High-speed trading firms rob traditional investors

[ututu]

Let it crash. It won't evolve otherwise. In any case, they don't put a knife to your throat to force you to take a credit.

But that's not about HFT anymore, isn't it?

If not financial industry, there would've been jungle instead of Singapore as it is now. So maybe it's not so bad. :)

Buffet's annual address comes to mind, I think it was 2005 or 2004 one where he talked about Gotrocks and various "helpers/consultants" aka financial intermediaries and the fact the intermediaries job is to facilitate transactions that represent real, wealth creating economic activity. Intermediaries can't and don't create wealth on their own, one of the reasons I have no issues with Gates making billions, because he is not intermediary: he sells product/service, and he is not in inter-mediation by itself. Now middle-men are necessary, though perhaps with digital age there shouldn't be that many, as supposedly it should be a lot easier to find willing counter-party in always-on connected world, however sometimes middlemen perform regulatory capture, where they firmly position themselves at the through/money nexus and start facilitating transactions for the sake of transactions. Since they are middle men they don't give a sh..t whether transaction makes sense or whether instead of 10 transactions the same result could have been achieved with 3, they are paid per transaction so they "facilitate" with abandon while regulatory bodies are fast at sleep.

[Sergei82]

Let it crash. It won't evolve otherwise. In any case, they don't put a knife to your throat to force you to take a credit.

But that's not about HFT anymore, isn't it?

If not financial industry, there would've been jungle instead of Singapore as it is now. So maybe it's not so bad.

Buffet's annual address comes to mind, I think it was 2005 or 2004 one where he talked about Gotrocks and various "helpers/consultants" aka financial intermediaries and the fact the intermediaries job is to facilitate transactions that represent real, wealth creating economic activity. Intermediaries can't and don't create wealth on their own, one of the reasons I have no issues with Gates making billions, because he is not intermediary: he sells product/service, and he is not in inter-mediation by itself. Now middle-men are necessary, though perhaps with digital age there shouldn't be that many, as supposedly it should be a lot easier to find willing counter-party in always-on connected world, however sometimes middlemen perform regulatory capture, where they firmly position themselves at the through/money nexus and start facilitating transactions for the sake of transactions. Since they are middle men they don't give a sh..t whether transaction makes sense or whether instead of 10 transactions the same result could have been achieved with 3, they are paid per transaction so they "facilitate" with abandon while regulatory bodies are fast at sleep.

Excuse me, what value does software create on its own??? Unless it is a computer game, it is ALWAYS intermediary (including MS Word, Excel etc)!

[ututu]

Let it crash. It won't evolve
Excuse me, what value does software create on its own??? Unless it is a computer game, it is ALWAYS intermediary (including MS Word, Excel etc)!

It's a tool. Hammer also doesn't have any value on its own just like tank of gas, or bag of floor, it can't be directly consumed. They are tools/inputs in the long chain of transactions at the end of which you get house/bread/car/computer games/etc. Finance facilitates these transactions, technically these transactions can get done w/o lots of finance buys bodies (true not efficient but certainly possible) but surely finance busy bodies can't exist w/o economic transactions. Imagine real estate agents and real estate transactions, can you do real estate transaction w/o REA, sure. Can you imagine REA that exists on its own w/o transactions taking place ? The problem is that some people take "facilitation" by itself as genuine wealth creating economic activity that must be encouraged and supported in complete disconnect from underlying activity it is supposed to serve, just take a look at City whinging at EU and Cameron's attempts to protect City middlemen from being scrutinized. Very similar to SGrean REAs whining about regulations imposed last year or so.

[JR8]

Excuse me, what value does software create on its own??? Unless it is a computer game, it is ALWAYS intermediary (including MS Word, Excel etc)!

Do you presume an 'intermediary' by definition adds no value? Hmmm... I don't.

I engage an accountant to do my tax returns.
A doctor to diagnose my ailments, instead of inexpertly trawling the web trying to do so myself.
A web-based broker to purchase my stocks.
An estate agent (realtor) to find investment property for me.
The post office to freight my letters and parcels.
... and so on.

Only as a result of which, I have time to play computer games etc... hehe.. .


[I must be missing something. The apparent point being debated seems far too black and white]

[Strong Eagle]

Excuse me, what value does software create on its own??? Unless it is a computer game, it is ALWAYS intermediary (including MS Word, Excel etc)!

Eh? That's like saying a power tool creates no value, when it reality, it's value is that worker productivity is hugely increased with the use of power tools over hand tools. Would you rather take down a tree with a two man crosscut saw or a chain saw?

Software provides massive increases in worker productivity. I remember when my bank account was maintained manually in a ledger... very labor intensive and error prone.

Moreover, software now provides the tools to do things like simulations to address a variety of problems that couldn't even be addressed before the software came along.

People who create software create things of value. I still can't figure out what value a trader, trading for himself or his company, creates.

[Sergei82]

People who create software create things of value. I still can't figure out what value a trader, trading for himself or his company, creates.

Stitching everything together... software for HFT creates value for HFT, while HFT itself does not create value?

[nakatago]

It's like the difference between writing simple software that helps farmers in India get weather information through their cellphones and writing complex software to help Chinese teenagers farm gold in the latest MMORPG.

[JR8]

People who create software create things of value. I still can't figure out what value a trader, trading for himself or his company, creates.

He creates a profit, surely the desired end-point of most companies. In fact in the UK the IR can prosecute company directors who control companies that they believe are run with no motive to make/report a profit.

What's of more value, $1million I made today for my company and it's shareholders, or a computer game?

[I suppose it hinges on how you define 'value'...]

