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Yes, they are taking on risks by making these trades. Do insurance companies 'earn' money? Do bail bondsmen 'earn' money? Does a retirement account 'earn' money

• mikekchar 8y ago
  The definition that google returns for the word "earn" is: 1. obtain (money) in return for labour or services. 2. gain deservedly in return for one's behaviour or achievements. I think it's interesting to see the contrast in those 2 definitions. In the first place you concern yourself with whether or not a service has been performed. In the second place you concern yourself whether or not the money is deserved by way of the action/accomplishment. I think this neatly separates the two kinds of thinking on this sort of topic. On the one hand, people are appalled that people are making a lot of money without providing any particularly useful service (in the case of HFT, I suppose we could argue that it increases liquidity, which is helpful in some ways, but the market had ways of dealing with that before HFT so I think it's not a super strong argument). On the other hand, there are people who admire the cleverness, skill, impetus and daring of people who can find ways to make money without providing some kind of traditional service. To those people, the money has been earned by virtue of their ingenuity/initiative/luck. I think the conflict here is that to many people, the world would be a better place if we valued #1 considerably more than we value #2 (possibly to the point of not valuing #2 at all). It is, of course, not the world we currently live in, but I can understand the sentiment.
  • hueving 8y ago
    Hft does provide a service: taking on financial risk. This is a hard concept for people not in finance to understand, but think of it like insurance if that helps you.