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Sudden Demand For Logicians On Wall Street
An anonymous reader writes "In an unexpected development for the depressed market for mathematical logicians, Wall Street has begun quietly and aggressively recruiting proof theorists and recursion theorists for their expertise in applying ordinal notations and ordinal collapsing functions to high-frequency algorithmic trading. Ordinal notations, which specify sequences of ordinal numbers of ever increasing complexity, are being used by elite trading operations to parameterize families of trading strategies of breathtaking sophistication. The monetary advantage of the current strategy is rapidly exhausted after a lifetime of approximately four seconds — an eternity for a machine, but barely enough time for a human to begin to comprehend what happened. The algorithm then switches to another trading strategy of higher ordinal rank, and uses this for a few seconds on one or more electronic exchanges, and so on, while opponent algorithms attempt the same maneuvers, risking billions of dollars in the process."
Buy gold.
(Half in sarcasm, since if the world economy collapses totally, it would probably be better to have something like, say, food.)
before problems arise? Have you not been paying attention for the last two years?
"Einstein argued that [...] God is not capricious or arbitrary. No such faith comforts the software engineer." ~ Brooks
Well, at the expense of whom?
Currently, other traders with less sophisticated algorithms.
How long can this trend be maintained before major problems arise in the economy ?
Until they start gets jobs as Secretary of the Treasury and writing laws that distort markets in their favor at the expense of everyone.
What you seem to fail to realize is that growth has nothing to do with making a profit in derivative markets. And high frequency algorithmic trading has been here before, and now they step up that game. So as far as "change" goes, nothing has really changed, and nothing will, high frequency algorithmic trading is here to stay. If anything, this is making markets much more volatile. And if you think last weeks 1000 DOW drop was an exception, those are going to be more frequent.
Experiments and other stuff
> Technology is a wonderful thing - each year we're able to do more with less.
A perpetually growing economy usually involves the average wage rising so average people can buy more stuff while still working less.
Have you looked around lately ? In fact you are right in some way: every year we need less people, so by the market rule, the average wage goes down relatively to what you can buy for a dollar on average, especially food and lodging.
Everything I write is lies, read between the lines.
That's one of the stupidest comments I've ever heard on here. No, really. It is.
Long term investment is the POINT of a stock market. It's to encourage the private sector to ALLOCATE MONEY EFFICIENTLY toward PRODUCTIVE activity. Shuffling money around constantly and making the only "productive" part the cut you get for the shuffling (not the actual thing you invested in) completely defeats that purpose. It's called RENT SEEKING by the banks and traders, and it's a BAD THING. It encourages money to be allocated poorly in a short sited fashion, only doing whatever will make the most commission for the trader and his company. It does the opposite of what the stock market was supposed to do.
Great googly moogly have people become so blinded by day trading as to think making money on the trading was the point of the market? If that's the way you're thinking, then just withdraw your life's savings from the bank, drive your ass to Las Vegas, and start "investing". You can be well ahead of Wall Street's curve on what they're trying to sustain: a massive legalized national casino.
Some people are mentally defective and will only be happy when they have more than others. Two such persons and they'll keep fighting eachother until everybody loses.
Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
Those of us in the rest of the world, who have been suffering being the weaker part in the worldwide marketplace game, we've been paying attention for much longer than two years.
The filesystem is the package manager
This is one of the best comments I've read about this issue.
Too many people see things exactly as you describe. The "market" is just an abstraction, they don't make the connection to the real world companies that they are investing in because they don't see that as the point anymore. It used to be that you could take a small amount of money, invest it in a company with a good idea - along with many other people - and you could profit from it too. Getting money to people with good ideas, and letting people who could never start their own company have a chance to be involved in the process of business, that was the goal. Now, Wall Street is about finding new ways to creatively move, funnel, transfer, shuffle, and convert money so that when it comes out of the other side of the black box it's more than you started with. It might as well be a casino, instead of a random number generator or dice you have the ups and downs of real companies creating the random seed.
It would be funny if not for the fact that the rest of the US, the world really, are subsidizing this farce and allowing these people to get rich doing nothing productive.
If you build it, nerds will come. Soylentnews.org
This will end poorly (again). It's basically a bunch of business majors managing a poorly understood programming effort, but instead of running things in a development environment they're running it on massive computers and the variables are REAL MONEY. Hiring mathematicians to write their algorithms won't likely help, they will eventually do something stupid, divide by 0, have unbounded growth, or otherwise watch their program crash along with the market.
I'm cashing out everything, buying canned food and ammo and moving to a farm.
My favorite quote doesn't fit into 120 characters. Now no one will like me.
