Goldman Sachs Automated Trading Replaces 600 Traders With 200 Engineers (technologyreview.com) 185
Goldman Sach's New York headquarters has replaced 600 of its traders with 200 computer engineers over the last two decades or so, thanks to automated trading programs. (Though, the effort to do so has accelerated over the past five years.) "Marty Chavez, the company's deputy chief financial officer and former chief information officer, explained all this to attendees at a symposium on computer's impact on economic activity held by Harvard's Institute for Applied Computational Science last month," reports MIT Technology Review. From their report: The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated. Chavez, who will become chief financial officer in April, says areas of trading like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled. Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry. In addition to back-office clerical workers, on Wall Street machines are replacing a lot of highly paid people, too. Complex trading algorithms, some with machine-learning capabilities, first replaced trades where the price of what's being sold was easy to determine on the market, including the stocks traded by Goldman's old 600. Now areas of trading like currencies and futures, which are not traded on a stock exchange like the New York Stock Exchange but rather have prices that fluctuate, are coming in for more automation as well. To execute these trades, algorithms are being designed to emulate as closely as possible what a human trader would do, explains Coalition's Shahani. Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman's staff, are computer engineers.
Re: (Score:2)
Re: (Score:3)
And when that business dries up they will just go back to selling securities it knows are toxic [independent.co.uk] to its customers and then selling those securities short so they profit when their customer loses. Now with the new fiduciary rule (which would require financial advisors for your retirement accounts to put your interests ahead of their profit) being "reviewed" before it can even go into effect and many former Goldman Sachs employees in senior cabinet positions expect more of the same, investment banks fleecing
Re: (Score:3)
Of course, there is a mini-USB port for that.
Re: (Score:2)
Managers and engineers (Score:4, Insightful)
Vonnegut called it in what, 1955?
Re:Managers and engineers (Score:5, Insightful)
Re: (Score:1, Insightful)
What? No!!! Please learn about what is actually happening.
High frequency trading is extremely beneficial to "mom & pop" retail traders due to the increased liquidity it generates.
HFT doesn't "suck profits away" from the "buy and hold" traders. The HFTs are making profits off of one or two ticks of movement, while the "buy & holders" are sitting-out movement of tens/hundreds of handles. When your mom/pop buys/shorts a stock, a microscopic HFT blip has absolutely no discernible effect on such a lo
Re:Managers and engineers (Score:4, Insightful)
Why don't you get a job and become one of the makers instead of one of the takers?
Re: (Score:1)
Re:Managers and engineers (Score:5, Insightful)
What does your trading produce for the world? If you're day-trading stocks, which I doubt, you are producing some infinitesimal amount of liquidity for the market. In other words, you're producing nothing. If you're trading derivatives, (more likely), you're just a parasite. Doing harm. A tumor on the economy.
Re: (Score:3, Insightful)
What does your trading produce for the world?
Among other less tangible things, my trading provides something very substantial and immediate to "the world" -- a stock, option or payment for the person on the other side of the trade.
You can think of it sort of like coin collecting or stamp collecting -- I'm buying and selling items and trying to do so for a profit.
If you're day-trading stocks, which I doubt, you are producing some infinitesimal amount of liquidity for the market. In other words, you're producing nothing. If you're trading derivatives, (more likely), you're just a parasite. Doing harm. A tumor on the economy.
No doubt you are a great contributor to society, but you seem to have some butthurt.
I wonder if you say the same thing to those who trade coins and stamps?
Re:Managers and engineers (Score:5, Insightful)
I wonder if you say the same thing to those who trade coins and stamps?
What about tulips?
There is a fuzzy line between trading that is useful, and that which becomes speculation. If it were so clear as to where that line was, we would never have an asset bubble again. I would suggest that when the financial industry is apparently producing record levels of 'value', while most western economies are no longer able to produce enough housing and infrastructure to sustain the middle class, that the real 'value' to humanity of much of that financial activity is rather overstated.
Re: (Score:2)
No, why do you ask? To a coin collector, the coin has value in itself, and if I were one, I'd go to a coin shop to buy something I personally value.
