Further, I don't know if a college degree is really necessary for a lot of "decent jobs". I know this being a tech site, folks are thinking more from the perspective of high tech industries requiring a lot technical training, but there are other jobs that pay well enough without a lot of school. UPS driver, plumber, firefighter. Having said that, the future of our economy seems to be heading in one of two directions jobs-wise: really technical, well-paying jobs that do require a good deal of school of which there don't seem to be a lot of, or a lot of menial, service jobs that don't pay as well. There'll still be plumbers and firefighters, but I picture big plumbing conglomerates that hire plumbers as contractors who will get crap pay compared to what they used to get when they were independent/proprietors.
See, this is the thing I've realized after leaving college. Most of the people you meet doing various jobs DO NOT need to have slogged through Shakespeare, the Napoleonic Wars, Partial Differential Equations, etc...
They only point in having a degree for a great many jobs is to prove that you can learn stuff. Now that everyone has a degree, you look like an idiot if you don't have one. So you have to spend a few years getting one, just to prove that you're OK. The system is completely crazy.
To compare, here in Switzerland, I met up with my banker yesterday. Perfectly competent guy, more or less the same as any banker you'd meed in the Anglo-Saxon world. But guess what? He started in the bank on an apprenticeship when he was 16. He already had the basic skills (language, writing, basic math) that he needed to become a specialist in a desk job. So instead of high school and college, he's been gathering experience in his profession. That makes much more sense to me than forcing kids to unrelated stuff just to prove how smart they are.
Perhaps it's primary/secondary education that need to be better? Just create kids with the basic skills of writing and math, and let the ones who really want to be academics do that. The others, let them start working. At that age you even have a chance at starting over somewhere else a couple of times if you don't like it. And you'll be making your own money, not much debt.
You'd have thought the lower tuition fees for in-state kids was due to a public purse of some sort, so that the institution doesn't get less for their own kids. It's crazy to set up an incentive to get out-of-state kids for a state school.
I thought this article was posted on the Onion at first.
You know, this is why I need to land me that first CEO job. It seems that no matter how badly you fuck up, no matter how many pooches you screw, no matter how toxic you are to shareholder assets or confidence, and no matter how much of a buffoon you make of yourself, as long as you've been a CEO, you will always get hired.
There's a simple explanation for this. If you're a board, and you hire a guy who's done it before but he fails, well, you've done your best. You've failed the ordinary way. If you hire a young guy who seems smart, but doesn't have the wings, and HE fails, well, you're an idiot. You've failed unconventionally, and it will be embarrassing.
This is much the same as in any superstar industry. (CEOs shouldn't be in that category, but guess what, they are!) You see this with journeyman sportsmen. They move from club to club never finding success, but someone always hires them, because they've tried it before and they won't make their boss look stupid. That's why it's very hard to break into sports: if you don't get through the eye of the needle at a certain age, you won't have the credentials, and someone would be taking a big chance on you. On the other hand, if you did make it on to say a Premier League soccer team at age 18, you won't fall too far.
Dude, I know money can seem tight when you're fresh out of college. But 10% is hopefully not what's deciding between HP and another firm. I don't know anything about HP, so it's not a dig against them. Just saying that 10% is not worth anything. In a few years, you'll be more senior and that little bit of extra money from your first couple of years will mean nothing. Have a think about what you think would be interesting work, where you met more interesting people, that kind of thing.
Oh, and also don't take a job at a big name firm just to get it on your CV (I'm not saying you are, it's just the typical kind of consideration college grads have). Those types of firms (I'm thinking big 4 prof services for instance, but I'm guessing it is the same for other name firms) tend to dangle that carrot, AND underpay, AND make people miserable. Just an observation.
I suppose it's peanuts now, but the guy who was in charge of the project decided not to charge the failed contractors £1 bln, and then went on to work for a consultancy.
"But at the risk of keeping things going, I just want to point out that something of value is moved within the economy when the used car salesman sells somebody a car. Someone who didn't have a car before now has a car. Same with financing - banks lending money to businesses/entrepreneurs/homeowners/etc allows them to expand their business or buy a house, thereby enriching the local economy."
