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Ask HN: How come so many of you know about stocks/finance ?
Do a lot of you work in the field or have degrees in business??
Whenever there is a discussion on stocks, HFT, economy, a lot of seem to know about it (more then just a wikipedia search or passing interest...which I would say I have)
- tirrellp 16y agoI majored in econ as an undergrad. I have always wanted to be wealthy so I try to understand how money 'works'.
- sgman 16y agoIt's similar to the question "How come so many people seem to know so much about politics?" Low barrier to entry, everyone has an opinion, and since the field is subjective, there's generally no "right" or "wrong" answer.
- eru 16y agoYes, but in finance you can at least put your money where your mouth is.
- brk 16y agoYou had to do something with all that free money from stock options in the 90's... :) I have no formal finance experience, just a lot of hard-learned business and investment knowledge. It also helps that my wife has a degree in finance and runs the finance group for a tech company, so she and I can talk and discuss things from different angles.
- aymeric 16y agoWould it be because hackers make more money than they spend so they learn how to invest it?
- zavulon 16y agoPersonally, I used to work in finance, so I had to know it - but I think it's essential knowledge for both employees and entrepreneurs. Employees - well, if you're planning to make a career in some big company, you might as well invest in 401K, especially if they're offer matching. And then you usually get a choice between various funds. And obviously, you need to get educated about finance, because if you make wrong choices, you could get really fucked. Entrepreneurs - obviously you need to be good at that when money valuations come into play for your startup. And here - same situation, if you're not educated about how that works, you're gonna get fucked. And those are just some of the examples of situations you're going to run into where that knowledge is required.
- btmorex 16y agoActually, you don't really need to know much to do a decent job investing for retirement. Invest in a low-cost, index-based stock fund and similarly low-cost, diversified bond fund. Follow one the many simple formulas to decide what percentage should be in bonds vs stocks (usually based on years to retirement.) What I wrote above will easily beat most of the more complicated plans out there especially after factoring in cost. You can of course get more complicated, but you usually only need to get more complicated if you have an awful lot of extra money which most people don't.
- tsally 16y agoA lot of smart people go into finance and make a lot of money, so I think there's a general curiosity about their methods and techniques. Unfortunately the better you understand it the more cynical you'll get. :-p
- tyn 16y ago"A lot of smart people go into finance and make a lot of money"... Any references?
- tyn 16y agoIf you meant they make a lot of money working as employees (e.g. as traders in banks that get a lot in bonuses even when they blow everythng up) then my comment was irrelevant. If you mean that a lot of people make money by beating the market (that's how i got it) then I would still like to see these references.
- noodle 16y agofor me, at least, my parents made sure to teach me finance and about how the stock market works as i grew up. nothing in-depth, but once i got into college with an already firm understanding, the rest was just personal research and interest in the topic.
- tansey 16y agoI work for a hedge fund.
- tom_b 16y agoI'd be super-interested in hearing what that's like from a hacker point-of-view. Is it a big team? Are you doing standard IT work there or far-out, complex coding? If you're a hacker there, what's the skinny on fun problems in the day-to-day work?
- tansey 16y agoMy work life is similar to yummyfajitas. I work in a 4-person fund that was bought by a 30-person firm (collection of different alternative asset funds), which makes us semi-autonomous. I'm basically a jack-of-all-trades there, but 80% of my time is model development. When I first started, the fund was still in its infancy and it was all about creating the frameworks, automating tedious tasks, etc. Since then it's more about statistics, AI, and lately saving pennies. The most fun is being able to watch the market, and have that epiphany where you all of a sudden have a trading system in mind that you want to try. You furiously code for the next 30 minutes, compile, debug, input parameters, hit enter--- and then have your dreams crushed to find "hmm... well if I traded that, we'd lose 98% in x years." :) I'd say it's best described as a startup meets online poker. On the startup side, it's a small team, constantly pivoting based on perceived market demands for different investment vehicles, and lots more freedom to fail fast with little ideas. The poker side is where the whole luck factor comes in, dealing with huge swings due to flash crashes and political speeches.
- drcode 16y agoLots of techies are single people with low expenses. Therefore they are likely to have money to invest. At that point, you really have no choice to learn stocks, since most other avenues don't lead to much return.
