No. However, profit/notional amount traded ratio isn’t really a metric that I’ve ever heard discussed as a measure of comparison among trading strategies. If anything, I’d guess my personal trading is pretty efficient in this sense.
I think it always has been.
Sanders had a bunch of never Hillary supporters in 2016, but they would have gone for anyone who wasn’t Hillary, and he lost those to another guy (for the misogynist wing of the never Hillary) - likely Biden - and to Warren for the “Hillary is too corporate” wing. And he was never going to get the Hillary supporters to vote for him in the primary, he was far too much of a spoiler in the election to hope to win them over - that’s more than half of Democratic primary voters who would vote for Marianne Williamson over Sanders if forced to choose. (I’m exaggerating, but given any choice, most Hillary supporters would vote for almost anyone but Sanders).
Had Kamila Harris actually gained traction, maybe - she isn’t an old white guy. She’s qualified. She’s smart. And yet, she hasn’t been able to move polls her direction. Mayor Pete is more of a media darling than a contender…he’s smart, but he needs more political experience than running a small city in Indiana - and once a South Bend cop shot a black man during his campaign, it was over - his oversight of the South Bend police department isn’t going to win him any votes for people who think police overreach - especially against people of color - is an important issue. It doesn’t help that he looks about twelve and has the gravitas to go with it.
As for the rest of them, I don’t think they had a chance. Too many of them split too many ways. Some of them have the charisma of a cold cheese pizza (Castro, Klobuchar). Others suffer from “another white guy” - that Biden is currently escaping due to name recognition and association with Obama. And then there is Cory Booker - a usually charismatic man of color - and seems to have been taking “boy am I boring” lessons and behaving like he really isn’t in this to win. (I think he is going for VP).
Plus, Warren and Biden just came into this way better prepared with far better name recognition. In a crowded field, that counts.
I think this is a reasonable stance.
I’m not a high frequency trader. I compete with them in some ways. They have moved into strategies that I used to trade successfully. They make my life more difficult. However, I think that HFT is frequently seen as a boogie man and serves as a scapegoat for the misdeeds of the broader financial sector. HFT, when viewed against the backdrop of finance as whole, is minuscule. Virtu Financial, one of the largest HFT market makers, is a publicly traded company (ticker VIRT). Looking at their most recent quarterly statement, their market making unit had net income of $20mm. Granted their performance fluctuates quarter to quarter, but these firms aren’t raking in billions of dollars each year. In 2017 revunue across the HFT industry was less than $1bn. They aren’t even in the same universe as JP Morgan, Goldman Sachs, etc. Getting rid of HFT would do next to nothing to correct the problems in the financial industry. IMHO, it would be throwing the baby out with the bathwater and actually make things worse for public investors.
Too late to edit, but the $20mm figure I posted above should read $100mm. That’s across global equities market making - HFT and otherwise.
This financial tax is an interesting idea. Again, the tax I would impose would be small enough that the revenue to the public wouldn’t be large. It would be as much to improve financial transparency. I don’t know any of Sanders’ details, but obvious a tax as high as 0.5% would hugely drive down activity — stock trading would move to Shanghai, Singapore … or London!
First let’s be clear about costs: A cobbler who earns $5000 mending shoes has created that much value — his cost to society is neutral or positive. The artist or athlete who earns a million has provided that much value, or at least supposedly so, in entertainment and advertising value. (Some of the advertising gain will not be beneficial, and would be downgraded in a complete accounting.) Executives provide leadership and imagination, allegedly. But what public good do stock traders provide? How do they contribute to the economy? Where does their income come from? How do they differ from professional poker players?
Now let’s dispose of the Chocolate Icing Fallacy.
Five million dollars spent on specialists (mainly as their profits) provides price discovery worth ten million dollars gross to other people generally. Therefore ten billion dollars (expenses and profits) spent on HFT will provide $20,000,000,000 (twenty billion dollars) in benefits (liquidity, price discovery) to society.
If 5 teaspoons of chocolate icing per day are yummy!, then eating 10 gallons per day must be better still.
Key point. The HFT trading volume can be huge (e.g. often more than 50% of total volume IIRC), and is obviously all computer-driven. I think there have been incidents where a player lost many millions to HFT excesses. (Someone else got lucky and won the millions, so you could call it a wash… EXCEPT that proponents of exuberant trading algorithms often cite proper price discovery as a public benefit. Yet in fact we see occasional grossly BAD prices discovered due to HFT, e.g. due to runaway software, algorithm fights, or whatever.
So how much is taken by HFT? I dunno. $5 billion profit at its peak a decade ago; of course it’s declined since but it still costs several billions industry-wide in expenses. Other schemes also rake-off value. We wouldn’t get much from Buffett with this tax — investment turnover is very slow at his Berkshire.
The reason that HFT profit is measured in ten figures — not eleven figures — is that tight competition is limiting profits. Yet — akin to the billions of joules of electricity needed to mine one bitcoin — these HFT operations will remain in service.
Yes. Some of the hyper-finance leads to screwy pricing and can lead to total loss of liquidity — consider the credit crisis of 2008 due to the “hyper-efficient” MBSs etc. This nonsense also goes away with a quite small transaction tax. So don’t believe the “Liquidity is always good!!” hype.
