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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!
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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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?
Alternative title: "Goldman Sachs 600 Traders"
Leela: "Is all the work done by children?" Alien: "No, not the whipping."
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.