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The stock market provides an efficient medium for the allocation of capital. This means that corporations can more easily and safely raise capital from the publ

The stock market provides an efficient medium for the allocation of capital. This means that corporations can more easily and safely raise capital from the public and that the public can participate in the positive-sum growth of publicly traded companies and the economy at large. Moreover, the stock market, like any market efficient enough to be worth its salt, provides a uniquely effective information aggregation mechanism via price discovery, facilitating more accurate and more precise forecasting and prediction for nearly any process which interacts with the greater economy. Studies of high-frequency trading have yet to show benefits to these processes above and beyond those provided by a slower static tick rate, and in fact, more recent studies seem to suggest that HFT may even exist only to the detriment of these processes, all while wasting undue resources, both physical and intellectual, on an endless arms race over ever decreasing trading latency[1]. [1] https://en.wikipedia.org/wiki/High-frequency_trading https://en.wikipedia.org/wiki/High-frequency_trading

j-pb 3y ago
> The stock market provides an efficient medium for the allocation of capital. Only if P=NP.[1] Besides Efficiency: the ratio of the useful work performed by a machine or in a process to the total energy expended or heat taken in. This also begs the question: "To efficiently allocate capital (energy) for what goal (work)?" And it doesn't look like the answer to that is "the betterment of humanity", but to push the bell curve of wealth as far to the left as possible with the longest tail possible, externalities be damned. The stock market isn't a usefull tool for society like kickstarter, but a wealth extraction mechanism for the wealthiest. So I'd argue that HFT isn't any more immoral than T. 1: https://arxiv.org/abs/1002.2284 https://arxiv.org/abs/1002.2284
- Dylan16807 3y ago
  > Efficiency: the ratio of the useful work And then you merely link a proof that the efficiency is not 100%. That's effectively meaningless.
  - consilient 3y ago
    That's not what efficiency means in this context. People who say the market is efficient mean one of: - You can't beat the market - You can't beat the market without insider information - You can't beat the market using only information about historical prices. (Insert "approximately" and "by enough to be worth it" as appropriate) 1 is certainly false, 3 is probably true, 2 is controversial.
    - Dylan16807 3y ago
      Yeah, I know, but they quoted that one so I used it. The paper is basically proving 3 can't always be true for actors with unlimited computational power, and without any "approximately" or "by enough to be worth it". It's a cute math trick, not something useful.
    - cosmojg 3y ago
      You hit the nail on the head, thank you. I probably should have qualified my use of the word "efficient" with "highly" or even "incredibly" to make this more obvious.
      - Dylan16807 3y ago
        The paper doesn't prove you can't be highly efficient in real markets. It proves you can't be perfect.
- aleph_minus_one 3y ago
  > Only if P=NP.[1] The statement of P vs NP is different from what most non-mathematicians and non-computer-scientists think: - It is possible that P=NP, but the the asymptotically fastest algorithm is provable, say, O(n^(2^64)). - It is possible that P≠NP, but there exists an algorithm of O(n^(log log log log log log log log n)) where the constant in O(...) is small.

j-pb 3y ago

> The stock market provides an efficient medium for the allocation of capital. Only if P=NP.[1] Besides Efficiency: the ratio of the useful work performed by a machine or in a process to the total energy expended or heat taken in. This also begs the question: "To efficiently allocate capital (energy) for what goal (work)?" And it doesn't look like the answer to that is "the betterment of humanity", but to push the bell curve of wealth as far to the left as possible with the longest tail possible, externalities be damned. The stock market isn't a usefull tool for society like kickstarter, but a wealth extraction mechanism for the wealthiest. So I'd argue that HFT isn't any more immoral than T. 1: https://arxiv.org/abs/1002.2284 https://arxiv.org/abs/1002.2284

Dylan16807 3y ago
> Efficiency: the ratio of the useful work And then you merely link a proof that the efficiency is not 100%. That's effectively meaningless.
- consilient 3y ago
  That's not what efficiency means in this context. People who say the market is efficient mean one of: - You can't beat the market - You can't beat the market without insider information - You can't beat the market using only information about historical prices. (Insert "approximately" and "by enough to be worth it" as appropriate) 1 is certainly false, 3 is probably true, 2 is controversial.
  - Dylan16807 3y ago
    Yeah, I know, but they quoted that one so I used it. The paper is basically proving 3 can't always be true for actors with unlimited computational power, and without any "approximately" or "by enough to be worth it". It's a cute math trick, not something useful.
  - cosmojg 3y ago
    You hit the nail on the head, thank you. I probably should have qualified my use of the word "efficient" with "highly" or even "incredibly" to make this more obvious.
    - Dylan16807 3y ago
      The paper doesn't prove you can't be highly efficient in real markets. It proves you can't be perfect.
aleph_minus_one 3y ago
> Only if P=NP.[1] The statement of P vs NP is different from what most non-mathematicians and non-computer-scientists think: - It is possible that P=NP, but the the asymptotically fastest algorithm is provable, say, O(n^(2^64)). - It is possible that P≠NP, but there exists an algorithm of O(n^(log log log log log log log log n)) where the constant in O(...) is small.