BTW, let’s not think that HFT is the only “culprit.” Consider Renaissance Tech and its Medallion Fund. Their annual profit a decade ago was more than that of the entire HFT industry in HFT’s best year! (Anyone explain Renaissance key methods?) We can be envious at Renaissance and wish them well, but still understand that they provided little to society in return for the many tens of billions of profit they made cleverly, in the fixed-sum game.
All together what are annual profits and expenses of professional stock traders? Wild guess: $100+ billion. This is siphoning off much brain talent that could be used in teaching, science, engineering, governance, law, public service, etc.
It’s sad to see such cynicism, but I guess it’s a popular theme in some political “debates” here, going back to Reagan’s “government is the problem.” Sad.
The choice is EITHER a complete ban on all market makers OR total laissez faire, with even a 0.01% tax out of the question. Got it.
Make up your mind please. “Day”? Or “years”? I thought HFT was all about shaving fractions of a second, not days or weeks. :smack:
septimus, your numbers aren’t based in reality. HFT, as an industry, is way, way, way smaller than you make it out to be. Wipe them out tomorrow and the broader financial system would barely notice. The only effect would be a less efficient market and higher costs to transact. It would be a step backwards. There was never a Good Old Days when the financial markets were more “fair” before the HFT nerds corrupted it - it used to be worse.
I was speaking about the existence of dealers in general in markets.
Question: If Sanders drops out, will his supporters go to Yang making it a 3 person race? Thoughts?
“According to Reuters polling data, Sanders supporters are three times as likely to choose Yang as their second favorite than backers of either U.S. Senator Elizabeth Warren or former Vice President Joe Biden, the other two leading contenders.”
Exactly. Grab a copy of the Wall Street Journal from the 1980s or 1990s and look at the bid/ask spreads.
Look, I understand that ‘Wall Street’ is a convenient and juicy punching bag for candidates. Especially with most people’s knowledge of the financial markets coming from TV and movies which show the villain making millions while being a horrible person. It’s easy to appeal to voters to want to bend them over their knees and spank them hard. And yes, the financial services industry does add value. We’re not spending our days snorting cocaine off w key in the bathroom all day long. Sometimes it helps have someone that can talk to a retiree about a decision to liquidate their portfolio and put it all in gold because their nephew found the Ron Paul subreddit and became a true believer.
Some will, definitely. They’re likely the ones who were for Ron Paul and just looking for a way to rebel against ‘the system’ I think those that really believe in Bernie’s ideas will likely go to Warren. That’s yet another reason I wish we could thin the herd. So many damn candidates on the debate stage makes it impossible for anyone to get enough time to make their case.
I’ll give you the benefit of the doubt and assume you just misunderstood me rather than strawmanning me. I’m certainly not advocating the end of dealers or speculators. (And I can’t remember how long you’ve been in the thread, but I’m no fan of Bernie Sanders, to put it mildly.)
Having a transaction tax would not end speculation. But it would have to be speculation based on spotting a potential growth stock early and holding onto it until it paid a nice profit, not sniping pennies from tiny fluctuations hour to hour or minute to minute.
I said above that I did not intend to end speculation. “Money management”, though? That really is a very dubious profession, I’m sorry. Sure, getting your money managed by a pro is probably going to be better than just buying a bunch of gold. But if money managers were really out for their clients’ best interests, they’d have them simply invest in no-load index funds. Of course, the problem is that doing so would not support the managers’ continuing to have a full time, decent paying job. Active management makes the *managers *money, but it hurts clients in the aggregate. This has been exhaustively proven in many studies.
As a wannabe poker pro (“wannabe” because I could never get my hourly earn high enough, and then Black Friday hit–but my net lifetime profit from poker is in the low five figures), I bristle slightly at this question, but it’s a not unreasonable one.
Excellent point.
Dealers/traders/market makers aren’t in the business of analyzing companies and investing, though. They’re supplying liquidity on demand and getting paid for accepting that risk.
I guess I just don’t understand the argument that how long someone holds on to something comes with an sliding ethical scale. What’s the tipping point for acceptable vs. sinful timeframes? And why?
Just swinging by to let everyone know the never bernie crowd and people trying to appeal to identity politics isn’t working, you guys are going to vote Bernie Sanders in the general election, and when you do I want you to remember what I said.
I’m going to vote for the Democratic nominee in the general election. Not Bernie Sanders, silly.
Can I ask the flip question? If you support Bernie Sanders, why do you support him?
Is it because you like his proposals?
Is it because you hate “the system”?
Is it because he’s a charismatic person?
Something else?
I’m frankly surprised you didn’t give “Because I love his mellifluous voice” as an option.
What about all the people who have put forward substantive reasons why Bernie is not their preferred candidates - you know, the ones whose posts you’ve largely ignored. Who will we be voting for?
I stand by my points set out in post #18, with the note that although he has apparently resolved the first point about not being a Democrat, there have been persuasive arguments to suggest that point #5 isn’t really valid and Sanders hasn’t actually been that effective in Congress…which is an even stronger argument against voting for Bernie.
I can’t stop you from dismissing all criticism of Sanders’ shortcomings as “identity politics” and irrational opposition, but it will certainly affect how much credence is given to your own arguments.
I don’t know what this means. (underline added)
And yes, if it ends up Trump vs. Bernie, I will vote for Bernie. But I’m not expecting that, and I’ll be voting for someone else in the primary.