According to Wired’s Jerry Adler Wall Street used to bet on
companies that build things. Now it just bets on technologies that make faster
and faster trades.
The 2012 New York Battle of the Quants, a two-day conference
of algorithmic asset traders, took place in New York City at the end of March,
just a few days after a group of researchers admitted they had made a mistake
in an experiment that purported to overturn modern physics. The scientists had
claimed to observe subatomic particles called neutrinos traveling faster than
the speed of light. But they were wrong; about six months later, they retracted
their findings. And while “Special Relativity Upheld” is the world’s most
predictable headline, the news that neutrinos actually obey the laws of physics
as currently understood marked the end of a brief and tantalizing dream for
quants—the physicists, engineers, and mathematicians-turned-financiers who
generate as much as 55 percent of all US stock trading. In the pursuit of
market-beating returns, sending a signal at faster than light speed could
provide the ultimate edge: a way to make trades in the past, the financial
equivalent of betting on a horse race after it has been run.
“…High-frequency traders are a subset of quants, investors
who make money the newfangled way: a fraction of a cent at a time, multiplied
by hundreds of shares, tens of thousands of times a day. These traders occupy
an anomalous position on Wall Street, carrying themselves with a distinctive
mixture of diffidence and arrogance that sets them apart from the pure, unmixed
arrogance of investment bankers…..
Wait…wait…there’s more at http://www.wired.com/business/2012/08/ff_wallstreet_trading/all/
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