Thursday, July 21, 2016

HSBC Currency Traders Got Greedy on Christmas

HSBC Currency Traders Got Greedy on Christmas - Bloomberg View: "More generally, there is a reason that "insider trading" isn't really a thing in the FX world. These guys trade pounds all day. They know that their clients are buying and selling pounds. If they were restricted from trading any time they knew that there might be a big client trade in the next week, they could never trade. Front-running a live order is bad, but just buying pounds when you know a client might later want to buy pounds seems ... inevitable? "

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Sunday, July 17, 2016

Brexit and the power of wishful thinking

In Brexit and the power of wishful thinking Tim Harford talks about predicting the future.  There are at least two interesting aspects:

1) Behavioral biases that make this more difficult.

"The first is that wishful thinking is surprisingly powerful. A few years ago, the economist Guy Mayraz conducted a simple experiment at Oxford university’s Centre for Experimental Social Science. Mayraz ran sessions in which the participants were shown 90 days of “wheat prices” (actually based on historical price data) and asked to predict the price of wheat on the 100th day. In addition to being paid for accurate forecasts, half the experimental subjects were told they were “bakers”, who would profit if the price of wheat fell, and half were “farmers”, who would make money if the price of wheat rose."
2) The use of scenario planning:

"It’s time for more serious scenario thinking about the UK’s future in Europe. Because scenarios are persuasive stories, they can help us face up to uncomfortable prospects and think clearly about possibilities we would rather ignore. And because scenarios contradict each other, they force us to acknowledge that, in the end, we cannot actually see into the future. As a result, we move from a sterile question to a fertile one — from “What will happen?” to “What will we do if it does?”"

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Saturday, July 16, 2016

Why Land May Not Be the Smartest Place to Put Your Nest Egg - The New York Times

Why Land May Not Be the Smartest Place to Put Your Nest Egg - The New York Times: "A more extreme outcome is also quite plausible. In a hundred years, we might even see much of our former farmland converted back to wildlife preserves. In fact, it’s far from inconceivable that the real price of land could be even lower than it is right now."

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Worthwhile Canadian Initiative: What's wrong with Airbnb?

Worthwhile Canadian Initiative: What's wrong with Airbnb?: "Airbnb undermines the distinction between short-term, "hotel", accommodation and and long-term, "apartment" accommodation. Some people seem to figure this is a bad thing. New York State legislators, for example, have passed legislation imposing heavy fines on anyone listing their entire apartment on Airbnb or a similar service. But what – if anything – is wrong with what Airbnb is doing?"

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Friday, July 08, 2016

Why Traders Have Lost Their Touch

Why Traders Have Lost Their Touch - Bloomberg View: "Trading can be broken down into a few fairly simple strategies. Flow trading entails taking positions on the back of customer orders. Buying-and-selling patterns create opportunities for traders to exploit small price changes. Large, dominant dealers that participate in a high proportion of activity are especially well-positioned to benefit"

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