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Goldman Sachs Automated Trading Replaces 600 Traders With 200 Engineers (technologyreview.com)
Goldman Sach's New York headquarters has replaced 600 of its traders with 200 computer engineers over the last two decades or so, thanks to automated trading programs. (Though, the effort to do so has accelerated over the past five years.) "Marty Chavez, the company's deputy chief financial officer and former chief information officer, explained all this to attendees at a symposium on computer's impact on economic activity held by Harvard's Institute for Applied Computational Science last month," reports MIT Technology Review. From their report: The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated. Chavez, who will become chief financial officer in April, says areas of trading like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled. Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry. In addition to back-office clerical workers, on Wall Street machines are replacing a lot of highly paid people, too. Complex trading algorithms, some with machine-learning capabilities, first replaced trades where the price of what's being sold was easy to determine on the market, including the stocks traded by Goldman's old 600. Now areas of trading like currencies and futures, which are not traded on a stock exchange like the New York Stock Exchange but rather have prices that fluctuate, are coming in for more automation as well. To execute these trades, algorithms are being designed to emulate as closely as possible what a human trader would do, explains Coalition's Shahani. Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman's staff, are computer engineers.
Vonnegut called it in what, 1955?
In short, no need to know what the market is going to do, just a need to know what it is doing right now. Profit not based on picking the right stock but by the fact that stock prices are not constant. As I used to think of it, not making money off the stocks but off of the changes in stock prices. A guaranteed winner. Genius!
According to https://www.theguardian.com/business/2009/nov/18/goldman-sachs-blankfein-sorry,
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Who knows what sophisticated and perfectly-executed levels of depravity might be perpetrated by Golden Sox' robot traders? Hookers and blow may well be involved but not in a fun Benderesque sense.
Requiem for the American Dream
Sooooo.... Russians or Indians?
If you want news from today, you have to come back tomorrow.
I bet those engineers don't get performance bonuses or commissions.
why we tolerate these people? I just realized I can't afford a house because of how the mathematics of mortgages work. I never bothered to do the math since I never thought I could buy one. After 10 years of paying down debt and saving I thought I was ready. Not so much. The way mortgage math works out you're paying almost all interest for the first 15 years of a 30 year loan ( stretched to 30 years since these bastards took 20% from me). Then I need extra insurance since the 2008 crash & a couple family illnesses (thanks private medical system) wiped out my savings. And I need home owners. And I have to pay HOA fees because we cut so much funding outside of rich neighborhoods there's no money to cut weeds and fix roads. It all kept adding up until I realized it'd be more than I could afford what with a kid in college and the real reason it costs $100k to go to college.
Not just all the cost, but all the _risk_ is on the home owner. The banks make sure they get their interest up front. And they take my tax dollars to guarantee the loans and hold the entire f'n country hostage if we don't pay.
Every last one of us except 1% is getting screwed by this. Why the hell do we tolerate it? Why don't we force the banks profits _down_ and our standard of living _up_? Why is the free market so much more God Damned important that we'd throw our lives away chasing Any Rand's ghost? Fuck.
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It's not really a role for an "engineer". A coder skilled in mathematics or mathematician skilled in coding is a better fit. They are just calling them "engineers" because it sounds impressive and not because the IEEE or any other professional body would recognize them as engineers.
Yes, yes, I'm perfectly aware that there are programmers who fit the description of engineer in every way, but I doubt these ones are.
Goldman Sachs has also filed over 2900 applications for H1B visas in the past three years. I suspect this isn't for traders.
Have you read my blog lately?
Hit F1 to continue . . .
Alternative title: "Goldman Sachs 600 Traders"
Leela: "Is all the work done by children?" Alien: "No, not the whipping."
https://contrarian.live/2016/0...
Pictures tell a thousand words.
But who are we kidding about financial markets anyway. Like in a casino, the house always wins.
READY.
PRINT ""+-0
It's You vs Goldman. Always.
The pieces you are failing to put together is that as you said, politicians aren't very smart. Therefore they will try to profit even if they cannot. And the funny thing about inflation is that it can look to you as if you are profiting when you are not.
after a) a large scale economic crash caused by deregulation b) several medical problems outside my control (other family members).
The places without HOAs are slums thanks to white flight. We abandon the inner cities and let them all go to shit. The HOAs don't just do that. They maintain a ton of crap that used to be maintained with tax dollars. Again, if I want things that everybody used to take for granted I need to live in ridiculously expensive places. Anything affordable is a hell hole by design.
And read my f'n post you damned troll. I'm bitching _because_ I understand the terms of the mortgage. I understand that I'm paying the interest up front so that the bank gets all of the profit and none of the risk. I pay interest up front because the longer I'm in the house the better the odds my life'll go to shit again when somebody gets sick or my job gets offshored or whatever disaster strikes next. Interest is suppose to be the profit a bank makes for risk. Why the hell are they getting so much damned profit for zero fucking risk?