- barnaby 16y agoIt's a complex system. A good gacker loves a complex system.
- waterlesscloud 16y agoThis, as much as anything else.
- Qz 16y agoI'm pretty sure that's a typo, but gacker totally deserves to be a real word.
- gfodor 16y agoI propose this word be adopted for the up-and-coming geeks of the next generation who, instead of hacking on silicon, will be splicing genes in their bedroom. genetic-hackers.
- carbocation 16y agoGacker (n): Someone who plays the game of genetics using both zinc fingers and stem cells.
- bl4k 16y agoa financial hacker would be a facker
- eru 16y agoOr a Fugger. (http://en.wikipedia.org/wiki/Fugger http://en.wikipedia.org/wiki/Fugger)
- nl 16y agoThere's a big secret to finance, at least up to some level: It's a lot simpler than you think. Even things like hedge funds, which are often popularly presented as impossible for mere mortals to understand are pretty simple conceptually. (Having said that, some of the specific hedges used can be complicated are require a high level of economic literacy to follow)
- pyre 16y agoSo it's more an issue of: 1) understanding how something specific works and 2) understanding all the related jargon. While both of these might be relatively simple (at least for the base case) it still takes the time to learn them. Many of these things cannot just be learned on-the-fly by picking up context clues in a discussion (though I think that the jargon is a large part of this).
- edanm 16y agoIsn't this (partly) true of programming as well? And in fact, almost every field? If someone drops in on a conversation between two programmers, he'll probably be lost in a sea of jargon, even though they could explain what they're talking about quite simply if they wanted to (it would take a little longer, but it could be done).
- c00p3r 16y agoThat secret is not just about finance, it is about almost everything. Most of complex systems were built from simple and understandable parts. The problem is - one should learn the underlying rules and principles first.
- known 16y agoI work in an Investment Bank and I can second it.
- mortuus 16y agoMarketplace Whiteboard does a great job explaining market concepts with analogies and simple whiteboard visuals (and is available as a podcast) http://marketplace.publicradio.org/collections/coll_display.php?coll_id=20216 http://marketplace.publicradio.org/collections/coll_display....
- barredo 16y agoSomehow related (2009) article from NYT http://www.nytimes.com/2009/10/14/opinion/14trillin.html http://www.nytimes.com/2009/10/14/opinion/14trillin.html (That I personally enjoyed) “IF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.” “The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” “I told you what happened. Smart guys started going to Wall Street.” (...) That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”
- tansey 16y agoYeah, that's complete bullshit. The "smart guys" have been working on Wall St. for decades. Maybe there weren't as many high-profile funds, but they were there. They were there (and blamed) when LTCM collapsed, they were there (and blamed) when the dot-com bubble came, and it should be no surprise that they are still here and being blamed for the current crisis. The notion that smart people are to blame for the financial crisis is like saying tobacco farmers are to blame for lung cancer. The quants aren't the ones making the laws in congress that have torn down regulation for the last 30 years. They aren't the guys demanding huge increases in leverage (even in the case of LTCM, where a few of the high-profile quants did get excessive, it still wasn't their call). They aren't the guys who lowered interest rates or started the housing bubble. They're the guys who just see an opportunity to make money and they take it. If a guy cuts off your leg, throws you in the ocean, and you get eaten by sharks, are you really going to say that your death was the result of a vicious, man-eating shark? The people to blame are the usual bunch. It's congress, the white house, and the executives-- most of whom are not the "smart guys" that are being blamed. Quants are a scape goat for a bunch of people unwilling to accept that what happened is not easily traced back to a recent event, but rather requires a longer look back and a more nuanced answer. It's a lazy answer to effectively say, "Wall St. gave $70 trillion to a bunch of mathematicians who were just too darn smart for their own good, dontchaknow." Washington got hooked on Reagan-era deregulation, where each time they let the banks go a little further, they got a little more campaign funding, and around and around we go. There are tons of bubbles and crashes in the history of stock markets. Each time people think things are different, and they're always wrong. This is no different than every other time: greed and corruption. (Disclaimer: I work for a hedge fund.)
- bufordtwain 16y agoI want to be able to retire one day, I have no pension, so I figure I need to know about this stuff.
