Monday, January 3, 2011

How negative sum game is required to support a positive sum game

Electronic Trading Creates a New Financial Landscape -

Once capital is raised, the rest of trading is negative sum. We have a huge industry of highly paid salespeople, executives, software experts, etc. participating in this questionably productive world, of which I am a part. I'm not one for regulation but have to wonder how this talent could be used in a more clearly positive sum game. As Shapiro suggests, limit trade execution speed to one second, meaning slow it down substantially to eliminate the arms race. The entire stock picking industry has been discredited to insiders since the publication of

Where Are the Customers' Yachts? (1940). Fear and greed are the sources. I don't have the answers. The investment world concentrates the emotion, irrationality, selfishness, and status seeking that frustrates me about humanity most often. Oh well, that a good rant to start the week.

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