[Brah]

This kinda echos my "Maybe the next generation will enable a new industry that does more than play with OPM, and actually contribute to the human race" comment from the other thread.

On one hand I get it that profit is something, on the other, the said definition of 'value' does come into play.

[JR8]

This kinda echos my "Maybe the next generation will enable a new industry that does more than play with OPM, and actually contribute to the human race" comment from the other thread.

On one hand I get it that profit is something, on the other, the said definition of 'value' does come into play.

'Value' = your personal values?

Can you provide an example of a company that you suggest are an exemplar of 'contributing to the human race'?

[Sergei82]

What's of more value, $1million I made today for my company and it's shareholders, or a computer game?

Don't underestimate computer games. One well and timely made MMORPG with its virtual economy can bring billions to the company's shareholders.
Look here for example:
http://en.wikipedia.org/wiki/Nexon_Co._Ltd.

[Brah]

"company" is probably the operative word, I think it's more about the role of the person -

- in the context of what people do that contributes to society or the betterment thereof, ostensibly callings like doctors, artists, philosophers, firemen, benevolent leaders, etc. versus those roles involving the moving of numbers or money from one place to another, where one side looses out, or developers of marketing strategies to fool people into buying things they don't need, or manufacturers of unhealthy products, etc.

Sorry, don't mean to slight your (former?) profession, especially as I work in the same industry so am guilty. So yes the values are somewhat mine but more in the conventional sense and more of the masses.

Of course this is very idealistic thinking and society as we know it does not always reward those in those roles responsibly.

This kinda echos my "Maybe the next generation will enable a new industry that does more than play with OPM, and actually contribute to the human race" comment from the other thread.

On one hand I get it that profit is something, on the other, the said definition of 'value' does come into play.

'Value' = your personal values?

Can you provide an example of a company that you suggest are an exemplar of 'contributing to the human race'?

[Sergei82]

...slight your (former?) profession

maybe soon

[JR8]

"company" is probably the operative word, I think it's more about the role of the person -

Ah well now you're moving the goalposts

- in the context of what people do that contributes to society or the betterment thereof, ostensibly callings like doctors,

Hmmm... 'a calling'. I know the expression but I do wonder quite how it applies. Do you think it necessarily entails an element of selflessness? If so I can think of an example, being a church vicar (and similar). Whereas I would suggest that nuns and monks are perhaps selfish, as their journey is inward-looking, seeking their own enlightenment, and they don't seem to do a great deal for others.

I don't know about you, but I have yet to meet a poor doctor, or dentist for that matter. I have however met several very wealthy ones including various relatives of mine.

You could take it to an extreme and quote someone like Mother Theresa, but even with her she did not escape controversy (along the lines of, she's not quite the saint she might make herself our to be (unintentional irony).


artists,

Like Warhol, who did everything in 'limited editions' of 500 (actually you could argue that Dali started that)? Or Damian Hirst.... $ker-ching, that'll be $20mm please. Even historically artists sought and had their 'patrons'.

philosophers,

Like de Botton, who sells pop-psych books and had his own TV series (the same as Richard Dawkins)? I'll grant you something though, I think you could make a case that some academics have a 'calling'. You don't meet a lot of wealthy lecturers and heads of faculty in the UK, but I can generalise and say that almost all that I have met do it, not through necessity but because of an instinctive passion about it.

firemen,

Well, in the UK firemen are often ex-forces (the ranks). They are disciplined and you could argue generally not qualified or experienced for a higher calling. (No one take that as criticism please, it's not). One could ask if firemen are so noble, why do they belong to a union (both in the US and UK).

benevolent leaders, etc.

I'm not sure who such people might be. If you mean someone like Aung San Suu Chi then yes I would agree, to give up what she did for 'her people' was perhaps as genuinely selfless as one could be

versus those roles involving the moving of numbers or money from one place to another, where one side looses out,

Heavens that's very cynical No one forces anyone to deal with banks. I'm at a loss to comprehend the 'one side loses out' bit, in a voluntary agreement, so we'll have to leave that one. However I expect you have a bank account, and I expect when you change money you seek the best rate.

or developers of marketing strategies to fool people into buying things they don't need,

Caveat emptor.[/blue] I mean surely you believe in personal responsibility?

or manufacturers of unhealthy products, etc.

Like which ones, and who is the authority on what is unhealthy? I was brought up with the saying 'Everything in moderation', which seems to make sense to me.

Sorry, don't mean to slight your (former?) profession, especially as I work in the same industry so am guilty.

It's ok I don't actually mind, in fact as you can tell I enjoy a vigorous and good natured discussion It's just that I do enjoy needling false constructs (one of my parents' friends, a QC no less, once said that I should have become a lawyer. I am somewhat of that frame of mind (as my ex-wife will attest after seeing what I did to her in court, as will the 'nightmare landlord' I did similar to hehehe), but he was charming enough to simply be flattering me.

So yes the values are somewhat mine but more in the conventional sense and more of the masses.

Well, I am sure the masses are less perfect than you or me In any case I am not that concerned by what 'the masses', these 3rd parties, hold as values and think of banking. I have resolved who and what I am. I have played a pretty good game for a person with little natural gift for anything, and I live by what I consider 'simple decent values' - as I am sure most of us here do.

Of course this is very idealistic thinking and society as we know it does not always reward those in those roles responsibly.

It is idealistic yes. But 'Rewarding responsibly'... you've lost me again mahn. 'There is no such thing as society', just a collection of individuals with each their own motivations.

edit: for clarity/format

[Brah]

I will reply to that, just got to work up the stamina for it