On the other hand, my stocks have no physical components. I don't even have pretty stock certificates. I own them to profit, and to insulate against certain market conditions that could cost me money.
Re: (Score:1)
Re: (Score:1)
Look, I don't know what you have up your rear, but it certainly sounds like you know nothing about trading in the stock market.
Trading stocks, options, futures, etc. is actually not very different from trading coins or stamps. Sometimes we trade to keep something, sometimes we trade to make a profit.
There's nothing evil about any of it, and each deal always has two parties -- a buyer and a seller. Nobody is forcing the buyer to buy and nobody is forcing the seller to sell. Every trader is a willing parti
Re: (Score:1)
I think this point is that once you and the other willing party is done trading tulips ad infinitum someone figures out it's not worth what they thought. The whole pyramid falls down and left behind is those that trusted the business.
Those with a house with a mortgage based on stocks/bonds/currency.
Those with pensions savings invested in otherwise "non risky" stocks.
You are not trading coins or stamps. You are pumping and draining in a complex ecosystem whose success or fall has huge ramifications for billi
Re:Managers and engineers (Score:5, Interesting)
HFT doesn't "suck profits away" from the "buy and hold" traders. The HFTs are making profits off of one or two ticks of movement, while the "buy & holders" are sitting-out movement of tens/hundreds of handles.
Did you intend to copy the script from Office Space while describing this process, or was that an accident? Because you did [youtube.com]
Re: (Score:1)
Did you intend to copy the script from Office Space while describing this process, or was that an accident? Because you did
No, I have never seen that movie/scene, and no, it is nothing like my explanation of HFTs.
Evidently, your understanding of trading is about as extensive of that of Jennifer Aniston.
Look, stock prices go up and stock prices go down and sometimes they don't move. There are all kind of things that influence stock prices, but most HFT trading (arbitrage) doesn't really move a stock price, and if it does, it only affects the price by one or two ticks.
In addition, those one or two HFT ticks can be down or the mo
Re: (Score:3)
it only affects the price by one or two ticks.
You're right, I don't know the intricacies of how it works, and I had to google what a tick was. But that comment right there proves my point. That comment basically means "It only affects the price by a little bit", considering the value of a tick is some fraction of dollar. According to a 30 second reading of this anyway: [investopedia.com] "For example, the E-mini S&P 500 futures contract has a designated tick size of $0.25 while gold futures have a tick size of $0.10." So you are agreeing that involving a HFT betw
ye olde salami slicing trick (Score:2)
I know what you're going to say, there was no "Superman 3", but in the universe I come from, unfortunately there was.
Re:Managers and engineers (Score:5, Insightful)
Laws should be passed requiring traders to have to apply for permission to make each trade. What I mean is that all traders even the small ones should have the same requirements that major share holders have. So, you should be able to buy in, but you would have to release a statement of intent to trade and wait 7 days before the transaction takes place.
There is a disgusting belief, almost like a religion that suggests that gambling on shares with absolutely no regard for how it impacts society as a whole is "Free Market" and "Democracy". Bullshit. Gambling on stocks IS NOT the same as investing in companies. What is worse is that when you gamble on stocks, you believe you have the right to demand a company behaves in any way it takes to increase the value of those stocks to make you a profit. That's filth. It causes shitbacks at major companies to lay off 20% of their workforce and outsource to India because it will generate the buzz which will cause trading volumes to skyrocket. And if the direction is up, people will rake it in, if it's down, they'll short the hell out of it. And yet, you just killed a city and can't even tell me what the company actually does.
I will shit all over HFT and algorithmic trading because it legitimizes shitting all over millions of peoples lives without even having the first idea what company you're actually effecting. The stock market isn't like a casino. If you win or lose in a casino, only the casino and a small number of people may be impacted. When you treat wall street as a casino where you are allowed to count cards, you and your peers can actually destroy the financial health of entire cities. A program with a bug could collapse an entire company within a few seconds destroying lives.