- fanboy123 16y agoreal answer is most of these guys dont know as much as they think. general coverage of financial topics miss a lot of the big picture.
- BrentRitterbeck 16y agoI have industry experience as a broker, trader, and currently developing strategies. EDIT: My current position is only an internship for the summer as I finish up my MSFE degree.
- djb_hackernews 16y agoWhat financial engineering program are you in? I've been looking into those and mathematical finance programs and would appreciate any feedback.
- jfornear 16y agoI think it's easy to forget about the diversity we have here on HN. We've got traders, climate scientists, ex-Marines, lawyers, chefs, etc.
- staunch 16y agoFYI: Jarheads I've known prefer that you say "former Marine" and not "ex-Marine", as "ex" can have negative connotations.
- trafficlight 16y agoOnce a Marine, always a Marine.
- jfornear 16y agoSorry about that. :)
- jeffepp 16y agoI would venture that a lot of us have the ability to pick up these concepts rather quickly. In addition, for those of us who are self-employed, it is beneficial to manage our retirement accounts. I also traded at a options trading firm while in law school. I loved it.
- ct4ul4u 16y agoI worked on Wall Street starting in the mid 80s and with and on trading desks since the mid 90s. I've built the technology for equity trading desks and program trading desks. I was the business manager for a couple of program trading desks. I've created trading products (most notably a dark pool that mixed retail and institutional order flow). I am a big believer that individual investors can't beat CAPM and shouldn't be picking stocks. I think the ideal portfolio is a mix of treasuries, equity and debt index funds, and angel investments.
- joshu 16y agoDid working on Wall St give you the experience you needed to become one of the Great Old Ones?
- rjett 16y ago"I am a big believer that individual investors can't beat CAPM and shouldn't be picking stocks." First of all, hasn't CAPM been shown to be a nice, but not terribly accurate, picture of how the market works? Among other things, it assumes that asset returns are normally distributed random variables, it assumes that investors have homogeneous expectations about the return of an asset (aka everyone has the same info at the same time and observes the same risk and expected return of any particular asset), and it doesn't explain variance in stock returns. In other words, it doesn't accurately mirror reality. Secondly, while I agree that most people shouldn't be picking stocks, my hair still bristles when I hear someone say that individual investors can't beat the market. True, little retail investors are probably at a disadvantage to the bigger, faster funds out there, but this hasn't stopped a handful of people from beating the market. <brag>I've averaged 28% annual returns over the past 12 years. Maybe you would say I'm just lucky though? </brag>
- petoveritas 16y agoIf you are interested in learning about finance and economics, hands down the best source of learning through osmosis is the Bloomberg On The Economy podcasts by @tomkeene_ Look into it. All he does is interview really really smart people from Wall Street and nobel laureates in economics... really good show where the more you listen to it the more things start to make sense. If you have questions about other educational resources shoot me a tweet @petoveritas
- btilly 16y agoI wouldn't claim a deep knowledge of stocks or finance. But I worked in bonds for several years, and read a few books while I was there. I also have read a few more books on economics. So I'm better versed than your average person.
- Flemlord 16y agoI design software for financial advisers.
- brc 16y agoIf you're interested in startups, you've got to know this stuff. The foundation of just about all business is the capital markets - without them, the big dollar buyouts and IPOs don't happen. Understanding financial markets is understanding the foundation of society, and understanding the history of financial markets is a better roadmap of 'how did we get here' than, say, studying the personalities of kings and presidents. Sitting in front of your computer, literally everything you touch and look at is the product of the organisation of finance through capital markets. Without it, factories don't get built, shipping doesn't happen, nothing would get done. Once you understand financial markets, you realise your startup is actually two products : one is the product that people buy, the other is the company as a product, which means the company as an investment opportunity. If you understand what capital markets want from companies, you can design that into your company to make it more saleable. Also, any decent undergrad course worth attending should at least cover finance and economics, even if at 101 level. I don't believe any education in the modern world is complete until the person has an in-depth understanding of the importance of financial markets in our daily lives, even if you disagree with it.
- mkramlich 16y agoI disagree that financial markets are the foundation of society. Instead, I think they're more near the top or to the "side". Closer to the foundation of society is more basic and primal human needs and wants, and people doing real work, making real things that other people need or want. Finance is just a very modern abstraction. It can be useful, but also just another form of gambling or parasitism. Again, not to say it's not useful to understand. Just not part of the foundation of society.
