I have absolutely nothing against these guys. To the contrary, I respect the fact they take advantage of how easy their jobs are, rather than attempting to portray themselves as hard-working, Galtian products of our awesome meritocracy. But it says something funny about our system that you can make a million a year doing this:
Briargate, a proprietary-trading firm that the two former NYSE floor “specialist” traders started in 2008, is mostly active at the stock market’s open and close.
In between, when market activity typically drops, the Wall Street veterans play tennis in Central Park, take leisurely lunches, visit their children’s schools and work out at the gym. Dress shoes have been replaced with flip-flops, slacks with cargo shorts. Once during market hours, they walked about five miles and crossed the Brooklyn Bridge to try Grimaldi’s pizza.
[….]Mr. Oscher says their compensation is “in line” with what they formerly made as specialists. Successful specialists could make upward of $500,000 at the industry’s peak, while partners could bring home more than $1 million.
FlipYrWhig
How is what these people do different from fantasy football?
DougJ
@FlipYrWhig:
Not different at all. I don’t think they’d claim it is.
Ash Can
It is a bizarre system, and somewhat analogous to pro sports in that if you have a special gift for it, you can clean up.
licensed to kill time
Well, la-di-da. That is all.
BGinCHI
If these guys don’t get tax relief this country is fucked. How can the working class survive if these heroes lose a small percentage of their income?
JenJen
Last paragraph is a doozy:
I honestly got a little nauseous while reading that piece.
ETA: Oh, wait… actually, I’ve identified the source of nausea as MSNBC, which I foolishly have on in the background. They just talked up an upcoming segment: “Luke Russert gives us an in-depth profile of the man who could be speaker, and how his childhood led to where he is today.”
Ella in New Mexico
Au contriaire! These people obviously are far more endowed and deserving than the rest of us. They are clearly WAY more savvy and clever than us little people. They DESERVE to live like this, don’t you understand? Obviously, this is true since I, the commoner, have absolutely NO idea what they do or HOW they do it.
If they’d wanted to actually work for a living they’d be used car salesman.
Bulworth
Our very great producers.
Steve
Briargate does “black box” trading, meaning they program a computer to do the trading for them. The work is all in designing a profitable algorithm.
Back when the bubble was peaking, 2007 or so, I would routinely comment how amazing it is that 99% of the American public has no idea how much of the economy is nothing more than paper being pushed back and forth, often by computers, as opposed to actual productive activity. It’s really weird and it’s led to a major misallocation of our best minds.
Agoraphobic Kleptomaniac
This will be shortened to 2 sentences and added in one of the paragraphs about America’s decline as the last standing superpower in historybooks.
Martin
@FlipYrWhig: Uh, they make a million dollars per year doing it while y’all don’t.
Like the ‘why is this art’ question, it mostly boils down to who is willing to take the risk to try. You get a few thousand fantasy football folks willing to risk their own savings then they won’t be making nearly so much.
I don’t mean to sound all Republican here, but those have been the rules for a long time. There’s a soft inflection point on earning, above which you have enough to take some risks and actually realize the American Dream and below which you’re going to be remain a poor bastard because you’re working your whole life for food and rent and nothing more. Republicans don’t recognize that point, asserting that a 4th job is all it’ll take – Democrats do and seek to get everyone up to it. But the truth remains that there are a lot of people above that point that are too afraid to take the risks that they can afford to take and really shouldn’t complain that someone else rolled the dice and now earn 7 figures.
NonyNony
@Steve: IOW these guys are making a ton of money by gaming the system.
russell
But can they put off going to the bathroom when they’re holding a position?
If so, then they’ve earned every cent.
@Dogsdoingthings
Dogs who believe this WSJ article is what Walter Benjamin had in mind when he said, “There is no document of civilization which is not at the same time a document of barbarism.”
artem1s
money for nothing and chicks for free
tamied
This makes me sick. At the same time, I’m thinking ‘how can I get me one of them jobs?’
beltane
At least these guys have good taste in pizza. Nice that they visit their kids in school, too.
