Interesting piece
http://www.nytimes.com/2008/10/12/opinion/12dooling.html?_r=1&oref=slogin
(More discussion here, although I've hijacked the story to talk about one of my personal beefs)
And to think, just a few weeks ago, I was having an argument with some other idiot about the role of computers vs traders in the stock market. He professed to believe that:
a) the stock market is predictable, and
b) traders have some kind of important role and aren't replaceable by a simple script.
Heh.
a) Anybody who's read into the maths and statistics of it will understand that market behaviour is simply a statistical/mathematical model. Another well-known model is the Standard Model of physics, which describes how particles and energy interact. However, just because you understand physics, does not mean you can predict when the next car crash will occur outside my window. Not without very, very detailed inside information anyway. Right? The stock market is unpredictable in exactly the same way. Yes, I was also completely astounded at hearing above idiot's assertion.
b) Beyond following the fairly transparent rules of stock market behaviour, no single trading strategy has ever been proven to be more effective than another -- except things relating to insider trading. All that's required is you follow the rules and obtain information (that is, the input variables) and process it as quickly as possible. This is why it is completely fucking ridiculous that city traders get any decent salary at all. A trader just needs a lucky month (which is statistically guaranteed to happen from time to time) and they will have a bunch of banks gagging to pay them millions to come and trade for them.
What a preposterously synthetic and over-inflated job position. Most of the decisions are already made by computer systems and traders are hardly more than a mouthpiece these days, yet they're still treated as being more valuable than gold-plated unobtanium. It's pure idiocy. There are other positions in the stock and financial markets which really do require supreme intellects and vast amounts of understanding and worth, but it is simply not true of the trader.
(More discussion here, although I've hijacked the story to talk about one of my personal beefs)
And to think, just a few weeks ago, I was having an argument with some other idiot about the role of computers vs traders in the stock market. He professed to believe that:
a) the stock market is predictable, and
b) traders have some kind of important role and aren't replaceable by a simple script.
Heh.
a) Anybody who's read into the maths and statistics of it will understand that market behaviour is simply a statistical/mathematical model. Another well-known model is the Standard Model of physics, which describes how particles and energy interact. However, just because you understand physics, does not mean you can predict when the next car crash will occur outside my window. Not without very, very detailed inside information anyway. Right? The stock market is unpredictable in exactly the same way. Yes, I was also completely astounded at hearing above idiot's assertion.
b) Beyond following the fairly transparent rules of stock market behaviour, no single trading strategy has ever been proven to be more effective than another -- except things relating to insider trading. All that's required is you follow the rules and obtain information (that is, the input variables) and process it as quickly as possible. This is why it is completely fucking ridiculous that city traders get any decent salary at all. A trader just needs a lucky month (which is statistically guaranteed to happen from time to time) and they will have a bunch of banks gagging to pay them millions to come and trade for them.
What a preposterously synthetic and over-inflated job position. Most of the decisions are already made by computer systems and traders are hardly more than a mouthpiece these days, yet they're still treated as being more valuable than gold-plated unobtanium. It's pure idiocy. There are other positions in the stock and financial markets which really do require supreme intellects and vast amounts of understanding and worth, but it is simply not true of the trader.