[ExI] Efficiency of algorithmic trading

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Sat Apr 30 14:14:40 UTC 2011

On Sat, Apr 30, 2011 at 3:28 AM, Jones Murphy <morphy at alumni.caltech.edu> wrote:
> I agree, Olga. I have yet to see any evidence of superior
> enlightenment here, and I am unsubscribing from this group because I'm
> having to autoblock so many participants for nonsense and bigotry,
> much like I would in any average forum. So far I've just seen a lot of
> hierarchism, absurd claims of meritocracy in societies which
> horrifically and rigidly stratified, crude and aggressive tribalism
> and racism etc.

### Oh, phleeeze

> The idea that the budget deficit is some great and insoluble problem
> is nonsense. Raising taxes on the wealthiest back to what they were
> during the peak of America's economic growth and upward mobility would
> easily cure the deficit by itself.

### To cure the deficit you would have to raise my taxes and the taxes
of everybody who makes more than I to about 70 - 80 %, assuming
persons who earn less get no tax increases. In other words, for every
10 dollars I make, 8 would go for taxes. This would make my net income
drift down to somewhat below today's average.

I am working in a crappy place away from home to bring in extra money
and to be able to indulge my passion for science, working in a biotech
company. But, if almost all I make was taken away, I would just stop
doing it. The investors who pay for my company would be wiped out as
well. So instead of some patients getting treated and some science
getting done, I and many others would do something else - and it is
absolutely guaranteed it would be much less socially useful, like
writing NIH grant applications or lobbying the bureaucrats, or even
becoming one. After all, if you can't lick them, join them.

 More modest tax increases coupled
> with slashing the insane military budget to some small sane multiple
> of the next biggest(currently China's) would also take care of the
> budget deficit and pay down the national debt very quickly. The
> illusion of a budget deficit and national debt is created sustained by
> the lowest federal taxes in 80 years, since the low  low taxes leading
> into the Great Crash.

### How about the highest government spending levels ever?

Stealing money to pay for your lifestyle is a great idea until you run
of suckers.

> The idea that CEO's today are working so much harder(at 400plus times
> average worker pay) than CEO's when Reagan took power(40 times average
> worker pay) is false.

### Spike didn't say that. No reasonable person says that.


 CEO's are not working ten times harder now than
> 30 years ago. This is rank hierarchism again, and a false claim of
> meritocracy where it does not exist.

### No, spike didn't say that either.

So, who are you arguing against?


 I know. I'm a CEO of a small
> hedge fund, and in my own career have worked with and done business
> with a lot of CEO's of very big financial companies whose names you'd
> instantly recognize. Many are very talented, and many are not talented
> in any business sense but are great "survivor" contestants good at
> scheming and backstabbing their way to the top. Virtually none of them
> are worth 400 times what average workers are making. I wouldn't pay
> it, as a shareholder or director.

### Nobody's forcing you.

 It's just too easy to find talented
> people to replace them at a much lower price than these absurd
> multiples.

### These "absurd multiples" are a drop in the bucket compared to
losses you would sustain while looking for the cheap talent. The issue
is not merit, talent or some nebulous idea of "desert" - the issue is
day-to-day efficiency in running a company. Do you know that the stock
price of a company (i.e. the value assigned by prospective buyers
based on expectations of future economic productivity) drops by on
average 20%, according to Danish data, after the death of a CEO's
child? Imagine that Procter and Gamble would announce they are firing
their CEO, to spend the next 6 months looking for a cheap replacement
and save themselves about 0.01% of their gross income on executive
pay. What is in your professional opinion, as a hedge fund CEO, the
likely impact of this announcement on P&G stock?

I note you are not providing any numbers and quantitative analysis in
your posts.

Is your hedge fund doing well?

Just asking, not trying to be horrifically, rigidly, absurdly snide,
hierarchical and tribalistic, or something.


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