I don't think I said anything bad about Wall Street except that when they screw up it causes recessions.
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Also heard there are weird arbitrage opportunities via eg neutrino-based signals (see http://www.nature.com/news/physics-in-finance-trading-at-the-speed-of-light-1.16872 … ) You could get ...
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...really rich off of this kind of thing, but it's unclear how doing that creates value. Is this the exception, or the rule?
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Yep that's one critique of the price-signals-create-value theory: it's hard to say where the economic rents end and the social value begins
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Sure it's good that demand in NYC affects supply in Chicago, but is it really way better for that to happen a few ms faster?
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I'd note that there's all sorts of theory on this sub-question that I'm not well versed in
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This is sort of a silly argument.
@slatestarcodex's point that Wall St can do a lot of damage when it messes up doesn't mean "Wall St Bad". -
I don't think it's an argument; we're just discussing what social value finance does and doesn't create. :-)
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See also mis-threaded tweets:https://twitter.com/PeterFavaloro/status/863118867169550336 …
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Two ways to make money on a hedge fund as the manager -- raise enough money to charge a ton of management fees or 1/
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In any given year outperform in a way that triggers a share of success fees or carry (often 20% of profits above a threshold) 2/
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Hedge funds as a category may not typically outperform but individual funds can make very large profits in any given year 3/
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Think for example the people featured in the Big Short - they had an investment that made a ton of money on one particular trade 4/
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But that has no basis or implication for future success. Often the manager can then raise a ton of money and charge fees on it 5/
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See for example
@matt_levine writing recently about John Paulson 6/pic.twitter.com/AZuOYYt5qe
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The broader point is the most successful hedge fund managers usuallyhave some big success that allowed them to raise a ton of money /end
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