The same banks that perform HFT also act as brokers. They know where everybody's stop losses are. They can run your stops and cause you to sell, while triggering other people to sell the market short, then run the market back up and cause the shorts to cover, and cause you to buy again so you don't miss out. Rinse and repeat.
this system rewards people who produce nothing of value, make nothing, enrich no one's lives, do not create art, do not expand the sphere of human knowledge, and provide no meaningful service to humanity or the country.
If only it were so simple. Efficient allocation of capital is extremely useful. It enables all kinds of progressive development that would never occur otherwise and stock markets (and derivative markets) are the best way humanity has come up with to do it. You might as well be arguing that farmers' markets and cattle auctions are just as useless - all they do is provide a meeting place and a means to buy and sell - they create nothing.
It should come as no surprise that the system can and is abused - that's pretty much the case for every system man has ever come up with. But to argue that capital markets are nothing more than siphons from the poor to the rich is to throw the baby out with the bath water.
When information is power, privacy is freedom.
Shuffling money around constantly and making the only "productive" part the cut you get for the shuffling (not the actual thing you invested in) completely defeats that purpose. It's called RENT SEEKING by the banks and traders, and it's a BAD THING.
No, it's not. Arbitrage is a much closer definition to what's going on - they are trying to treat one big market as if it were a bunch of micro-markets (as the time between trades gets shorter it effectively breaks the market up based on ranges of trading speed) and are looking to profit on the difference between them. If they were actively trying to screw with the markets - like pulling a pump-and-dump scheme, or bribing politicians for favorable laws, that would be a form of rent-seeking. But millisecond gambles on minute fluctuations in price is not rent-seeking any more than year-long gambles on large fluctuations in price is rent-seeking.
It encourages money to be allocated poorly in a short sited fashion, only doing whatever will make the most commission for the trader and his company. It does the opposite of what the stock market was supposed to do.
You are confused here. Sure there are people who think they can be individual players doing high-frequency trades and there are brokers willing to accommodate them. But they are a drop in the sea. The real money moving around is coming from funds, mostly the kind that are only available to high net-worth people. Those fund managers aren't trying to maximize brokerage fees, they charge a management fee regardless of the number of trades. Sure they may manipulate the system to max out any performance-based bonuses, but that's a common problem with any sort of fund, not just the ones that do high-frequency trading.
When information is power, privacy is freedom.
Stock markets for efficient allocation of capital, sure. Derivative markets, that's questionable, and in some cases downright laughable.
Laissez lire, et laissez danser; ces deux amusements ne feront jamais de mal au monde. - Voltaire
The trickle has taken on a decidedly yellow tinge.
I hesitate to say the entire stock market in general because at its core there is something useful
.9 and so there will be 90 trades that minute). The sell and buy orders are randomly selected and then processed. Those passed over will be at the top of the queue for the next minute. I'm sure it would take some serious refining, but the idea is to completely eliminate microsecond fluctuations, eliminate priority trades, and make it "fair" for all. Either that, or make the market completely open where anyone can log on from anywhere and do a trade as if they are a broker. That would introduce many more problems than just batches and delays with limited processing, but it would fix many of the problems we have now.
The "fix" is to have trades once every minute, and no more than that. Trades are executed to the number of "requests" times 90% (if there are 100 sell requests and 200 by requests, the lowest number of 100 is taken, multiply by
But, anyway it goes, there needs to be a complete re-write of the stock market. It's been perverted from the paper trading to a good-ol-boys network of computers with systemic abuses aimed at hurting people trying to use the system in good faith. As it sits now, abolishing the stock market and having companies sell their own stock in paper in person at their corporate headquarters would be a massive improvement. Sadly.
Learn to love Alaska
It's a fundamental flaw.
The incentive to do the right thing (long term investment into production) is - money. If there is another way to make the same money easier or faster, or make more money or even make more money easier and a lot faster, then a rational participant in the market will do it.
Now, the stock market is a closed system - any buck that the day trader made, someone else had to put in. The stock exchange doesn't generate any value. So if nothing else convinces you, then ask yourself where all these short-term pure trading profits come from. If you still haven't realized after all the bailouts: It's you.
Can't really blame the traders. They ran a highly profitable scam for many years, then it all blew up. They probably couldn't believe their luck when the tax payer stepped up to cover all the losses and didn't even stop the scam. So heck yes do they continue, of course. Who wouldn't?
Assorted stuff I do sometimes: Lemuria.org
So they figured that by using "high-frequency algorithmic trading" they could keep the profits coming in.
"Profit" in the extended meaning of the word. There is no value being generated at the exchange, only well, duh - exchanged. So the value that they take out of the market ("profit") is something someone else had put in.
Well, at the expense of whom ? How long can this trend be maintained before major problems arise in the economy ?
Welcome to our time traveller from 2005. You may want to read up on the news to find your answers there. The short version:
a) everyone else
b) about 4 years, which were over in 2009.
Assorted stuff I do sometimes: Lemuria.org
It's also about marketing, bullshit and "plausible deniability".