Yes, I know there are upsides to trading as well. It gives legitimate investors a way to abandon sinking ships for example. This gives legitimate investors a better reason to make the investment when it's needed. But the downsides far outweigh the upsides.
Trading is a predatory business/career that focuses entirely on profit with absolutely no regard for the peoples lives it impacts.
Maybe trading should be restricted to only company stocks that are related to dumping trash in oceans, distributing child labor, sex trafficking and so forth. Trading requires about the same moral compass.
Re:Managers and engineers (Score:4, Insightful)
It could be argued that if abandoning ship is harder, investors will become more interested in the long term well being of the ship and less interested in short term stock value plays that will crash the company in the long term.
Re:Managers and engineers (Score:4, Insightful)
This kind of emotionally-charged angry rhetoric isn't constructive. Moreover it's disconnected from reality. It's someone thumping their fists on the table, demanding strongly that something is "wrong" in their eyes and trying to elevate that to some kind of moral imperative. Chest-thumping and loudly proclaiming you'll "shit all over" doesn't sound to me like a strong intellectual argument grounded in fact. Quite how it got rated "insightful" is beyond me.
I'm sorry but life is more complex than your one-sided view of things presented here.
Companies collude with markets because those in charge gain financially from doing so. But then so do employees who take stock options. Banks have a vested interest to make more money to be able to loan more in order to make yet more money. This may come as a shock to you but that money also then creates jobs and improves lives and living standards as well. It is not a universally negative activity. Unlike the clear view from on top of your moral highground, it becomes difficult in reality to separate "investment" from "gambling" - there is efficiency to be had in execution through algorithms. Which, oddly, all investors want because nobody wants to pay over the odds. How do you provide liquidity in a market or move positions efficiently if we cannot trade without x days notice? Oh and who gets to give that permission, you? Surely that'd be a much less corruption prone system (haha)? Your solution to most of this seems to be to ban everything. What, Capitalism as well, presumably?
I find your rationalization and minimization of Las Vegas-style casinos truly bizarre. It seems some forms of gambling that destroy lives is fine by you - because it only affects a small number of people but this larger "gambling" as you perceive it, is not. So the moral outrage of an activity is proportional to what the impact of it is in your eyes? So it's morally acceptable for someone to drive recklessly on the freeway because they're only affecting a few people?
Another irony you might find amusing - there are "ethical" funds out that don't invest in "dumping trash in oceans, distributing child labor, sex trafficking" (I'm not sure which S&P500 companies do that last one on your list though) - but guess what? They make much poorer returns than funds who have no such restrictions. So are we therefore morally bankrupt as a society to not invest in those companies? What about tobacco? Defence companies (there's an interesting one) - who gets to decide? You and your friends up in ivory towers? An "expert" who's dedicated their life to understanding one company? How does that work? I'll give you a hint to the answer: it doesn't, which is why the system exists as it does today - chaos, inconsistencies, injustices and all - alongside growth and prosperity.
Re: (Score:2)
Re: (Score:2)
They make much poorer returns than funds who have no such restrictions. So are we therefore morally bankrupt as a society to not invest in those companies?
Damn right.
What about tobacco?
As evil as evil gets.
Defence companies (there's an interesting one) - who gets to decide?
Decent people. In other words, not you.
Re: (Score:2)
To put it simply, everyone should have equal access to the market.
Re: (Score:2)
Re: (Score:2)
If you pull back a bit you'll see that the tighter spreads and faster trades happen at the cost of losing some of the profit. Kill all the HST and the same fundamentals will apply, when buy >=ask, the stock trades. The difference is that you won't have someone elbowing you out of the way with your buy in order to snatch it up and immediately sell it to you for a bit more than you should have needed to spend.
Re: (Score:1)
I would even top that: tax trading earnings. Just a tad. Every engineer knows that some damping makes the system more stable.
Use the proceeds of this tax to head off the most horrible collaterals due to unrestricted trade.
"What, tax *me*? No!"
Pfft. Greedy twat. Contribut or go away.
