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My attempt at a charitable interpretation of Jalopy's post is that he is saying it's actually a bad thing to transfer wealth from informed traders. This is beca
by yummyfajitas 13y ago
My attempt at a charitable interpretation of Jalopy's post is that he is saying it's actually a bad thing to transfer wealth from informed traders. This is because David Einhorn has demonstrated great competence at trading, and if HFTs predate him it reduces his incentive to continue transmitting useful information to the markets.
I find this to be an argument I can't dismiss easily.
I've added a link to your comment to the original post. It's important to spread this idea as well.
- jalopy 13y agoThanks - you captured a good part of my argument. I'd make a small correction though. I don't consider it "trading" as much as "investing". As a former quant trader and a current (and forevermore) value investor - there is a big difference.
- deleted 13y ago[deleted]
- harryh 13y agoI think the counter-artument to jalopy's point is to compare the relative degree of investment by "informed traders" vs "efficiency providers" (market makers, HFTers, etc). I think you'll find that investment by the former vastly outweighs the latter indicating that investment in efficiency providers is very unlikely to be too high.
- dllthomas 13y agoWhy should we expect the investment in the two to have any relation to each other?
- ochowie 13y agoYou find this is an argument you can't easliy dismiss? David Einhorn is personally worth $1.25 billion and Bill Ackman is worth a similar amount and you think that they're going to pack it in over an HFT making it slightly more difficult to place an order? The rise of HFT hasn't stopped Bill Ackman from making huge bets on companies like Herbalife and JC Penny. I won't even get into the fact that he probably paid less to execute that large order than he would have in the previous pit trader environment.