Steve
@Martin:
What risk? A tiny fraction of what they trade is their own capital. For the most part they’re trading other people’s money and enjoying a lucrative upside with no downside. The consequences of failure are small. Even if your trading system suffers a complete meltdown, it’s far from a career-ender – the future employment prospects of failed hedge-fund managers are roughly as doomed as those of Iraq War cheerleaders, which is to say not at all.
DougJ
@beltane:
No way, Motorino and Lucali’s are much better.
Greenhouse Guy
Eh, fuck these doods/doodettes. Sickening.
Ash Can
@NonyNony: Everyone in the markets is gaming each other, really. The money is made on the margins, and if, like Steve says above, these guys have come up with a more effective algorithm, the system is set up in such a way that it can pay off big. Basically, they’ve designed a better mousetrap. Of course, I also agree with Steve that it’s weird and makes for a peculiar misallocation of brilliance.
chopper
@beltane:
grimaldi’s is pretty nice, especially after a walk across the bridge.
i’d walk 20 miles for lucalis pizza, but that’s another story.
Greenhouse Guy
Oh, just because… http://www.youtube.com/watch?v=ZxRG7uoFDo4&ob=av2n
Bruce (formerly Steve S.)
I’m with you, I prefer honesty from my plutocrats. For the same reason I wasn’t at all upset with Tony Hayward when he was photographed at a yacht race, I was much more put off when he appeared on TV pretending to give a shit. I want them to be seen for what they are, not for what shallow and idiotic journos think they should be.
DonkeyKong
Call them the “Groovy Galts”
I smell a David Brooks column in the making.
dmsilev
@JenJen:
To be fair, Luke Russert *is* an expert on how your decisions in childhood can lead you places as an adult. In his case, his choice of father was key.
dms
Ash Can
@Steve: According to the article, that’s not true at all; they use only their firm’s own money. Also, they definitely do expose themselves to risk by taking off during the middle of the day. If something hits the fan and moves the markets while they’re off playing tennis, oops. (Of course, iPhones and such are a boon in helping people like these guys stay connected to the trading floor.) However, they’ve constructed their model in such a way that, as they say, it’s worth it to them to forgo the (usually) small gains they’d make trading during the slower hours for the extra leisure time they have.
Florida Cynic
I read that piece last week, and it really didn’t set off the Gekko alarm in any real way. These guys have the bulk of their net worth tied up in their business, they provide liquidity to the market, they aren’t setting up shop in the exchanges’ data centers doing high speed trading (and don’t have the resources to), and they aren’t ripping off customers. If Goldman and the rest of the Too Big To Fail crowd had being playing by Briargate’s rulebook, we wouldn’t be where we are today.
Martin
@Ash Can: Further, even if it was someone else’s money, you have to be willing to quit your job and do the various things to secure access to other people’s money to even attempt this.
I’m almost positive I have the analytical skills to do that job (both in general and specifically wrt the stock market), but I’m not willing to quit my current job and give up my benefits to try it. That risk alone is too high for me personally, but that’s a reflection of me, not of them.
Steve
@Ash Can: “Trades only its own money” doesn’t mean what you think it means. Yes, it means they’re not a hedge fund where outsiders are free to contribute their own capital, but they still most likely raised a bunch of money from outsiders by selling preferred shares or something similar. If the firm fails due to poor trading algorithms or whatever, it’s not like the principals will have to sell their homes in order to pay back the preferred shareholders.
bago
Heh. I made it so you can check into the line outside of Grimaldi’s on foursquare.
georgia pig
In fact, they give you an insight into the degree of the bullshit coming from the Galtian superheroes of Wall Street. In other words, you can do what they do in a couple of hours a day if you have some decent software and IT support.
geg6
@Bruce (formerly Steve S.):
Exactly. The fact that they feel the need to hide their true colors is what leads people to like the Teatards to think that Wall Streeters are all downtrodden and such.
