[edit] To add one prominent example - it's doable, as Jeff Hawkins demonstrated. Founded Palm, made money, then created his own brain research lab. As far as I understand, the neurological community has not embraced his ideas with open arms, but they are at least intrigued by his universal computational model of the brain. So that's a pretty big accomplishment.
So either he's withholding whatever concrete insight he found, or he hasn't found it yet - I believe the latter is more likely.
I know multiple people who have done this.
If you want a famous person, look at Paul Erdős. Always jumping into new areas of mathematics and solving problems at the cutting edge.
Or, to get to the current subject, Taleb using his background as a trader to jump to a career in academia, where many consider(ed) his research cutting edge.
Sonia Vallabh, and her husband, Eric Minikel are the strongest examples of these type of highly smart and ambitious people.
> Sonia Vallabh ... had just graduated from Harvard Law School.
> [Eric Minikel] ... had recently gotten a degree in urban planning from M.I.T
https://www.broadinstitute.org/bios/sonia-vallabh
https://www.broadinstitute.org/bios/eric-minikel
https://www.nytimes.com/2020/07/07/health/rare-diseases.html
He already had a PhD so it's not surprising he was able to enter Academia. But outside his books I'm not aware of anyone talking about his Research much.
Does anyone who works in this field know of it being currently applied?
Personally I really enjoy his books and recommend them to my friends and family. Professionally, I have never heard his name being mentioned.
You find the same 'fluffy' management books on trader desks (varies between firms).
- Some translation of "the art of war". - Tribal leadership and their whole "Tribe of tribes" nonsense - its name escapes me at the moment, but some leadership book written by a US marine? Because this maps directly to finance? - six sigma
Usually they are "management" focused chanting type material.
How? In today's academic environment you won't survive even a few years without publishable research results.
I would venture to say the average Jane street worker has done more good for society than the average cancer researcher or Alzheimer’s researcher.
For fusion research, the quantitative skills from many Jane Street people can easily transfer to make meaningful contributions to fusion research.
Or you can take your ~10M or whatever in earnings during a decade as an OCaml programmer at Jane Street and fund a cutting-edge cancer research lab?
Are you reading yourself after you type?
Might be one of the more arrogant things I've read. And I frequent WallStreetOasis.
Also I said the average researcher, meaning taken from the global population, ie not from a top institute. Jane Street is highly concentrated in talent that produce real results in the world.
The average cancer researcher has probably done more good than the average trading firm worker though.
This is just blatant Jane Street (and more generally, hedge fund) propaganda.
Yes, you serve some role within the financial system, but you're not really relevant to society imminently and to non-western societies generally.
Who do you think is supervising the high school student? Where does the idea for the project come from? Where does the money supporting the high school intern' experiments come from?
Spend your money attending conferences to make connections and get yourself updated in the field.
Hire technicians to help with your grunt work. Spend your days reading research papers, discussing science at conferences, and setting up new experiments.
More often, you are trying something that hasn't been done before and you're getting results that don't quite make sense. Here, experience and background knowledge seem key, and I'm not sure that you'll pick up much of that in a year, even in a "top lab" because experiments are slow. On top of that, you'll need to learn how to design experiments and analyze/present their results in ways that your peers find convincing, which is in itself a non-trivial skill. All this presumes that you're even able to find your way into a "top lab", but that's not a foregone conclusion either: these places can be incredibly selective even among people with a decade of experience in the same field.
Put another way, your answer assumes there's a lot of fat to trim in the PhD/postdoc stages. What is it and can it really be cut down by 90% as you propose?
If you’re independently wealthy, you don’t need to go through the modem hazing ritual and you can start your own lab much earlier.
I’m not saying you can start immediately and be an effective researcher, you will initially suck like everyone else. But you will have a better time learning how to fail if your career/livelihood is not on the line.
I understand that (as the article mentions) these folks clean up when the wheels have already come off anyways, but day-in-day-out, the spread on AAPL is one tick ($0.01) nowadays, rather than the 1/8ths that you'd get quoted by some loud guy from Jersey 30 years ago.
Citations on this stuff are hard to come by, but it does seem at least directionally true that these advanced actors are making less money over time even as the problem becomes harder. If that's true, it's money not going into the pocket of a middle-man somewhere. Multiply that by everyone's retirement account and we're talking real money.
That ETF that you should have your roll in? It's buying and selling securities all the time, and encountering friction along the way. And whether people have ETFs or individual equities in their (hopefully tax-advantaged) retirement account, across everyone with a retirement account it adds up.
I know that people often have a low-key axe to grind about advanced market actors being "bad", and I know that politicians go to the well with this narrative all the time, but it's misleading at best and usually just demonstrably wrong. And with nothing but respect, I tend to bow out of conversations where people push the issue past a comment or two.
There are exceptions: Citadel paying 2x for PFOF on Robinhood vs. Schwab to get optionality on internalizing against dumb flow? Yeah, that's pretty iffy. But in general advanced actors are slicing strips of meat off of each other to the benefit of 401ks everywhere.
I really hope it isn’t, or it would be making lots of tax events! I hope it’s doing in-kind transactions like all the normal ETFs.