When a MM buy/sells stock, that also is moving around something of value. People are either investing the money or retrieving it for use.
To cut to the chase, it's valuable because investors can invest more money at a given price. All those guys trying to game a few ticks will end up increasing the size of the orderbook, which everyone else can use to invest more. Remember, HFTs are only themselves holding the stock for a few seconds. An investor can do just one trade with the HFT, leaving the algorithm to sort out it's own problems.
There is no advantage to having "liquidity" based on fractions of a second. Any real life situation that requires access to liquid funds is not going to change in a few milliseconds.
This is all just trading for the sake of it to earn money for the traders, it does nothing to help support actual businesses or real people.
Here's a very simple strategy a guy told me about: you have two markets trading the same stock. One of them is in NYC, the other is in London. The HFT guy puts some liquidity in the NYC book, expecting to be able to arb it against a London order. Suppose he sees 100 shares in NYC and 50 in London. He then adds 50 in NYC to bring the total to 150. He or someone else might do the opposite, ie adding the NYC liquitidy to London, so you get 150 in each place.
Now, how is this valuable? Well, if you have an investor who wanted to buy some shares, that guy can now invest more at that price. Why does the HFT need to be fast? Well, there's gonna be more than one guy after the lean in the other market. If you get done on an order, you want to be able to get out asap.
Yes, there's lots of shenanigans that can happen, such as quote stuffing to slow down the exchange, but hopefully that can be gotten rid of.
The used car guy IS a market maker. Remember, he doesn't net create any cars. All he does is wait for a guy to sell him a car, then waits for a guy to buy the same car. That's his core business. There's sideshows like financing that I won't deal with (banks have sideshows too). They are completely analogous.
Wrt to your casino analogy, that's already been done. And you say no value is being created in gambling, but gambling is a form of entertainment. People will literally pay the casino to take their money. But that's no different from say, watching a game of football. You're enriched by the experience. People don't whine about the casino always winning. Anyway, I wasn't going to agree with your analogy, just pointing out a few issues down the road with it.
I didn't. But I suppose it might be, and if that's the case, it would be good to know. Of course it would be more interesting to find a universe teeming with life. But whatever the truth is, it would be nice to know.
Used car salesmen? How about that for an analogy. They do precisely the same thing as market makers. They are just shuffling cars around and taking advantage of fractional differences in markets.
The UK charges 50 bps on share purchases. This does nothing to stop trading, because it is necessary for market makers to be able to trade without this fee. The MMs then do a CFD contract on the shares, giving the same result.
Their datacentres will be colocated with the exchanges, and nobody from the firm can access them. You have to call the datacentre and get "remote hands" to do your plugging in wires, reboots, etc, at any time during at the day.
They don't really need to be in NYC, it just happens to be a financial centre.
I think this is misinformed. A couple of general issues, and then on to HFT itself:
1) Cab drivers do something that is profitable without creating anything. Waiters do something profitable without creating anything. Neither of those is especially controversial. Why should HFT be required to create anything? 2) Optionality is worth something. Got a 24-hour convenient store that you've never bought anything at? It's still of use to you. Liquidity is just that. It's useful to know that it's there, even if you don't think you'll use it. (There is the common complaint that HFTs vanish when panic sets in, which is somewhat valid. But real traders would do the same.)
Now, does it help to be able to trade at lightning fast speeds? I certainly don't, but I can see why HFTs do. Quite often all they're doing is offering something in one market and waiting to take in another market. Arbitrage, basically. If you're going to do this, you want to minimize the period of uncertainty during which you don't know your position. If you can't be sure you can get your hedge off, you won't leave as much in the market for other people to take. Less liquidity, everyone loses.
There's a couple of shenanigans you can do. If your firm is amateur enough, you can put in manual trades that weren't real. In other words, because he's a voice trader, he could type in a trade that offsets his big position, but isn't matched by a counterparty. This will naturally create a "break", but some shops have a special portfolio in which error trades are dumped. If the dude has backoffice connections, he might be able to "explain" the discrepancy to someone, and they'll leave it, because there's a thousand other little trades people have dumped there.