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It doesn't matter, the Goldman Sachs is too busy acting as an intermediary for selling the treasury bonds to the Fed in order to implement the quantitative easing. Who needs the insider trading when you're running the Grand Central on that gravy train?
why we tolerate these people? I just realized I can't afford a house because of how the mathematics of mortgages work.
Such it up you clueless millennial whiner. You understand nothing, nothing at all.
Want to pay more principal early on in your loan? Just [...]
Many people will say your problems are due to your own personal choices.
They are not.
Certainly there's a certain group of people who make bad choices and ruin their lives, or who can't seem to get ahead.
But there's another group of people, who we used to call the "middle class", who make intelligent choices but who are on the brink of poverty, or falling into poverty, or generally having a tough time getting ahead.
We see articles here about the rising cost of education, and the answer is always "some people don't need higher education". We see articles about how few jobs there are, and the answer is always "move to where the jobs are". We see articles about outsourcing, and the opinions are "you lose your job, but the population benefits overall due to lowered costs".
We are gutting the middle class in this country, have been for about 20 years, and the overall sentiment is "expect less out of life". Don't expect to own a house, don't expect to send your kids to college, don't expect to live as long, don't expect to get paid more, don't expect to be able to pay your medical bills...
You're ahead of the curve by actually doing the calculations and trying to predict your finances - a lot of people up to 2009 didn't do that, and thought that they could have the same opportunities as people had in the 1980's.
There's lots of people who think everything's fine and will try to pin this back on you, but it's most likely not anything you did.
Don't listen to them.
Things are bad right now, and whether they will get better remains to be seen.
And when that business dries up they will just go back to selling securities it knows are toxic to its customers and then selling those securities short so they profit when their customer loses. Now with the new fiduciary rule (which would require financial advisors for your retirement accounts to put your interests ahead of their profit) being "reviewed" before it can even go into effect and many former Goldman Sachs employees in senior cabinet positions expect more of the same, investment banks fleecing their customers, other investors and taxpayers for every cent they can.
Enigma
Damned Android auto correct!
Of course, there is a mini-USB port for that.
Everything I write is lies, read between the lines.
Engineers are the easiest job to automate. The job itself is a function of automation. Like a snake eating its tail.
It sure can be a frustrating thing. You know financially you're much better off owning (landlords make money because renting costs more than buying), but getting the down payment together and everything can be pretty difficult. I studied mortgages and such extensively when I bought my houses (without a huge down payment) - maybe I can help, if you'd like to discuss it.
> Then I need extra insurance since the 2008 crash & a couple family illnesses (thanks private medical system) wiped out my savings.
PMI sucks donkey dick. It sucks even more if you have less than 10% down. Which includes 9.9% down. 10% has significantly lower PMI than 9.9%. There are three ways to get 10% down. On the finance side, the first trick I use is my buyer's agent refunds me 1.5%. He gets paid 3% commission, and splits it with me. Obviously he's NOT a full-service broker who is going to spend days driving me around. I drive myself around looking at houses. When I find what I want, he handles the contract and pays me $4,500 for the privilege of doing so.
If you're having trouble hitting 10% (or striving for 20% down), don't pay loan origination fees or anything to the mortgage broker or bank, at least not much. A good loan officer can trade you back and forth on fees versus interest rate, so you can always get a no-fee loan or very low fees. Your interest rate will appear to be slightly higher in exchange BUT hitting that 10% down mark will *reduce* your interest rate. By getting over that 10% (or 20%) mark, you reduce the rate + PMI by about as much as the no-fee option "increased" it - and you'll pay PMI for a shorter time.
You can consider a slightly longer commute, or a slightly smaller house, or one that needs a little TLC to get the cost of your first house down, in order to be able to hit 10% down.
On the side of saving up a bit more down payment, I'll just refer you to Dave Ramsey. He has a radio show, and a podcast you can listen to in the car for free. His books and CDs are available cheap on ebay.
Certain government programs have *permanent* PMI. Fuck that. You want the normal PMI that goes away after you have 20% equity. (Not that you *want* PMI, but with less than 20% down you're going to have it.)
> The way mortgage math works out you're paying almost all interest for the first 15 years of a 30 year loan
You can greatly improve that ratio of interest to principal after two to three years. More on that later, after some long-winded explanation.
You actually get to decide what percentage of your payment goes to interest and which percentage goes to principal. You made a couple comments on this, one indicating you understand it, but another indicating maybe you don't fully. Let's see if we can get clear on this. Suppose you borrow 200K at 3% for one year. What's the interest? 3% of 200K is 6K, that's the amount of interest you pay in the first year. You don't pay the interest "up front", you pay interest as you incur it. If someome paid their loan off in ten years, the first year they'd pay ~$6K in interest and ~$20K in principal. Does that make sense? (Obviously few people pay off a mortgage in ten years, but a short term makes the math more transparent.) Suppose someone said "I'm a masochist, so I want to make sure I'm paying on this damn loan for as long as possible - make me pay for 30 years." How can a mathematician help this masochist pay for as long as possible? Well just pay interest every year, pay very little principal, and it'll take 30 years to pay it off. :) In a very real way, the interest is such a huge chunk of the payment only if you insist on paying for 30 damn years. You may know that you *can*, after you get your next raise, decide to pay a lot less interest by paying a bit more principal each month, which causes your loan to be paid off much sooner.