Let’s see who they really are in all their plutocratic glory.
arguingwithsignposts
Not that surprising. Most people who make their money off gambling don’t spend all day at the cas1no.
Cat
@Martin:
Your first post had the classic markings of someone whose never been within a wiff of a working trader.
This one cements it.
You don’t get into their old jobs by having just the ‘skills’, you also have to have the pedigree. There are way to many people trying to get these jobs and there is precious little to differentiate the applicants other then what school they went to and their appearance.
You then have to have the right pedigree to get other people to risk their money. Some outsider isn’t going to be able to even get the people with the money on the phone to ask them to give them money for a venture like this.
If you really think you can do this and think it can be done a micro scale you can easily get a netbook with a 3g card or dongle and trading account with access to live data so you can keep your day job.
Ailuridae
@Steve:
It would be awesome if every time there was a thread about finance or trading the people commenting weren’t astonishingly ignorant. When someone “trades their own money” it does indeed mean that all of the capital put up front is their own. So the founders of this firm do indeed bear all the down side risk if they fail badly.
Steve
@Ailuridae: But the article doesn’t say the traders are “trading their own money.” It says the firm is “trading its own money.” That often means money that is put up by preferred equityholders in addition to the principals’ own startup funds.
I hope this doesn’t make me sound even more “astonishingly ignorant,” but it is very common for trading firms with this profile to have passive investors.
stuckinred
@Ailuridae: So what do you think of “buy-write” strategy as long as you are here?
Martin
@Cat: I think you are overstating your case. Either that or the guy I know (net worth somewhere in the high 9 figures) who has built his own real estate investment firm on the back of a U of Colorado degree either doesn’t exist, or U of Colorado has had their reputation massively improved when I wasn’t looking.
The west coast is full of bond traders and the like and while there’s more than a fair share of USC hiring bias there, there’s a fair bit of room for guys without the pedigree to break in, though you’ll need enough financial security to weather a rocky start (I know a few other guys that put on the cocky successful trader schtick but were living in a shitty one-bedroom because they were barely pulling it off).
I didn’t mean to infer that there’d be no more investment to doing this than quitting your job, merely that even that was a risk I (and most people) are unwilling to make. Founding a firm like is described would require a significant up-front cost, and while pedigree would certainly allow that to happen without significant personal investment, it’s hardly the only path to take. Maybe it’s true in Wall Street proper, but they don’t fully run the show any longer.
arguingwithsignposts
I’ll bet most of their income is taxed at the lower capital gains rate instead of the rate of people who have to actually work all day.
I don’t have anything against these guys personally. I have something against a system that rewards this kind of “risk” at such levels while laying off and cutting the wages of working stiffs who often face far greater personal risk on a daily basis.
Mike in NC
@JenJen:
Fortunately I start a new job tomorrow and will no long have to put up with cable news as background noise as I work around the house.
“I invite each of you to sit down in front of your own television set when your station goes on the air and stay there, for a day, without a book, without a magazine, without a newspaper, without a profit and loss sheet or a rating book to distract you. Keep your eyes glued to that set until the station signs off. I can assure you that what you will observe is a vast wasteland.” – Newton Minow (May 1961)
The only difference now is that there are hundreds of stations and they never go off the air.
Nylund
My friend is a brilliant (but lazy) math nerd. After grad school, he stuck around the department doing odd jobs for very little pay. He hates “real” jobs. A finance guy came in and asked for help with a math problem. They got along, and after a couple months of teaching himself how to code, they started a hedge fund. He went from making $15k a year to making very serious money in just a few months. It didn’t take him long to master all the magical Galtian secrets. He told me that any half-way smart person could do it.