Another thing you can do is create transfer trades, so that you have a buy and a sell between internal portfolios. The price you transfer at, if not the market price, will move PnL between accounts. I worked at a shop where a guy got busted for this. He tried to give himself money from another trader's book. Not clever.
Another thing to note is that VaR measures risk. (Well, heh, it's supposed to.) If you move losses into the past by messing with the dates, it won't show up in risk reports. All this sounds ridiculous, but it's perfectly possible that nobody checks the previous days' PnLs AFTER they've been recorded at the end of the day. This is crazy as well, but if you really want to hide stuff, it helps to have known a few back office staff. Also, keep in mind the aggregate is the aggregate of quite a number of positions, from various strategies and traders. The VaR leading to the loss might be quite small in comparison. Remember you can lose over x even if VaR = x. It's only a percentage chance.
Oh, and finally, the most obvious thing you can do is to not put in the trades that led to losses. This will also result in a "break" when the counterparty gives up the trade, but unsettled trades are commonplace. Your VaR will look fine. You can pretend for a few days you didn't do it, until someone digs out the tape of the conversation.
Slashdot Mirror
That's not a reason to ban all foreigners.
I'd say the degree benefits the recipient much more than the taxpayers in the community. Tuition should accordingly be divided.
Further, I don't know if a college degree is really necessary for a lot of "decent jobs". I know this being a tech site, folks are thinking more from the perspective of high tech industries requiring a lot technical training, but there are other jobs that pay well enough without a lot of school. UPS driver, plumber, firefighter. Having said that, the future of our economy seems to be heading in one of two directions jobs-wise: really technical, well-paying jobs that do require a good deal of school of which there don't seem to be a lot of, or a lot of menial, service jobs that don't pay as well. There'll still be plumbers and firefighters, but I picture big plumbing conglomerates that hire plumbers as contractors who will get crap pay compared to what they used to get when they were independent/proprietors.
See, this is the thing I've realized after leaving college. Most of the people you meet doing various jobs DO NOT need to have slogged through Shakespeare, the Napoleonic Wars, Partial Differential Equations, etc...
They only point in having a degree for a great many jobs is to prove that you can learn stuff. Now that everyone has a degree, you look like an idiot if you don't have one. So you have to spend a few years getting one, just to prove that you're OK. The system is completely crazy.
To compare, here in Switzerland, I met up with my banker yesterday. Perfectly competent guy, more or less the same as any banker you'd meed in the Anglo-Saxon world. But guess what? He started in the bank on an apprenticeship when he was 16. He already had the basic skills (language, writing, basic math) that he needed to become a specialist in a desk job. So instead of high school and college, he's been gathering experience in his profession. That makes much more sense to me than forcing kids to unrelated stuff just to prove how smart they are.
Perhaps it's primary/secondary education that need to be better? Just create kids with the basic skills of writing and math, and let the ones who really want to be academics do that. The others, let them start working. At that age you even have a chance at starting over somewhere else a couple of times if you don't like it. And you'll be making your own money, not much debt.
Aren't the most reputable institutions in America generally NOT state institutions?
Also, whether or not to fund a university is something the politicians do. People have voted to have less education. Isn't that fair enough?
You'd have thought the lower tuition fees for in-state kids was due to a public purse of some sort, so that the institution doesn't get less for their own kids. It's crazy to set up an incentive to get out-of-state kids for a state school.
I thought this article was posted on the Onion at first.
You know, this is why I need to land me that first CEO job. It seems that no matter how badly you fuck up, no matter how many pooches you screw, no matter how toxic you are to shareholder assets or confidence, and no matter how much of a buffoon you make of yourself, as long as you've been a CEO, you will always get hired.
There's a simple explanation for this. If you're a board, and you hire a guy who's done it before but he fails, well, you've done your best. You've failed the ordinary way. If you hire a young guy who seems smart, but doesn't have the wings, and HE fails, well, you're an idiot. You've failed unconventionally, and it will be embarrassing.
