HFT is the child of Lucifer, I suggest we begin preemptive strikes and start burning fresh Physics PhDs on central squares of NY and London.

"Every man should lose a battle in his youth, so he does not lose a war when he is old"
 

Hmmm. I read Wilmott's quotes but didn't view the full interview.

There is a little bit of truth to this, but you rarely make money in finance pulling securities away from their fundamental value. The funds that were selling as prices went down during the flash crash- most of them LOST money.

I think the SEC needs to raise pay for its quants, hire more, and beef up its enforcement capabilities. They currently have 10 positions. Two of them are filled. The other eight are offering $120K/year for people with advanced quantitative degrees to work in Manhattan. To be competitive, it should really be $150K. They probably also want 30 quants and hundreds of developers if they want to do decent enforcement on HFT.

There should also be better opportunities for non-lawyers to advance at the SEC, and they need to have people with quantitative and technology backgrounds weighing in on regulations if they're not at least making them. Letting people with just legal and traditional banking backgrounds make the rules in this area is a bit like having people with backgrounds in railroads and highways regulating airplane safety. We wouldn't have someone who spent 10 years as a manager at Ford Motors regulate the safety of a Boeing 747; we'd hire aeronautical engineers to, if not make their own regulations (as the FAA does- most of the design rules are created by engineers rather than JDs), at least advise the regulators.

My big problem with the quant space is the intellectual imbalance between the regulators and the private sector. If the SEC had as much brainpower as the guys at DE Shaw or Getco, we'd have smarter, tougher, better-targeted, fairer, and more effective regulations, and people would trust the markets more. We don't have that with the SEC, at least right now.

All that said, at the end of the day, laissez-faire economics is not as horrible an approach to the market as some people make it out to be, at least for the retail investor. For individuals who hold a cash position, nobody is forced to trade at a price they don't like.

 
Best Response
"I just have to keep saying don't worry for another two years, because in two years I will have made all the money I need to make and the opportunity will be gone."

There's actually a lot of truth to this. I quote from an article I read a while back (http://queue.acm.org/detail.cfm?id=2536492 if you have time, it gives a pretty in-depth view on HFT):

I remember coming home late one night, and my mother, a math teacher, asked why I was so depressed and exhausted. I said, "Imagine every day you have to figure out a small part of the world. You develop fantastic machines, which can measure everything, and you deploy them to track an object falling. You analyze a million occurrences of this falling event, and along with some of the greatest minds you know, you discover gravity. It's perfect: you can model it, define it, measure it, and predict it. You test it with your colleagues and say, 'I will drop this apple from my hand, and it will hit the ground in 3.2 seconds,' and it does. Then two weeks later, you go to a large conference. You drop the apple in front of the crowd...and it floats up and flies out the window. Gravity is no longer true; it was, but it isn't now. That's HFT. As soon as you discover it, you have only a few weeks to capitalize on it; then you have to start all over."

In my opinion, this is what makes working in this industry so interesting, since you have to continuously improve and challenge yourself.

Edit: I don't know why this says it's replying to IP, sorry.

 

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