- coryl 16y agoGlobalization and modern business practices have unfortunately made global finance markets a very real core part of the way a society functions. That's why a market crash in the US throws the world into a financial depression: small businesses cannot get loans, governments and consumers lose confidence, jobs are lost, people starve.
- jswinghammer 16y agoI study economics as my personal hobby. In particular I study Austrian economics which has proven very useful for me in business and my own personal finances.
- tjmaxal 16y agoMBA
- iamelgringo 16y agoI founded http://Newsley.com http://Newsley.com. We're transitioning from a social news site for financial news into a real time search engine for economic and financial news. We're in the process of rebuilding the back end right now, so there's not much to see on the front page aside from a social news site. If you click on an article's discussion page, you can see some to the semantic entity extraction that we're doing for each article, however. To answer your question, when you build a site like that, you end up reading a lot of financial news, and you pick things up along the way. :)
- rjett 16y agoCool site. I've been looking for something ever since newmogul went down. Markenomics just didn't cut it as a replacement (mainly because there was hardly any good discussion there). One comment about your design: Maybe use a smaller font so I can see more than 3 stories above the fold.
- wmwong 16y agoI second this! I've been looking for a replacement for newmogul as well.
- iamelgringo 16y agoThanks, guys. I do need to change some of those font settings. I use huge monitors at home, so it doesn't really bother me. The article submitter sometimes crashes, too. Feel free to ping me if you find any bugs, or have other suggestions. Jonathan@newsley.com
- rbanffy 16y agoI notice many hackers are also interested in law. And politics. Any complex system that generates interesting behavior out of a set of not very complicated rules is delightful to hack. If there are rules that generate rules, it's even more fun.
- spammenots 16y agolol, this really is one big circlejerk, isn't it?
- bl4k 16y agoFor some reason, your average nerd often considers themselves to be a part-time economist. A nerd meeting an economist would likely attempt to argue out points, where you wouldn't do the same if you met a brain surgeon. It is just that type of field where you can pick up things in your 'spare time' and sound smart enough to hold a conversation. It must piss real economists off a lot .. (I couldn't imagine economists arguing about why RubyOnRails won't scale, but you see the opposite scenario - geeks/nerds arguing fine economic points, all the time)
- dreyfiz 16y agoSame goes for nerds thinking they're lawyers or judges.
- chopsueyar 16y ago...or lawyers thinking they're judges? ...or law students thinking they are lawyers?
- pbiggar 16y agoAre you American? I've noticed Americans in general are really into this stuff. Most bank accounts come with advanced options like money market accounts, and its pretty normal for people to have a "portfolio". So I would say knowing about money is a far bigger part of the US culture than it is in say Europe.
- ydant 16y agoThe money market accounts most Americans have access to as part of their baking account is simply a higher interest rate savings account with slightly different restrictions. It's not investing by any stretch of the imagination. I think the real difference is in the US is the feeling that our portfolio (i.e., our retirement account) is the only thing that will support us when we can't work anymore. Thus many Americans regardless of how much financial savvy are likely to talk about their retirement and how much it's been hit by the recession, the stock crash, whatever.
- lionhearted 16y agoIt's worth starting to learn about at almost any point in your life - (smart) investing teaches you how to look at numbers, be rational, fight off being impulsive, think critically, etc, etc. It's probably good to start learning about investing 2 to 3 years before you actually have any cash, especially talking with smart people about their portfolios. Then you can talk to them a year later, if they're candid they'll tell you how things went. It's interesting seeing my friends who bought trying to time the market largely got wrecked - one friend lost a lot trying to catch the falling knife of Indymac and Washington Mutual. Another friend who lives in Amsterdam is a more fundamental investor, looks at the numbers and the markets. He invested in Marvel before it got bought by Disney and Baidu after the crash, and made a lot since then. Long story short, it's a good brain exercise no matter what, it's a topic that matters to a lot of people, it's fun, it's very flexible, and so on.