This is much the same as in any superstar industry. (CEOs shouldn't be in that category, but guess what, they are!) You see this with journeyman sportsmen. They move from club to club never finding success, but someone always hires them, because they've tried it before and they won't make their boss look stupid. That's why it's very hard to break into sports: if you don't get through the eye of the needle at a certain age, you won't have the credentials, and someone would be taking a big chance on you. On the other hand, if you did make it on to say a Premier League soccer team at age 18, you won't fall too far.
Dude, I know money can seem tight when you're fresh out of college. But 10% is hopefully not what's deciding between HP and another firm. I don't know anything about HP, so it's not a dig against them. Just saying that 10% is not worth anything. In a few years, you'll be more senior and that little bit of extra money from your first couple of years will mean nothing. Have a think about what you think would be interesting work, where you met more interesting people, that kind of thing.
Oh, and also don't take a job at a big name firm just to get it on your CV (I'm not saying you are, it's just the typical kind of consideration college grads have). Those types of firms (I'm thinking big 4 prof services for instance, but I'm guessing it is the same for other name firms) tend to dangle that carrot, AND underpay, AND make people miserable. Just an observation.
Summary of the system thus far:
http://en.wikipedia.org/wiki/NHS_Connecting_for_Health
I suppose it's peanuts now, but the guy who was in charge of the project decided not to charge the failed contractors £1 bln, and then went on to work for a consultancy.
Also, I'd been wondering from a programming point of view how the heck you can run up such an enormous bill:
http://programmers.stackexchange.com/questions/48117/how-do-software-projects-go-over-budget-and-under-deliver
So does this mean that before this, the government could have patented the loophole structures, thus closing them?
Interesting example of the system getting so complicated it bites itself in the tail.
"But at the risk of keeping things going, I just want to point out that something of value is moved within the economy when the used car salesman sells somebody a car. Someone who didn't have a car before now has a car. Same with financing - banks lending money to businesses/entrepreneurs/homeowners/etc allows them to expand their business or buy a house, thereby enriching the local economy."
When a MM buy/sells stock, that also is moving around something of value. People are either investing the money or retrieving it for use.
"It comes down to this: what value is created by a trader holding a stock for a few seconds and then selling it?"
Here's a response I wrote for another guy:
http://slashdot.org/comments.pl?sid=2429950&cid=37417910
To cut to the chase, it's valuable because investors can invest more money at a given price. All those guys trying to game a few ticks will end up increasing the size of the orderbook, which everyone else can use to invest more. Remember, HFTs are only themselves holding the stock for a few seconds. An investor can do just one trade with the HFT, leaving the algorithm to sort out it's own problems.
There is no advantage to having "liquidity" based on fractions of a second. Any real life situation that requires access to liquid funds is not going to change in a few milliseconds.
This is all just trading for the sake of it to earn money for the traders, it does nothing to help support actual businesses or real people.
Here's a very simple strategy a guy told me about: you have two markets trading the same stock. One of them is in NYC, the other is in London. The HFT guy puts some liquidity in the NYC book, expecting to be able to arb it against a London order. Suppose he sees 100 shares in NYC and 50 in London. He then adds 50 in NYC to bring the total to 150. He or someone else might do the opposite, ie adding the NYC liquitidy to London, so you get 150 in each place.
Now, how is this valuable? Well, if you have an investor who wanted to buy some shares, that guy can now invest more at that price.
Why does the HFT need to be fast? Well, there's gonna be more than one guy after the lean in the other market. If you get done on an order, you want to be able to get out asap.
Yes, there's lots of shenanigans that can happen, such as quote stuffing to slow down the exchange, but hopefully that can be gotten rid of.
The used car guy IS a market maker. Remember, he doesn't net create any cars. All he does is wait for a guy to sell him a car, then waits for a guy to buy the same car. That's his core business. There's sideshows like financing that I won't deal with (banks have sideshows too). They are completely analogous.
