8 ms·

Can you explain what utility renaissance actually provides? And don't say liquidity in the market cause that's a line of bullshit

deleted 2y ago
[deleted]
actionfromafar 2y ago
I'm not saying they provide cover. But such a company could provide cover better than most.
gottorf 2y ago
> don't say liquidity in the market cause that's a line of bullshit It's not a line of bullshit. For every notable prop shop (that is, attempting to trade one's own money for profit, which you may view as an illegitimate market activity) there is in the market, there are 100x as many portfolio managers (who manage other people's money, such as pension funds, which you may view as a more legitimate use of the market). Every trade that a "legitimate" entity puts on has a counterparty, and the more counterparties there are from speculative activity[0], the more liquidity there is and the more efficiently things can be transacted. Everyone ends up happier. You could argue that the field of managing money in general pays more than it is "worth", but that's kind of an argument of cosmic morality. Who should be paid more, elementary school teachers or firefighters? [0]: https://www.cmegroup.com/education/courses/introduction-to-futures/understanding-the-role-of-speculators.html https://www.cmegroup.com/education/courses/introduction-to-f...
- DontchaKnowit 2y ago
  I do not view pension funds as a more legitimate use of the market. The market as a whole is completely zero sum in my view. And of course the CME group has a positive view of speculators, because they profit from speculative activity.
  - colonCapitalDee 2y ago
    > The market as a whole is completely zero sum in my view. How is it even possible to believe this? How do you think societies should manage their resources and plan for the future, if not a market? Soviet style central planning, or a cash and barter only economy? And if the answer is that we should have a market, then the market is providing some utility (because if it was providing neutral or negative utility then why have it) and is therefore not zero sum.
  - creer 2y ago
    You must be aware somewhere that both sides of every single trade are in it because they find a benefit in that trade, right? Some need the cash, some need to turn cash into investments, some are changing their minds from favoring firm A to favoring firm B, etc, etc. All the way to pension funds ... doing the exact same thing. You can imagine other ways to do it (but good luck making these other ways "fair" or "efficient" or "fast") - or you can recognize that a market is an elegant (in the engineering sense) way to do it. Once you have a market, you also want liquidity. Anyone who tried buying or selling illiquid shares (or illiquid goods), knows how much of a pain is lack of liquidity. It truly is desirable.
grotorea 2y ago
Not financial expert but I think "liquidity in the market" would be more of a high-frequency trader thing. The advantage to everyone else is that good investors inject information into the market and move prices towards their "correct" price earlier, preventing other investors from buying overpriced securities. Of course they make a profit by capturing the chance to buy underpriced securities but there's still a benefit. It also ought to mean financial resources are better allocated towards companies that are profitable and/or will make a profit in the future. tl;dr: (Actively managed) funds and investors are the Gosplan of capitalism.

deleted 2y ago

[deleted]

actionfromafar 2y ago

I'm not saying they provide cover. But such a company could provide cover better than most.

gottorf 2y ago

> don't say liquidity in the market cause that's a line of bullshit It's not a line of bullshit. For every notable prop shop (that is, attempting to trade one's own money for profit, which you may view as an illegitimate market activity) there is in the market, there are 100x as many portfolio managers (who manage other people's money, such as pension funds, which you may view as a more legitimate use of the market). Every trade that a "legitimate" entity puts on has a counterparty, and the more counterparties there are from speculative activity[0], the more liquidity there is and the more efficiently things can be transacted. Everyone ends up happier. You could argue that the field of managing money in general pays more than it is "worth", but that's kind of an argument of cosmic morality. Who should be paid more, elementary school teachers or firefighters? [0]: https://www.cmegroup.com/education/courses/introduction-to-futures/understanding-the-role-of-speculators.html https://www.cmegroup.com/education/courses/introduction-to-f...

DontchaKnowit 2y ago
I do not view pension funds as a more legitimate use of the market. The market as a whole is completely zero sum in my view. And of course the CME group has a positive view of speculators, because they profit from speculative activity.
- colonCapitalDee 2y ago
  > The market as a whole is completely zero sum in my view. How is it even possible to believe this? How do you think societies should manage their resources and plan for the future, if not a market? Soviet style central planning, or a cash and barter only economy? And if the answer is that we should have a market, then the market is providing some utility (because if it was providing neutral or negative utility then why have it) and is therefore not zero sum.
- creer 2y ago
  You must be aware somewhere that both sides of every single trade are in it because they find a benefit in that trade, right? Some need the cash, some need to turn cash into investments, some are changing their minds from favoring firm A to favoring firm B, etc, etc. All the way to pension funds ... doing the exact same thing. You can imagine other ways to do it (but good luck making these other ways "fair" or "efficient" or "fast") - or you can recognize that a market is an elegant (in the engineering sense) way to do it. Once you have a market, you also want liquidity. Anyone who tried buying or selling illiquid shares (or illiquid goods), knows how much of a pain is lack of liquidity. It truly is desirable.

grotorea 2y ago

Not financial expert but I think "liquidity in the market" would be more of a high-frequency trader thing. The advantage to everyone else is that good investors inject information into the market and move prices towards their "correct" price earlier, preventing other investors from buying overpriced securities. Of course they make a profit by capturing the chance to buy underpriced securities but there's still a benefit. It also ought to mean financial resources are better allocated towards companies that are profitable and/or will make a profit in the future. tl;dr: (Actively managed) funds and investors are the Gosplan of capitalism.