Then, his “finance” partner died in a freak accident. Investors got spooked, pulled all the money, and a week after the death, the place folded and he was unemployed again. He realized he lacked one crucial thing, the trust of super rich people who would let him play with their money. As he put it, he learned that despite being on the team, he actually wasn’t in “the club.” He was just the nerd that did the busy work in their eyes. He’s now someone else’s nerd, but just a cog in a larger machine. He still makes a good living, but not like he was as the number two guy in a small firm working with a partner with direct access to deep pockets.
In short, he said it really wasn’t hard to make a lot of money if you had access to a lot of money, but that access is pretty hard to get. Its a small club that doesn’t accept many new members and has a lot more to do with who you know that what skills you have.
I doubt that comes to much of a surprise to anyone.
Ailuridae
@Steve:
Point being that this is complete nonsense. :
A tiny fraction of what they trade is their own capital. For the most part they’re trading other people’s money and enjoying a lucrative upside with no downside. ”
These people aren’t risking customers’ money is the only relevant distinction.
Traders “blow out” all the time and indeed lose everything. I haven’t traded in five years but during the 30 months I did I easily knew a dozen people who lost everything. Screen trading from a computer is an astonishingly difficult way to make a living. Of the two firms I know in Chicago both have attrition/failure rates near 90% and of the 10% who “make it” not many of them are making big money.
The article does get at a larger point though. By having a market open and close (rather than just running it electronically 24/7/365) the market is far, far less efficient than it ought to be and results in brokerage houses essentially stealing money from customers as well as giving prop traders such as these a way of making money that provides no larger societal value.
Violet
@arguingwithsignposts:
Agree. This is the real problem with it. So what if these guys have found a job that where they work very little and make a lot of money? Good for them. We should all be so lucky.
The real problem is that the system rewards this kind of nothingness work and then rewards them again by taxing them very little. The whole thing is wrong. The country is not being improved by these guys and their non-work job. Unless you count the daytime employees at the tennis court getting a few extra tips, I don’t see how these traders’ lifestyle is helping much of anyone.
But good for them for finding it and making it work for them. Now we as a country need to find a way to disincentivize this kind of “work” and incentivize real work.
Cat
@Martin: We are talking two different classes of people I think or the east coast/west coast firms have east coast/west cost hiring biases.
I am talking about people who get into the investment firms as traders, analysts, quants, etc.
I also don’t think its overstating the case when the vast majority of the MOTU trainees are white males from wealthy families who went to expensive private universities. These jobs are just not available, as a rule, to the vast majority of college graduates regardless of how well they could perform the job.
Ailuridae
@Nylund:
So your friend was making serious money but once his partner died he had no access to any capital. But wait, he just spent several months making serious money, right? The SEC levers everyone at 4:1 regardless of “access” and firms such as this one will give you an additional 10:1 intraday (giving you 40:1) pretty readily. Heck Hold is always looking to expand new offices.
Steve
@Ailuridae:
Sure they do. And when you find them a year later they’re not begging on the street corner for cash. They’re not unemployable like a total failure in most any other industry would be. They’re likely to be right back out there trading for someone else.
One of the most spectacular failures in trading history was the collapse of Long-Term Capital Management during the Russian crisis in 1998. Everyone said that the trading strategies of its founders had been utterly discredited. Yet the principals had absolutely no problem getting enough backing to go on yet another wacky trading adventure within a couple years.
Do I think it’s tough for the kid at the very bottom with nothing but a dollar and a dream? Sure, just like everywhere. But even that kid is likely to get a second and a third and a fourth chance in the securities industry if he wants it, unless and until the regulators get a hold of him. It’s a funny business that way. Failure is not punished.
goblue72
I don’t care how much money they make being useless jag-offs. Have fun, make a pile. So long as we tax them till their sphincters bleed. And for no other reason than they are rich jag-offs.
