algorithmic trading

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How Badly Does Wall Street Want a Romney Presidency?

Apparently, this badly:

But this is chickenshit money — it doesn’t even add up to Lloyd Blankfein’s 2007 bonus.

Let’s see where the real money is going.

Markets couldn’t seem to care less:

The S&P is still well up during Obama’s presidency.

So does Wall Street really want a Romney Presidency? Or could Wall Street not care less, because they know that both sides will gladly do their bidding? After all it’s not like Obama has tried to jail corrupt bankers — Corzine, who after raiding segregated accounts is surely up there with the most corrupt guys on Wall Street, has been bundling for Obama as recently as April.

Ignore the chickenshit donations. If markets fall significantly between now and November — 1300, 1200, 1100, 1000 — the powers that be on Wall Street want a Romney presidency. After all, it’s not only possible but extremely easy to deliberately crash the market when you have at your disposal algorithmic trading programs that can buy the spike and sell the dip 40 times a second (that’s 2400 times a minutes, 144,000 times an hour). No market crash? They’re happy to stick with Obama.

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Wall Street vs Chimps

A friend sent me an interesting article debunking the widely-promulgated myth that traders are especially gifted creatures. Simply, other businesses make much more efficient returns on shareholder equity. Of the top ten DJIA stocks ranked by return-on-equity, only one — American Express — is in the sector of financial services:


 But actually, the rabbit hole goes a little deeper.

From the Daily Mail:

They are paid a fortune for their ability to make complex decisions about where to invest millions of pounds every single day.

But perhaps the job of an investment banker is not quite as difficult as it might seem.

A chimpanzee in Russia has out-performed 94 per cent of the country’s investment funds with her portfolio growing by three times in the last year.

Moscow TV reported how circus chimp Lusha chose eight companies from a possible 30 to invest her one million roubles – around £21,000.

I think this brings us to a (rather obvious) hidden truth.

Human beings are generally very good — vastly better than any chimpanzee — at creating value, producing things, bringing ideas to life. That’s why the most efficient companies on the DJIA — even over long periods — are all industrials.

Human beings are generally very bad — no better than any random stochastic process, like a chimpanzee throwing darts — at predicting the future in non-linear domains like currency rates and stock prices.

The fact that our predictive industries keep requiring taxpayer bailouts seems to confirm this.