Wrt to your casino analogy, that's already been done. And you say no value is being created in gambling, but gambling is a form of entertainment. People will literally pay the casino to take their money. But that's no different from say, watching a game of football. You're enriched by the experience. People don't whine about the casino always winning. Anyway, I wasn't going to agree with your analogy, just pointing out a few issues down the road with it.
LOL. Who the hell thinks they're being told anything remotely interesting at a job interview?
I suppose you've got a point though, it is the small fish that tend to be fried in internet related funnies.
Yeah, exactly. The kind of guys that you can find in a financial centre.
Quite a number of small HFT teams can be found outside of London/NYC after they've established themselves.
I didn't. But I suppose it might be, and if that's the case, it would be good to know. Of course it would be more interesting to find a universe teeming with life. But whatever the truth is, it would be nice to know.
Used car salesmen? How about that for an analogy. They do precisely the same thing as market makers. They are just shuffling cars around and taking advantage of fractional differences in markets.
I'm hoping they find signs of life somewhere. Alternatively, and less cool, that they find some reason why life is exceedingly rare.
We'll have to wait for more details for that.
Dude, this is the internet. You can say whatever you want, even name companies. They won't come for you.
The UK charges 50 bps on share purchases. This does nothing to stop trading, because it is necessary for market makers to be able to trade without this fee. The MMs then do a CFD contract on the shares, giving the same result.
Their datacentres will be colocated with the exchanges, and nobody from the firm can access them. You have to call the datacentre and get "remote hands" to do your plugging in wires, reboots, etc, at any time during at the day.
They don't really need to be in NYC, it just happens to be a financial centre.
Yes, and employees randomly losing stuff is a risk of the business... you gonna charge everyone for every teacup they drop as well?
I think this is misinformed. A couple of general issues, and then on to HFT itself:
1) Cab drivers do something that is profitable without creating anything. Waiters do something profitable without creating anything. Neither of those is especially controversial. Why should HFT be required to create anything?
2) Optionality is worth something. Got a 24-hour convenient store that you've never bought anything at? It's still of use to you. Liquidity is just that. It's useful to know that it's there, even if you don't think you'll use it. (There is the common complaint that HFTs vanish when panic sets in, which is somewhat valid. But real traders would do the same.)
Now, does it help to be able to trade at lightning fast speeds? I certainly don't, but I can see why HFTs do. Quite often all they're doing is offering something in one market and waiting to take in another market. Arbitrage, basically. If you're going to do this, you want to minimize the period of uncertainty during which you don't know your position. If you can't be sure you can get your hedge off, you won't leave as much in the market for other people to take. Less liquidity, everyone loses.
Why don't you expand on what you found out at the job interview?
There's a couple of shenanigans you can do. If your firm is amateur enough, you can put in manual trades that weren't real. In other words, because he's a voice trader, he could type in a trade that offsets his big position, but isn't matched by a counterparty. This will naturally create a "break", but some shops have a special portfolio in which error trades are dumped. If the dude has backoffice connections, he might be able to "explain" the discrepancy to someone, and they'll leave it, because there's a thousand other little trades people have dumped there.
Another thing you can do is create transfer trades, so that you have a buy and a sell between internal portfolios. The price you transfer at, if not the market price, will move PnL between accounts. I worked at a shop where a guy got busted for this. He tried to give himself money from another trader's book. Not clever.
Another thing to note is that VaR measures risk. (Well, heh, it's supposed to.) If you move losses into the past by messing with the dates, it won't show up in risk reports. All this sounds ridiculous, but it's perfectly possible that nobody checks the previous days' PnLs AFTER they've been recorded at the end of the day. This is crazy as well, but if you really want to hide stuff, it helps to have known a few back office staff. Also, keep in mind the aggregate is the aggregate of quite a number of positions, from various strategies and traders. The VaR leading to the loss might be quite small in comparison. Remember you can lose over x even if VaR = x. It's only a percentage chance.
Oh, and finally, the most obvious thing you can do is to not put in the trades that led to losses. This will also result in a "break" when the counterparty gives up the trade, but unsettled trades are commonplace. Your VaR will look fine. You can pretend for a few days you didn't do it, until someone digs out the tape of the conversation.