They have lots, most people have little, so we take because we have the numbers and they don’t. We’ll leave them with enough so they’ll still have a nice roof over their heads, a decent car and able to take the fam-fams on a decent vacation – but not enough that they get to easily climb the ladder to the plutocrats life. The well off have been waging war on us working stiffs for… well, for far longer than anyone currently alive can remember. After getting repeatedly punched in the face by the rich, I see no reason why the rest of us aren’t completely justified in punching them back until they noses are pile of bloody snot.
The problem with DFH’s isn’t that they are wrong – it’s that they lost their taste for brickbats and lead pipes.
FlipYrWhig
@Martin: I guess it’s my residual Puritanism or something, but I just get a phobic reaction to these investment games. I mean, I understand investing money in a company in hopes that its principal people will make or discover something useful or at least buyable. But this hyper-stylized investing in the investments other investors bundled and reinvested in whatnot… it just seems, like, imaginary. Imaginary and sketchy and it kind of makes my skin crawl. But I feel the same way about poker, too, so maybe I just have a stick up my butt.
FlipYrWhig
@Martin: I guess it’s my residual Puritanism or something, but I just get a phobic reaction to these investment games. I mean, I understand investing money in a company in hopes that its principal people will make or discover something useful or at least buyable. But this hyper-stylized investing in the investments other investors bundled and reinvested in whatnot… it just seems, like, imaginary. Imaginary and sketchy and it kind of makes my skin crawl. But I feel the same way about p0ker, too, so maybe I just have a stick up my butt.
Joshua
This sounds all too true. Look at any article on the son of a big shot, or the NY Times wedding section – all these kids are working at some small hedge fund or boutique investment shop or something.
Is it that the sons of all these Titans of America have the exact same talents? Or is it because all these small hedge funds and boutique investors consider that kid’s salary a cost of doing business?
Cat
@goblue72:
Its been a while since the west has had a good ole fashioned class war.
To bad the US upper class learned their lessons after the last one in the late 19th/early 20th century. They have also been out propagandizing the populist movements and created several faux populist movements to undercut the real ones.
If I didn’t have such a dim view of human intelligence it would almost be a beautiful plan, but reality its just a bunch of rich aholes who just happened to react the same way at the same time rather then a vast conspiracy.
Ailuridae
@Steve:
Sure they do. And when you find them a year later they’re not begging on the street corner for cash. They’re not unemployable like a total failure in most any other industry would be. They’re likely to be right back out there trading for someone else.
But, again, you have no idea what you are talking about. Of the dozen traders I can think of, 3 are till tending bar a half decade later, two work a desk for Scott Trade (which isn’t anything like trading). four went to law school because they didn’t have a means to make a living two work for/with me (I’m not a trader though) and only one found another person who was willing to stake him. And most of them blew out through no fault of their own.
Do I think it’s tough for the kid at the very bottom with nothing but a dollar and a dream? Sure, just like everywhere. But even that kid is likely to get a second and a third and a fourth chance in the securities industry if he wants it, unless and until the regulators get a hold of him. It’s a funny business that way. Failure is not punished
Those chances often involve putting up your own capital or if you are lucky, you might be able to find a firm that is willing to pay you a 1600/month draw (pre-tax). But that firm in particular dings out 75-85% of applicants (the only requirement is scoring sufficiently highly on a math test) and then 90% of those fail at the actual job.
Cat
@Joshua:
Insider trading.
r€nato
You know… I kind of admire these guys, but if I were in their shoes, there is no way I’d be showing off like this.
In certain ways, my self-employment offers me certain perks that beat the hell out of 9-to-5 employment, and I *never* let my clients know about them. Keeping your damned mouth shut is almost always a wiser choice, no matter the subject at hand.
goblue72
@Cat: Co-opting populism and fomenting hatred in service of upper class objectives is nothing new for the well-to-do. In the mid-19th century, they were called “Know-Nothings” – the leadership (such as it was) of which were Anglo-Saxon Protestant burgher-types who pushed a virulently nativist platform that was not above using violence at the ballot box to get its way. (sound familiar?) They eventually splintered, with most joining the Republican Party.