- Yaggo 16y agoI know almost nothing about business or stock markets, but have doubled (minus taxes) my savings through AAPL in last 1.5 years. :-)
- chopsueyar 16y agoGot it at $11.46
- Yaggo 16y ago... and sold at $20? :-)
- roel_v 16y agoWhen it comes down to it I don't really know much, just enough to fake it online - like the other 90% of online posters about complex subjects that can be made ambiguous without much effort.
- tezza 16y agoI seem to be a 'know about finance HN user'[1]. I work for an Agency Broker[2] in London but the knowledge really comes from: * How to Read the Financial Pages [3] * Money Week subscription [4] --------- [1] http://news.ycombinator.com/item?id=1304249 http://news.ycombinator.com/item?id=1304249 , http://news.ycombinator.com/item?id=667324 http://news.ycombinator.com/item?id=667324 and others I'm too lazy to locate right now [2] as a Java Dev [3] http://www.amazon.co.uk/Read-Financial-Pages-Michael-Brett/dp/0712662596 http://www.amazon.co.uk/Read-Financial-Pages-Michael-Brett/d... [4] http://www.moneyweek.com/ http://www.moneyweek.com/
- nailer 16y agoI make infrastructure for high frequency trading desks. Since the algo is a fairly small piece of code, and the OS is massive, there are big opportunities reducing latency in firmware, kernels, schedulers, transports, locking mechanisms, interrupts, and interconnects. Most investment banks are forming dedicated low latency infrastructure teams now and they're severely in need of skilled people.
- ig1 16y agoSpent 18 months working on equity analytics, 18 months on a credit default swap settlement system and the last couple of years working on high-frequency/low-latency FX pricing & trading.
- djb_hackernews 16y agoI can definitely attribute my interest in the markets to my Dad. When I was a kid he would get home from work and quickly turn on the TV to CNBC to watch the ticker tape. He was a pretty good stock picker and an unlikely one as a union electrician and very little education. The passion and excitement rubbed off.
- quant18 16y agoCan't speak too well for other cities, but in Hong Kong, up until very recently, no one besides hedge funds and grad schools had interesting programming problems to work on. So if you wanted to be surrounded by good hackers, you either went into finance, or you were in an M.Phil programme while you wait for a visa to go to a country where there's non-finance jobs with interesting problems to hack at. Fortunately this is slowly changing (after years of useless government "innovation" initiatives like CyberPort which just turned into subsidies for politically-connected real-estate developers); we've got more non-finance companies doing development (and not just sales), like Artificial Life, and there's more of an entrepreneurial vibe in the air (rather than CompSci majors automatically chasing after jobs in the big companies).
- agentq 16y agoI am a quantitative analyst at a large asset management firm -- I focus on risk models and alpha-generating strategies. Though we have separate developer teams, my job requires considerable hacking.
- Maven911 16y agoWell I have to say I am pretty impressed by the overall level of knowledge. I have been interested in business since a kid (use to read businessweek magazines regularly), and lately I have decided to study for the Chartered Financial Analyst (CFA) program which I am currently preparing for Level II. I noticed that a lot of lingo that I learned from the CFA curriculum will regularly show up in HN comments. Even with a level I background, I don't think I can talk-the-talk since I don't really work in the area. I would say that if anyone is interested to learn more about finance, stocks, economy, the CFA program is a great place to start.
- shareme 16y agoWhen I was a jr accountant and mis person for health care firms I completed a series 63 SEC license for mutual funds. I have kept up with finance every since, I guess its part of my interests as my 2 year degree was double major, CS and Accounting/Finance,
- MrFoof 16y ago>Do a lot of you work in the field or have degrees in business?? Chalk me up as one of those who works in the field. I'm a developer in the research department of a quant-shop.
- HeyLaughingBoy 16y agoFor some it's interesting, that's all. Most of what I once knew about finance I've forgotten. 20 years ago, just out of college I read a great book: Marcia(?) Stigum, The Money Market and it really opened my eyes to how banks and investments worked -- at least back then! I spent the next year or so interested in Finance but then gradually lost interest. Money and Finance are important to entrepreneurship, so it's not surprising that there are a lot of knowledgeable people around here. But one nice thing about HN is that you could probably ask a question about just about anything technically interesting in any field and get a bunch of good, informed answers from people with real knowledge of the domain :-)