This is so the gamblers can give better excuses/bullshit for gambling with other people's money. This way everyone can say it's some sophisticated stuff that few people understand, so they get to keep their bonuses and profits when it all blows up.
Here's an analogy: the financial system is a casino. The casino doesn't produce any "real" wealth - it just distributes it. The Federal Reserve produces the casino chips (trillions of them if necessary). The casino operators take their cuts+fees. The players gamble with OTHER people's money (pension funds etc), and when they win they get pay raises and bonuses. If a single gambler loses big, he loses his job. If a huge bunch of gamblers lose big, they say "bail us out". How can a huge bunch of gamblers lose at the same time? They can if they play a "let's create fake wealth" game.
Here's a popular version: you start with a "parcel". You sell it for a profit to the next person. And the next person may do the same thing and so on. Whoever currently holding the parcel is allowed to declare that they are richer by the current "outside" value of the parcel. When the "music stops" the parcel is opened and the holder gets whatever is inside (which may be a bunch of IOUs).
It doesn't really need very much sophistication to play such games.
Here's another game: this is a trading/auction game: a few players pay the casino a special amount and they then get to see other people's bids 30 milliseconds[1] before everyone else does and they also get to make bids and cancel their bids rapidly. Naturally this is very profitable for those few players, unless there is a bug in their software, and they make a big loss in which case they ask the casino to rollback the trades, or change the rules so their losses are limited.
This needs a bit more sophistication if you are aiming for maximum profit since your program has to "battle" the other programs. But the few with the 30 millisecond advantage should make money from the rest.
Lastly, the gamblers who get sacked for losing will often get rehired since even if their companies lose big and maybe even go bankrupt, they make their _bosses_ rich.
[1] http://www.nytimes.com/2009/07/24/business/24trading.html
Simplified version of how it works:
http://www.nytimes.com/imagepages/2009/07/24/business/0724-webBIZ-trading.ready.html
Isn't this some kind of insider trading? They are trading based on information before it is made public, but in the milliseconds range. The problem is the big players are given huge advantages, like free money from the Fed, while the rest of us suffer from the resulting inflation. Goldman Sachs and JP Morgan are way too powerful, they are powerful enough to destroy a currency, like the Euro.
Society is so fucked up that people are being paid 7 figure salaries to develop smarter gambling algorithms, that produce no real value, when they could help solving science hardest problems. Specially people with this knowledge.
You can't pervert something that is already perverted
I don't believe you. It was a perverted paper system further perverted by the computerization. Perhaps you'd have preferred that I have "further" inserted there, but the lack of that word doesn't mean that the previous system wasn't perverted.
something is either corrupt or it is not.
It was corrupt before. The existing corrupt paper system was further perverted with the computerization.
Hence you wrote that the paper system was not perverted.
I wrote that the system was perverted by computerization. You inferred that to mean that I thought the paper system was perfect. You are wrong.
If you want to argue about what I meant. I have explained it. If you want to argue about your opinion about what you think it could have meant when it's been demonstrated exactly what I did mean, then go fuck yourself.
Perhaps YOU should read what's written, not what you were thinking when you wrote it.
You are apparently arguing that it can be taken one and only one way, the way you assert. You are wrong. You have been further corrected with what I meant explained so there is no confusion in your little mind.
And while you are at it, you might want to try adding a little bit of that civilized conversation too.
I have no patience for those who always assume the worst when there's more than one way to take things. You are such a worthless pedant. So you get no such treatment when you have demonstrated yourself to be an uncivilized pedant who like to assume the worst possible interpretation and attack it. When you grow up and act like an adult, I might show you courtesy. But you've demonstrated you don't deserve any, so I'll not bother with the niceties.
Learn to love Alaska
4 seconds is too long to leave an opportunity of more efficient reallocation of capital unexploited, yet there are people who have been unemployed for over a year? This implies that we've created an economic system where it is a more efficient use of resources to rearranging ownership of theoretical constructs than finding a place in society for people who have none? Doesn't it seem that we've sort of lost sight of what the purpose of an economy is?
I worked at one of the banks being lambasted here in a group that I left, within a year my peeps advised me that the group disappeared OVERNIGHT with no explanation. They pay big money to make the SEC an empty shell of what it's supposed to be doing (policing them). We need a big legal fence put up to keep these sharks away from "cash in a barrel" situations like being brokers and traders for the same products, and we need to vet any and all new products that hit the marketplace. Do we not remember the $4/gallon gas situation, an overnight doubling in price caused by pure speculation when we allowed oil companies to act as their own brokers? Wall Street banks bought oil companies and started Milken the public like crazy (pun unavoidable). Trusting Wall Street to not grab any and all cash it can any way it can is like trusting a starving 20 foot python to babysit your infant.