8 ms·

Regarding the last point in working at Jane Street versus research on fusion/cancer: You could maximise more good by first working at Jane Street in your 20s,

by j7ake 4y ago

Regarding the last point in working at Jane Street versus research on fusion/cancer: 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.

benreesman 4y ago
Not to mention that tightening spreads, deepening books, and equalizing prices across regulatory/financial/geographical regimes is a pretty serious social good in its own right. 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.
- spoonjim 4y ago
  If you're going to hold AAPL longer than a quarter, then the tick vs. 1/8 doesn't matter, and if you're not, your trade doesn't need to happen to support the core goal of financial markets which is to finance companies.
  - benreesman 4y ago
    You're the best kind of correct, which is technically correct. But what I said is that "multiplied by every retirement account we're talking real money". Which is no-qualifiers correct. 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.
    - cycomanic 4y ago
      > But in general advanced actors are slicing strips of meat off of each other to the benefit of 401ks everywhere. 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?
      - benreesman 4y ago
        As I've mentioned elsewhere in the thread, it's notoriously difficult to get citations on this stuff so take with a grain of salt, but I've heard that in 2019 the "HFT" industry (defined some way) had cumulative annual profits in the US of somewhere between 2-4 billion dollars. That's a long holiday weekend for Google or FB. I've also heard that this (inflation-adjusted etc. etc.) this is down sharply from ten years before, when spreads were wide and undocumented order types were winked at. 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.
        robocat 4y ago
        > HFT industry annual profits 2-4 billion. That's a long holiday weekend for Google or FB 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.
        benreesman 4y ago
        Haha fair play, but to nitpick in return: when I worked on FB Ads, revenue was not even remotely uniformly distributed across days of the year, and Thanksgiving? Lots of family photos going up and being looked at relative to your typical Thursday. 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. ;)
  - esoterica 4y ago
    If the only people who trade AAPL plan on holding it for 10 years then by the time they want to sell it there will be no one to buy it from them, since the probability that someone else will want to make their once-every-10-years trade at the exact same time is zero. In order for long term investors to function they need liquidity to enter and exit positions.
    - jaycroft 4y ago
      But it doesn't have to happen at the exact same time? Limit orders exist, no?
      - FabHK 4y ago
        Further: Suppose you had an auction on shares once an hour, or even once a day, but no continuous trading. Would that make the world any worse off? (except for high frequency shops?)
        benreesman 4y ago
        I mean, what you're describing is how to create a black market in securities for people who want to act on news, knowledge, or sentiment before tomorrow's auction. 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.
        lightbendover 4y ago
        While not the spirit of your question, I would love to see the system that could resolve global NYSE hourly demand at an hourly cadence.
        em500 4y ago
        I doubt it. I've never heard a coherent explanation how liquidity on sub-second scale is a great social good, while at the same time the largest equity markets in the world are closed 2/3rd of the day, plus all weekends and holidays.
  - SnowHill9902 4y ago
    That’s a moralistic positivistic take on a real friction problem which has been reduced. It doesn’t matter what people use the market for.
  - kasey_junk 4y ago
    You are really going to need a citation to back up that the core goal of financial markets is to finance companies. 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.
    - notahacker 4y ago
      Markets in equities exist because companies want finance enough to be willing to sell the equity. Not sure why something that elementary needs a citation. 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.
      - matred 4y ago
        I’m not sure you’re reading that correctly, since the response concerned the idea that the core goal of financial markets is X, and you respond with a statement on equities markets, which by definition only concern financing companies. 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.
  - 1980phipsi 4y ago
    But what if you hold a mutual fund that bulls and sells AAPL regularly as part of managing inflows and outflows?
uniqueuid 4y ago
That sounds as if you can jump into a field without spending 10-20 years of learning and do cutting-edge research. I'm not sure whether someone who has done quant finance can make meaningful contributions to the actual science. So if your role ends up spending money and doing top-level management, why not just fund companies that do and stay in finance? [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.
- j7ake 4y ago
  You’re overestimating the technical skills needed to do cancer research: there’s a reason why many wet labs allow high school students to come and help with research. It’s mostly grunt work and whatever technical skills can be learned by a high school student over a summer. 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.
  - uniqueuid 4y ago
    But that's not the interesting part, right? That would be like saying that tech is simply assembling prototypes. The really interesting decisions are the strategic ones that require both a high-level overview of the opportunity landscape and some foundational knowledge of its feasibility. Or am I mistaken and it's simply brute force trials?
    - j7ake 4y ago
      Yeah you’re right. My point is that the technical bar for entry is low, and can be attained maybe by spending one year in a top lab. You then skip the hazing ritual that is the PhD and postdoc and directly start your own small lab. 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.
spoonjim 4y ago
I would suspect that almost zero people do this because working in an environment changes who you are as a person. If you spend a lot of time around cancer researchers you will think that cancer research is the most important thing in the world. You would need almost monastic mental compartmentalization to work at Jane Street for N years and remain singlemindedly focused on cancer research.
- govg 4y ago
  Tangentially related is the movement of Effective Altruism, which is basically espousing taking a high paying job and then using the rewards to make a change.
  - spoonjim 4y ago
    The existence of a "movement" makes it much more likely to succeed. If you are working at Goldman Sachs during the day, you need to be talking to Effective Altruism friends at night, or you will almost certainly be washed away in the current of Goldman Sachs value systems.
  - PoignardAzur 4y ago
    I'd temper the above statement a bit. The "get rich, then donate a lot" strategy is one of the paths popular in Effective Altruism.
- llaolleh 4y ago
  “He who fights with monsters should be careful lest he thereby become a monster.”
  - oblio 4y ago
    “Battle not with monsters, lest ye become a monster, and if you gaze into the abyss, the abyss gazes also into you.” Nietzsche Don't cut out the best part of the quote :-)
- nly 4y ago
  Or suffer a loss to cancer. That changes kinds quickly too
Donckele 4y ago
The article should not have delved into this as its a can of worms - stick with the industry, programming and math. 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 .
- data_maan 4y ago
  For some reason articles on hedge funds bragging about intellectual abilities if their employees always seem to invoke these professions (chess champion, concert pianist). I'm still waiting to see them bragging about having top proctologists in their team ;)
  - robertlagrant 4y ago
    > I'm still waiting to see them bragging about having top proctologists in their team ;) They tend to be on the regulatory side.
pyb 4y ago
By now, finance and FAANG have minted a very large number of tech millionaires. So, in practice, you have you ask yourself why ~nobody has actually done what you say. Personally I don't think it's because of a lack of funds.
- amelius 4y ago
  Bill Gates?
  - pyb 4y ago
    We were talking about retiring at 30 to do science, not retiring at 50 to fund science
mikaeln 4y ago
Very easy to plan in theory.In reality, if you've been at a place like Jane Street for 10 years you mostly likely will only leave if you are retiring.
nharada 4y ago
"Make a ton of money and donate it all" is an impactful way to maximize good. It's also something that people almost never seem to execute, usually it ends with "make money and donate a small amount of it".
amelius 4y ago
Broken window fallacy. Nice try to justify your bullshit job, though.
tester756 4y ago
>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. 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
doliveira 4y ago
I know we're supposed to assume the best interpretation, but I'm struggling to imagine how can someone think this is a reasonable comment other than through self-deception.
adamsmith143 4y ago
I think you are wildly underestimating the cost of running a world class lab. 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.