In your particular case, you can also decrease the interest and pay it off sooner WITHOUT increasing your payment. That damn PMI? We're going to try to get rid of that
I forgot to include another good tip that will get you $3,000 closer to 10% down. In your offer on the house, make the top line offer $3,000 more, with the seller kicking you back $3,000 to cover the cost of appraisal and such.
Technically, the seller isn't supposed to pay any of your down payment, but they can hand you money to cover expenses like appraisal.
Depending in the mortgage company, the 1.5% refund from your agent may or may not be allowed to go *directly* toward the down payment. If it's not allowed, you just apply it to the down payment *indirectly*. You just have to find a way to "borrow" the money for 30 days without technically borrowing it. A 401K "loan" may not count as a loan because you're borrowing your own money. Putting off paying a bill that isn't due until the end of the month isn't technically a loan. An IRA rollover puts the money in your pocket for 30 days if you do it right, etc.
So you use $4K of your "not borrowed" money to make the down payment, then use the agent's refund to replace the money.
One other thing - you didn't say where you live. If you're in the bay area, will shit yeah housing is outrageous. I just bought in the hottest Dallas suburb, a 3,5000 square foot house with a pool for $245,000.
I didn't touch on FICO score either. A good FICO score will reduce your interest rate, of course. You need your FICO credit scores to be above 700, preferably above 740. That's FICO brand score, Vantage Score, freecreditreport.com, etc aren't what matters. The number one easiest, most effective way to quickly increase your score is to make sure your credit card balance is 6%-8% of the limit. Higher or lower reduces your score. (Though 3% or so is good too, don't go to zero balance). Your balance should all be on one card. Just like the down payment has cutoffs at 10% and 20%, so does the FICO score. 701 will get a better rate than 699. If you're close to the next bracket, adding a few points to move up a bracket will make a difference.
Unless you count sucking the lifeblood out of the real economy and depriving small traders of the margins to which they would be entitled in a fair stock market.
Think about it. What does Goldman Sachs or any other big investment bank provide to economy in terms of actual goods and services? Are their multi-billion dollar annual profits really commensurate with the actual value of the services that they provide? Why does everyone out in the real economy, producing the real value struggle under perpetual debt while the people who shuffle money around accumulate(not "earn") massive profits?
These people are nothing but parasites who are endowed by the federal government with special legal privileges to rip off everyone else. This isn't "economic activity" or "industry" or "capitalism" it's leeching. "The Vampire Squid" is a perfectly appropriate label for GS.
I just saw that I typed "3,5000" square feet. Obviously that should be 3,500. It's a pretty big house, five bedrooms, but it's not 35,000 square feet. 35,000 is a neighborhood, not a house. :)
I'm just waiting for the crash when they all get hacked
Build a Man a Fire, and He'll Be Warm for a Day. Set a Man on Fire, and He'll Be Warm for the Rest of His Life.
Maybe Trump will bring back those 400 lost jobs by reverting to doing it all manually.
Beware of the Redittor who loans you a Sharpie.
Richard Pryor did it first in "Superman 3".
I know what you're going to say, there was no "Superman 3", but in the universe I come from, unfortunately there was.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
1. Your repayment risk is low because you have a large down payment. Or you have PMI that shifts the risk to you via insurance
2. Banks don't pay interest like you and me. Especially large banks.
3. Outside of an economic crash even the 3.75% you're paying will beat inflation.
4. You're in the top 10% of earners judging by the price of your home. That means you get to deduct interest because you have enough to itemize. Folks like me don't make enough to itemize unless we're paying crazy high interest rates. And all the gov't programs to help first time home buyers like me got shut down when the economy tanked in 2008.
5. Property taxes are inherently regressive. As a member of the upper (middle?) class regressive taxes benefit you. I'm in the lower class (higher end of the working poor). They hurt me and at least 60% of Americans (probably a lot more, but given that 60% of Americans don't have $1000 in the bank I'll use that number). 6. Fanny Mae is plenty profitable.
Your perspective is completely different than mine because you're doing a lot better than I am. Go back and have your finances wrecked by a few illnesses and a couple jobs lost to outsourcing/H1-Bs and you're opinion will change drastically...
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"Why don't poor people just buy more money?". If I could afford to pay more so that housing was affordable I wouldn't care that housing wasn't affordable because housing would be affordable. It's a ridiculous catch 22.
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