DFH’s need a little bit less of the Burning Man/Abbie Hoffman approach and little more of the Teamster approach in their public protest gatherings as far as I’m concerned.
r€nato
@Joshua: Ssssshhh. It’s class warfare, you know, to acknowledge that the uterus lottery is far more important to success than actually working hard and being the best at what you do.
Jager
@JenJen:
“Big Russ” the Buffalo working class hero is probably observing his grandson and thinking “WTF, your old man had to work for years to get a gig like you have, fer Christ’s sake”!
georgia pig
@Ailuridae:
No it isn’t. You’re confusing difficulty with likelihood of success. I would imagine what separates successful traders from failures these days is mostly luck or some weird, built-in perceptual skill or market-gaming gimmick. These guys are evidence that it’s very likely not hard work.
Bricklaying or roofing is a difficult way to make a living. It’s backbreaking and exposes you to extremes of climate, and will eventually leave you physically spent at 60. Playing slot machines is a risky, but not particularly difficult, way of making a living. You just pull a lever in an air conditioned casino.
Cat
@goblue72:
My US 19th century history must be to narrow. My recollection is that it was a violent, angry, and bigoted time. So much so, that violence didn’t need to any fomenting, just channeling.
That's Master of Accountancy to You, Pal (JMN)
@Nylund:
Absolutely, positively not true. Do you want one of the quant jobs on Wall Street? Can you understand and manipulate stochastic partial differential equations in five variables? Do you know what Ito’s Lemma is? That’s the kind of math they work with. Personally, I think there are a lot more people who could be good at math than there are people who believe that they could be good at math. So, while I wouldn’t say that a half-way smart person could do it, there are a lot of individuals who could provided that they want to be a math or physics major.
Now, a half-way smart person can be a successful trader. That I agree with. However, it takes more than that. I don’t think it requires the kind of connections are listing. I got into it by being a statistics major at the University of Minnesota who impressed a finance professor enough that he recommended me to a firm when they asked if he had any candidates.
To be a trader, though, you also have to be able to think fast. The trading day is long stretches of boredom interrupted by five minute or less stretches of sheer, unmitigated panic. (I was a market maker, so I had to be in the markets at all times, so you can’t just get out when the panic starts.) You need to make your decisions right now, not in five seconds, or you’re going to get picked off. And you had better make the right call right now more often than you make a wrong one.
That leads to a second quality you absolutely must have to be a successful trader. This is the one that drove me out. You have to be insanely good at dealing with stress. If you hit the wrong button on your keyboard, it might cost you hundreds of thousands of dollars. To make serious money, you need to have serious positions, and that means that, if the market moves against your positions, you lose. Keep in mind that derivatives trading (apparently not what these guys do) is, very slightly, a negative sum game. If your position does well, it means that someone else’s is a loser, and you paid a small amount of
vigfees to the SEC and the exchange.The people I knew who were successful at it fell into one of three categories: complete sociopaths who didn’t feel stress because they don’t really care if they lose all of their employer’s money; people who are very good at taking their stress out on someone else, typically by conducting their inter-office communications by screaming obscenities at someone ten feet away from them; and the very small number of people who just don’t feel stress. That last category includes a large percentage of great human beings; the sociopaths are often fun to hang around with, but I wouldn’t trust them to pick up their share of the check when you go out; the middle group just drove my stress levels up.
There are some other skills you need to have, but those are two of them. I think the percentage of people who could be successful traders is pretty low.
Being a broker or investment banker is different. All you need for that is a good smile, a good degree and the ability to lie with a straight face.
Cat
@That’s Master of Accountancy to You, Pal (JMN):
So it sounds like what you are saying is that the sociopaths will always figure out a way to collect rent from the rest of society.
stuckinred
@That’s Master of Accountancy to You, Pal (JMN): So, if I go to a financial adviser with a PHD in accounting and a former academic and turn over money to him to invest, am I stupid?
