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That's interesting. I actually feel quite differently about my own experience in finance. HFT is a great example mentioned by a sibling comment. You kind of ne

by vostok 7y ago

That's interesting. I actually feel quite differently about my own experience in finance. HFT is a great example mentioned by a sibling comment. You kind of need some number of traders out there to make sure that market prices are honest and fair. HFT has done a great job of reducing (a) the number of people involved in trading per dollar traded and (b) the amount of money made by traders per dollar traded.

anonu 7y ago
"keeping markets efficient" is how I justified what I did. But what's that number N of market participants where N+1 brings a de minimis improvement in efficiency. I think the number of market participants (large institutional players) is already well over N. To the point where its just computers churning trades. To be clear, nothing wrong with that. But from a personal perspective you start to question your contribution.
skrebbel 7y ago
I'm very far from the finance world so please correct me if I'm saying something stupid. But how does eg an algorithm that sells stock when the newspaper headlines have a "negative sentiment" help ensure that "market prices are honest and fair"? What's "honest and fair" about stocks across the board dropping because of bushfires or a virus outbreak, only to rise back to pre-headline levels half a day later?
- amylene 7y ago
  The best way to make a correct prediction is to continually update your estimate as new information comes in. As it comes in. That’s all the markets are doing. When the virus starts, the markets adjust downwards because there is a chance that virus kills tens of millions, which would have severe economic impact. As the world public health starts to reduce the error bars or bad outcome likelihood, the market adjusts. The problem is that you’re thinking of something as having a concrete value. Instead, think like Tetlock teaches in superforecasters. Then you will have a better model of what’s going on.

by vostok 7y ago

anonu 7y ago

"keeping markets efficient" is how I justified what I did. But what's that number N of market participants where N+1 brings a de minimis improvement in efficiency. I think the number of market participants (large institutional players) is already well over N. To the point where its just computers churning trades. To be clear, nothing wrong with that. But from a personal perspective you start to question your contribution.

skrebbel 7y ago

I'm very far from the finance world so please correct me if I'm saying something stupid. But how does eg an algorithm that sells stock when the newspaper headlines have a "negative sentiment" help ensure that "market prices are honest and fair"? What's "honest and fair" about stocks across the board dropping because of bushfires or a virus outbreak, only to rise back to pre-headline levels half a day later?

amylene 7y ago
The best way to make a correct prediction is to continually update your estimate as new information comes in. As it comes in. That’s all the markets are doing. When the virus starts, the markets adjust downwards because there is a chance that virus kills tens of millions, which would have severe economic impact. As the world public health starts to reduce the error bars or bad outcome likelihood, the market adjusts. The problem is that you’re thinking of something as having a concrete value. Instead, think like Tetlock teaches in superforecasters. Then you will have a better model of what’s going on.