In other words, really bad things happen more often than you'd expect. And, when they do, they're even worse than you've prepared for.<br /><br />So it is with quant strats. Witness LCCM.<br /><br />No doubt they'll make some money. I wish them well. Remember though guys, in then end everything gets arbed out. Everything.Jay Vogthttps://www.blogger.com/profile/05791588395485069312noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-58442627865158675132013-11-09T22:00:14.186-06:002013-11-09T22:00:14.186-06:00It would seem that money is being made, but no pro...It would seem that money is being made, but no product is being produced. I doesn't seem like a sustainable business plan to me.Levi Starkshttps://www.blogger.com/profile/05608821881587804877noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-1767449446001105492013-11-09T21:57:55.542-06:002013-11-09T21:57:55.542-06:00So my question is this..
Are they making money tha...So my question is this..<br />Are they making money that wouldn't otherwise exist, which is to say out of thin air, <br />Or are they just figuring out how to get a larger piece of a fixed sized pie? which is to say taking it from someone else?Levi Starkshttps://www.blogger.com/profile/05608821881587804877noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-55758310333856611972013-11-09T19:54:28.761-06:002013-11-09T19:54:28.761-06:00This has all happened before. The next time will...This has all <a href="http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all" rel="nofollow"> happened before.</a> The next time will be farce.Michael Khttps://www.blogger.com/profile/18127450762129879267noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-59528419426589932422013-11-09T19:51:34.289-06:002013-11-09T19:51:34.289-06:00Incidentally insider trading does regular people a...Incidentally insider trading does regular people a service as well.<br /><br />If a stock should fall, it will fall sooner than otherwise.<br /><br />If a stock should rise, it will rise sooner than otherwise.<br /><br />The price is fairer than otherwise for everybody.<br /><br />The disparagement of it is one of those mysterious things that make no sense.<br /><br />Like fining a company for cheating its stockholders. The stockholders pay twice. Idiocy.<br /><br />The government makes things worse, mostly.rhhardinhttps://www.blogger.com/profile/06901742898653890646noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-25135606270786618802013-11-09T19:47:32.318-06:002013-11-09T19:47:32.318-06:00The traders are competing with each other, not wit...The traders are competing with each other, not with regular people.<br /><br />They do regular people a service by keeping prices uniform.<br /><br />Except when something goes wrong, but the traders want to avoid that as much as anybody.rhhardinhttps://www.blogger.com/profile/06901742898653890646noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-70084591855458747562013-11-09T19:08:35.212-06:002013-11-09T19:08:35.212-06:00I think there was one engineer that demonstrated a...I think there was one engineer that demonstrated a program that could read market orders and process its own order before the orders shifted the price.<br /><br />Remember the Rock/Paper/Scissors robot?<br /><br />That's what we're dealing with. <br /><br />It has nothing to do with market efficiency or fair pricing. The markets need an interval timer. All orders processed once-a-second. Or better, once-a-day.Henryhttps://www.blogger.com/profile/14520113896946845614noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-35253173200482851892013-11-09T18:40:50.595-06:002013-11-09T18:40:50.595-06:00One thing, for example, that automated arbitrage d...One thing, for example, that automated arbitrage does is give the system of markets the same strength as the financially weakest exchange.<br /><br />If a trader goes bankrupt, the exchange covers his obligations to other traders.<br /><br />The system of completed trades is then only guaranteed by the weakest exchange.<br /><br />Generally there's a backroom meeting to get it covered, but that's going to depend on how deep a hole the system got itself into.rhhardinhttps://www.blogger.com/profile/06901742898653890646noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-26997254170628337212013-11-09T18:24:00.508-06:002013-11-09T18:24:00.508-06:00In 2000, the S.E.C. permitted stocks to be traded ...<i>In 2000, the S.E.C. permitted stocks to be traded in pennies or fractions of pennies, rather than the customary eighths or thirty-seconds of a dollar. That made it easier for traders to make money by placing very large orders for very small variances in the price of a stock.</i><br /><br />To what extent are market problems the result of high frequency trades made over changes in price that are fractions of cent per share?<br /><br />If significant, wouldn't a transaction fee/tax of one or a few cents per share be the least invasive form of curtailing those excesses?Wincehttps://www.blogger.com/profile/15002449963597087316noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-30113472462016556852013-11-09T18:00:50.604-06:002013-11-09T18:00:50.604-06:00If you read that the Dow dipped briefly to zero be...If you read that the Dow dipped briefly to zero before recovering up ten points for the day, it's flawed computerized trading that made it happen.rhhardinhttps://www.blogger.com/profile/06901742898653890646noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-78649360958233487252013-11-09T17:59:07.464-06:002013-11-09T17:59:07.464-06:00It just means that you get fair prices everywhere....It just means that you get fair prices everywhere. Arbitrage opportunities should disappear. You want them to. Then there's no point in shopping around.<br /><br />The problem is instabilities driven by computer trading when something unanticipated comes up.<br /><br />Systems find a way to go unstable every now and then.rhhardinhttps://www.blogger.com/profile/06901742898653890646noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-28307672050088595782013-11-09T17:49:35.958-06:002013-11-09T17:49:35.958-06:00When milliseconds count, the market is just second...When milliseconds count, the market is just seconds away for the average person.Oso Negrohttps://www.blogger.com/profile/07996629147239192401noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-12825630425639268782013-11-09T17:41:18.054-06:002013-11-09T17:41:18.054-06:00It's called High Frequency Trading and it has ...It's called <a href="http://en.wikipedia.org/wiki/High-frequency_trading" rel="nofollow">High Frequency Trading</a> and it has been around for a while.lemondoghttps://www.blogger.com/profile/14606734670170393751noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-37007893700255139892013-11-09T17:20:27.615-06:002013-11-09T17:20:27.615-06:00Because government control is the answer.Because government control is the answer.Anonymousnoreply@blogger.com