Ailuridae
@georgia pig:
Except my use of of difficult is quite plainly correct.
Difficult
–adjective
1.
not easily or readily done; requiring much labor, skill, or planning to be performed successfully; hard: a difficult job.
Trading, especially one’s own money, is quite difficult in that it requires a pretty hard to attain skill set that JMN outlined above quite well.
As for the guys in the article in question they may be market gaming but that obviously can’t be all that easy or enough people would flood the market with the same strategy and drive their profit margin into the dirt.
Steve
@Ailuridae: You are talking about people of an entirely different vintage than the folks portrayed in this article. I know, I know, I’m just ignorant, blah blah blah.
Omnes Omnibus
@Ailuridae:
Or they just hit on something easy that everyone will be doing in the next year or so and driving their profit margin into the dirt. In which case, they got big money for a short time by being innovators. If more people do what they are doing, they will need to innovate again, work longer hours to make their money, or accept less money.
Ailuridae
@Omnes Omnibus:
I know a bunch of people who have been doing something similar in Chicago for a while. They aren’t working off an algorithm though.
But this particular inefficiency in the market with crosses at the open and close is at least 30 months old and while it is likely trivial to stop the assertion that beating the inefficiency for seven figures a year is easy is almost certainly untrue.
Omnes Omnibus
@Ailuridae: Perhaps it would be would be better stated that they may be doing something that can be replicated by reasonably competent pros. This would lead to the results I described. I am not a finance guy, so I am not trying to argue a point. I was just raising a hypothetical.
Dr. Psycho
I would rather allow our economy to be in the hands of people who take several hours off in the middle of the day to enjoy the amenities of Manhattan, rather than monomaniacs who are on their game from bell to bell, running on speed and cocaine.
Ailuridae
@Steve:
No, I am talking about the reality for most traders who are on their own or propping somewhere that isn’t GSCO or the similar. You seem to be operating under an idea that after you’ve lost 10K or 100K of your own or someone else’s money that there are multiple people who are lining up to give you their own money to trade again. And what I am telling you is that 1) that doesn’t make a scintilla of sense and 2) its wildly incongruent with how the actual market works.
r€nato
@Omnes Omnibus: …which is why they are idiots for bragging about what they are doing.
That's Master of Accountancy to You, Pal (JMN)
@stuckinred:
My opinion, and it’s just that, is that the most of the financial adviser industry is a scam. They serve two useful functions: helping you figure out how much you need to be saving, and going over the tax implications of different investment vehicles.
Don’t pay them to choose your investments. The evidence that they aren’t any better than average (and often worse) in their picks is overwhelming. I think everyone should do one of two things with their investments:
1) If you enjoy it and want to spend significant time doing research on it and have the stomach for the stress of putting your own money at risk (it really is more stressful to be the one making the trades, even if you have the same amount of money involved) and you have some idea where you really think you can do better than the market, then do your own trading. Get the cheapest reliable broker you can find (there are advantages to the slightly more expensive ones, but beginners won’t take advantage of them and absolutely stay away from fly-by-night places) and have at it. Just remember that the broker and exchange and SEC are eating away small bits of your money every time you trade, so strategies that involve a lot of trading have to be a lot more successful;
2) Give your money to Vanguard.* I think John Bogle has created a company that really does care about the customer and isn’t just being a leech. They’re also really, really cheap. Find 2-3 different index funds, including the S&P500, and put most of the money in there. Then pick 2-3 funds that sound entertaining to be in and put the rest in them.
I put all of those emphases in #1 because you really need to match all of them to make it worth it. If you don’t enjoy trading, DON’T DO IT. I can’t emphasize that enough.
I happen to meet all of the requirements for #1. So I do my own trading. My sister listened to my advice and put all of her discretionary investment money in Vanguard.