> Citadel paying 2x for PFOF on Robinhood vs. Schwab to get optionality on internalizing against dumb flow? Yeah, that's pretty iffy. But in general advanced actors are slicing strips of meat off of each other to the benefit of 401ks everywhere.
No, robinhood average order is just smaller so less risk of adverse selection.
As for your second point, I guess neither of us works at Citadel so we're both guessing, but if you agree that there is a market for order flow and that the most charitable interpretation of why that would be the case is because of the attached optionality for internal netting, then you're sort of making the assertion that all PFOF is equally valuable, which would be a hell of a coincidence.
As a sort of side note, I regard the cherry-pick the parent with ">" prefixes and go after snippets of what they posted as basically the lowest form of discourse on HN in spite of how popular it is, and I would encourage anyone to try to reply to someone's entire comment rather than just trying to find the weld points and lean on those spots. It's pretty weak.
I am not sure I understand. That would mean that the number of advanced actors would stay stable or go down over time (generally much research shows that markets tend to concentrate even in pure random trading, so the number of advanced actors should go down). Is that actually the case?
To wildly oversimplify, market makers will tend to drive the spread down to the tick size, and arbitrageurs will tend to put themselves out of a job.
For the industry as a whole to be growing either in distinct actors or cumulative top-line, the number of markets and instruments and general financial activity has to be growing faster than the big dogs are eating each other. This is my (semi-informed) guess.
Nitpick: that’s 10 to 37 days for Google or FB. 2B for Google is ~10 days, 4B for Meta is 37 days. Alphabet net income for 2021 was $76.033B, Meta Net income $39.370B.
Morbidly funny anecdote: when I first moved to the NYC office I obviously didn't have many friends, let alone a significant other. Myself and a few of the other sad saps who failed to notice the office clearing out a bit early around us were borderline freaking out over what looked like very anomalous behavior in the IG ranking system.
It wasn't until we raised it in a slack group that included some coupled folks that we realized it was Valentines day. Womp Womp. ;)
That is, in my view, at best an ancillary goal (notice that most money in the markets doesn’t participate in buying shares from the company itself).
That may be what you want the markets to be about but every other participant has other desires from the markets and the great thing is they can all get what they want from them.
It's also true there are many other participants with many other strategies to extract that value created by the companies from acquiring and merging them to collecting dividends from a balanced portfolio to day trading, but the reason the market exists in the first place is because companies that create value need their capital in order to do it. As you correctly point out, most of the actual trades are secondary market ones involving companies not in the process of fundraising, but those trades are still positive sum inasmuch as without liquid secondary markets, companies that create the actual value might have found it too hard to raise funding. The difference between being able to sell TWTR on IPO day or shortly afterwards and being forced to hold it until an Elon Musk comes along and follows through with its existence has a huge impact on its ability to raise funds and grow. On the other hand reducing the time between trades down to smaller sub-second microsecond intervals is - whilst useful to people trying to win at essentially zero-sum trading games and inflating asset prices very slightly - going to have a pretty minimal impact on whether companies create more value by raising more funds.
Equities markets are a piece of the pie. The largest, by far, for the kind of HFT we’re talking about, but a fraction of financial activity.
The core goal of financial markets is to gather and match prospective buyers and sellers so that trading can occur.
Obviously true that financial markets for commodity futures etc have different functions, though a similar logic applies to them (the extra liquidity in commodities futures markets is useful to the extent it facilitates real world production decisions)
Sooner or later (spoiler alert: sooner) someone would put it on the Internet, and it would be unregulated, at least at first, and the insiders would do even better than they are now.
You should read up on the early days of ECNs, Island and Archipelago and what not. Alternatively, you could look at this exact script being played out in crypto right now.
You are begging the question. Why should a market reflect that? Why is that preferable to a daily auction (throw in a stochastic cut-off time to thwart HFT even more)?
Don't cut out the best part of the quote :-)
A lot of people trying to change their careers would like to have a talk with you about this, I bet.
Ph.D in CS is 5-10 years ahead of newbie trying to learn computers
Its funny that the article uses a “chess champion” and a “concert pianist” as examples to to argue that you don’t question their occupations when it comes to being a benefit to mankind or not. I mean, the huge fucking salaries, where does the money come from? from fucking trees?
WTF! Seriously? I predict this will be one of the first article/HN post that has negative publicity for Jane Street .
I'm still waiting to see them bragging about having top proctologists in their team ;)
They tend to be on the regulatory side.
Even if you retire with 10M by 30 you aren't going to run a world class research center with that kind of money for very long, or at all. Hell Land, buildings and equipment probably eat most of that right out of the gate. MIT's Plasma Science and Fusion Center had to shut down when their funding dropped from $28 to $14M per year. So at 10M you could Fund, forget about building, a center 1/3 the size of MIT's for 1 year.
Nice try to justify your bullshit job, though.
It's also something that people almost never seem to execute, usually it ends with "make money and donate a small amount of it".
You could maximise more good by first working at Jane Street in your 20s, retire by 30, and then set up your own smal fusion/cancer research lab where you can do research without being tied to government funding and politics. By 30, many cancer researchers have barely finished their PhDs, so you won’t actually be that far behind scientifically, but you’ll be far ahead financially.