by j7ake 4y ago

benreesman 4y ago

Not to mention that tightening spreads, deepening books, and equalizing prices across regulatory/financial/geographical regimes is a pretty serious social good in its own right. 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.

spoonjim 4y ago
If you're going to hold AAPL longer than a quarter, then the tick vs. 1/8 doesn't matter, and if you're not, your trade doesn't need to happen to support the core goal of financial markets which is to finance companies.
- benreesman 4y ago
  You're the best kind of correct, which is technically correct. But what I said is that "multiplied by every retirement account we're talking real money". Which is no-qualifiers correct. 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.
  - cycomanic 4y ago
    > But in general advanced actors are slicing strips of meat off of each other to the benefit of 401ks everywhere. 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?
    - benreesman 4y ago
      As I've mentioned elsewhere in the thread, it's notoriously difficult to get citations on this stuff so take with a grain of salt, but I've heard that in 2019 the "HFT" industry (defined some way) had cumulative annual profits in the US of somewhere between 2-4 billion dollars. That's a long holiday weekend for Google or FB. I've also heard that this (inflation-adjusted etc. etc.) this is down sharply from ten years before, when spreads were wide and undocumented order types were winked at. 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.
      - robocat 4y ago
        > HFT industry annual profits 2-4 billion. That's a long holiday weekend for Google or FB 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.
        benreesman 4y ago
        Haha fair play, but to nitpick in return: when I worked on FB Ads, revenue was not even remotely uniformly distributed across days of the year, and Thanksgiving? Lots of family photos going up and being looked at relative to your typical Thursday. 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. ;)
- esoterica 4y ago
  If the only people who trade AAPL plan on holding it for 10 years then by the time they want to sell it there will be no one to buy it from them, since the probability that someone else will want to make their once-every-10-years trade at the exact same time is zero. In order for long term investors to function they need liquidity to enter and exit positions.
  - jaycroft 4y ago
    But it doesn't have to happen at the exact same time? Limit orders exist, no?
    - FabHK 4y ago
      Further: Suppose you had an auction on shares once an hour, or even once a day, but no continuous trading. Would that make the world any worse off? (except for high frequency shops?)
      - benreesman 4y ago
        I mean, what you're describing is how to create a black market in securities for people who want to act on news, knowledge, or sentiment before tomorrow's auction. 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.
      - lightbendover 4y ago
        While not the spirit of your question, I would love to see the system that could resolve global NYSE hourly demand at an hourly cadence.
      - em500 4y ago
        I doubt it. I've never heard a coherent explanation how liquidity on sub-second scale is a great social good, while at the same time the largest equity markets in the world are closed 2/3rd of the day, plus all weekends and holidays.
- SnowHill9902 4y ago
  That’s a moralistic positivistic take on a real friction problem which has been reduced. It doesn’t matter what people use the market for.
- kasey_junk 4y ago
  You are really going to need a citation to back up that the core goal of financial markets is to finance companies. 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.
  - notahacker 4y ago
    Markets in equities exist because companies want finance enough to be willing to sell the equity. Not sure why something that elementary needs a citation. 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.
    - matred 4y ago
      I’m not sure you’re reading that correctly, since the response concerned the idea that the core goal of financial markets is X, and you respond with a statement on equities markets, which by definition only concern financing companies. 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.
- 1980phipsi 4y ago
  But what if you hold a mutual fund that bulls and sells AAPL regularly as part of managing inflows and outflows?