*If you work in academia, TIAA-CREF is also very good. There are a few others that I would recommend, but as long as Vanguard is around, why bother?
That's Master of Accountancy to You, Pal (JMN)
@Ailuridae:
Fixed. Note that these guys were taking advantage of that before they started their new gig, too. They were NYSE specialists, who control the book and conduct the opening and closing rotations. As someone who had to do a lot of hedging, where getting fills right now was very important, my conclusion was that the specialist’s entire job is to fuck you. They don’t do it all the time, but they do it most of the times that it’s most crucial.
Very few things made me as happy as seeing one of my stocks get moved to the electronic wing of whatever exchange it was on. The computer might screw something up, but it isn’t deliberately trying to fuck you.
I hate specialists.*
*This rant only applies to the old-time pit specialists. On the electronic exchanges, there’s still someone who is listed as the specialist (I was one for the options on a number of names), but they don’t have anything like the same power. The opening rotation consisted of clicking a button on the screen. It really had more to do with the liquidity requirements you had to provide, and getting a slightly better cut than other market makers as compensation.
That's Master of Accountancy to You, Pal (JMN)
@r€nato: If someone at the Wall Street Journal knew to go interview them, then everyone who counts already knew. Besides, bragging is one of the rewards for winning on Wall Street. I don’t think there’s more than four people in the entire industry who can keep from bragging about a big success.
stuckinred
@That’s Master of Accountancy to You, Pal (JMN): Thanks, I am in academia and got with this firm through that. I have no interest in trying to do this stuff myself so we went to them. He has us in a Vanguard “buy-write” thingy and we’re putting the return (if that’s what you call it) in my TIAA-Cref. I am 60 and pissed away a good part of my life having fun so I’m trying to catch up as much as I can. We were told that we could get 10% a year on this and all my friends and relatives that know anything about it freaked out. When I sent the firm’s info my pal who does some retirement work said they seem to be on the up and up but still questions that amount. After spending years not giving a shit I am not going to freak out now and we have been getting those monthly checks.
stuckinred
@That’s Master of Accountancy to You, Pal (JMN): Thanks, I am in academia and got with this firm through that. I have no interest in trying to do this stuff myself so we went to them. He has us in a Vanguard “buy-write” thingy and we’re putting the return (if that’s what you call it) in my TIAA-Cref. I am 60 and pissed away a good part of my life having fun so I’m trying to catch up as much as I can. We were told that we could get 10% a year on this and all my friends and relatives that know anything about it freaked out. When I sent the firms info my pal who does some retirement work said they seem to be on the up and up but still questions that amount. After spending years not giving a shit I am not going to freak out now and we have been getting those monthly checks.
HyperIon
This appears to be a clear violation of the categorical imperative.
Uncle Clarence Thomas
> I have absolutely nothing against these guys.
I do. They are depraved parasites. I call for RAID.
HyperIon
@stuckinred wrote: …in my TIAA-Cref
Recently I did my yearly SIMPLE IRA rollover from my job to my TIAA-CREF account. This means: I send them a form with info and they contact the source of my funds and transfer the money into my TIAA-CREF IRA account. This has gone like clockwork for years. One thing I like about them is that they are very efficient.
But this time….nothing but delays. I wonder if they have laid off a ton of people and just don’t have the bodies to process the paperwork. It’s been over a month and still not even a letter confirming the receipt of my request for transfer. I’m nervous.
stuckinred
@HyperIon: I have a retired friend and he said TIAA-CREF has been a nightmare lately.
r€nato
@That’s Master of Accountancy to You, Pal (JMN): well that may all be true… and I still believe in the old ways.
If you have money, don’t go flaunting it (too much). It is just asking for trouble.
If you have a killer gig going… don’t fucking tell everyone about it. Some schmuck (or gaggle of schmucks) is sure to come along and try to ruin it for you.
stuckinred
The Jets are stupid.