uniqueuid 4y ago

That sounds as if you can jump into a field without spending 10-20 years of learning and do cutting-edge research. I'm not sure whether someone who has done quant finance can make meaningful contributions to the actual science. So if your role ends up spending money and doing top-level management, why not just fund companies that do and stay in finance? [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.

j7ake 4y ago
You’re overestimating the technical skills needed to do cancer research: there’s a reason why many wet labs allow high school students to come and help with research. It’s mostly grunt work and whatever technical skills can be learned by a high school student over a summer. 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.
- uniqueuid 4y ago
  But that's not the interesting part, right? That would be like saying that tech is simply assembling prototypes. The really interesting decisions are the strategic ones that require both a high-level overview of the opportunity landscape and some foundational knowledge of its feasibility. Or am I mistaken and it's simply brute force trials?
  - j7ake 4y ago
    Yeah you’re right. My point is that the technical bar for entry is low, and can be attained maybe by spending one year in a top lab. You then skip the hazing ritual that is the PhD and postdoc and directly start your own small lab. 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.

spoonjim 4y ago

I would suspect that almost zero people do this because working in an environment changes who you are as a person. If you spend a lot of time around cancer researchers you will think that cancer research is the most important thing in the world. You would need almost monastic mental compartmentalization to work at Jane Street for N years and remain singlemindedly focused on cancer research.

govg 4y ago
Tangentially related is the movement of Effective Altruism, which is basically espousing taking a high paying job and then using the rewards to make a change.
- spoonjim 4y ago
  The existence of a "movement" makes it much more likely to succeed. If you are working at Goldman Sachs during the day, you need to be talking to Effective Altruism friends at night, or you will almost certainly be washed away in the current of Goldman Sachs value systems.
- PoignardAzur 4y ago
  I'd temper the above statement a bit. The "get rich, then donate a lot" strategy is one of the paths popular in Effective Altruism.
llaolleh 4y ago
“He who fights with monsters should be careful lest he thereby become a monster.”
- oblio 4y ago
  “Battle not with monsters, lest ye become a monster, and if you gaze into the abyss, the abyss gazes also into you.” Nietzsche Don't cut out the best part of the quote :-)
nly 4y ago
Or suffer a loss to cancer. That changes kinds quickly too

Donckele 4y ago

The article should not have delved into this as its a can of worms - stick with the industry, programming and math. 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 .

data_maan 4y ago
For some reason articles on hedge funds bragging about intellectual abilities if their employees always seem to invoke these professions (chess champion, concert pianist). I'm still waiting to see them bragging about having top proctologists in their team ;)
- robertlagrant 4y ago
  > I'm still waiting to see them bragging about having top proctologists in their team ;) They tend to be on the regulatory side.

pyb 4y ago

By now, finance and FAANG have minted a very large number of tech millionaires. So, in practice, you have you ask yourself why ~nobody has actually done what you say. Personally I don't think it's because of a lack of funds.

amelius 4y ago
Bill Gates?
- pyb 4y ago
  We were talking about retiring at 30 to do science, not retiring at 50 to fund science

mikaeln 4y ago

Very easy to plan in theory.In reality, if you've been at a place like Jane Street for 10 years you mostly likely will only leave if you are retiring.

nharada 4y ago

"Make a ton of money and donate it all" is an impactful way to maximize good. It's also something that people almost never seem to execute, usually it ends with "make money and donate a small amount of it".

amelius 4y ago

Broken window fallacy. Nice try to justify your bullshit job, though.

tester756 4y ago

>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. 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

doliveira 4y ago

I know we're supposed to assume the best interpretation, but I'm struggling to imagine how can someone think this is a reasonable comment other than through self-deception.

adamsmith143 4y ago

I think you are wildly underestimating the cost of running a world class lab. 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.