Re:Managers and engineers (Score:5, Informative)
HFTers always harp on the liquidity thing. News flash, while liquidity is important, it's not the purpose of the market. Equal access is much more important.
And HFTers absolutely grab profits from everyone else making trades. On the average, HFT makes money. It doesn't make it by finding a customer or building a product, therefore it must come from other traders, Q.E.D.
It's like I'm in the supermarket reaching for an orange and some guy swoops in and buys all the oranges in the store and all the neighboring stores as well and then offers to sell me my orange for a penny more than the prices on shelf. "But," he cries helpfully, "I did you a favor because you can choose from three times as many oranges now!" I just wanted my damn orange for the listed price.
Re: (Score:1)
There is a huge disconnect what HFT is if you think that it adds liquidity to the market, it doesn't. To be honest, I don't understand why it is legal. If you get rid of HFT today, there would be zero impact on the liquidity of the market.
What HFT does is takes an unfair advantage of buying something before you do and selling it to you. HFT all it does is to take a small portion of the sale/buy transaction without adding any value at all. It should be illegal, if I were to have knowledge of the price of
Re: (Score:2)
Having said that, HFT may provide you with the 'liquidity' to move trades personally, but the automation has the arbitrary consequence of grossly magnifying fuckups, and unless everyone cooperates and plays by the same rules, it creates the opportunity for Dark markets to flourish. As an Engineer, I the premise of HFT is great. But the sociologist in me is obliged to point out
Re:Managers and engineers (Score:5, Interesting)
Trades should be taxed on a decay function of how long they're held.
Hold it for 10 milliseconds? 99.9% tax.
Hold it for 10 days? 25% tax.
Hold it for 10 years? Nearly no tax.
Yes, that's why they bought Hull Trading. (Score:5, Interesting)
In short, no need to know what the market is going to do, just a need to know what it is doing right now. Profit not based on picking the right stock but by the fact that stock prices are not constant. As I used to think of it, not making money off the stocks but off of the changes in stock prices. A guaranteed winner. Genius!
Re:Yes, that's why they bought Hull Trading. (Score:5, Informative)
The occasional market "crash" attributed to automated electronic trading ...
Some crashes have been attributed to automated trading, but later analysis has found that (so far) no crashes were caused primarily by automatic trading. In fact, the "flash crash" of 2010 was exacerbated by loss of liquidity as automatic traders pulled out because volatility exceeded parameters.
Humans panic. Computers don't.
Computers do so panic. (Score:3)
Hit F1 to continue . . .
Re: (Score:1, Offtopic)
"Rev. Dr. Martin Luther King Jr. has shown us how to defeat men like Trump. Learn from Dr. King's example."
I believe very strongly I learned a great deal more from MLK which taught me it's not necessary to defeat men like Trump. We should instead speak his language and try and make him see that it's important to represent us, not just try and make it into history books as the most famous president ever.
Trump has thus far only performed in ways that would rile the rabble. He's adopti
Re: Computers do so panic. (Score:1)
MLK sought to effect social change. He opposed an attitude. I recommend using the method and techniques he advocated to oppose a single malign individual and his associates. Specifically, I would recommend avoiding violence in both action and word. Ignore A/C's - the 'coward' part of A/C tells us all we need to know about them. Speak and act with calm determination and unwavering dedication t
s/effect/affect (Score:2)
Re: (Score:2)
Re: (Score:2)
the "flash crash" of 2010 was exacerbated by loss of liquidity as automatic traders pulled out because volatility exceeded parameters.
Humans panic. Computers don't.
Boy. That sure looks like what happens when humans panic. If the result is the same, what's the difference?
Re: (Score:2)
automatic traders pulled out
Boy. That sure looks like what happens when humans panic. If the result is the same, what's the difference?
Sorry, I worded that poorly. By "pull out", I meant that they stopped trading. I didn't mean that they sold off their holdings, as panicking human investors tend to do.
Re: (Score:2)
In other words, "people who don't produce a goddamn thing".
Re: (Score:2)
Steve Jobs ran a company that produced something.
What does Goldman Sachs produce?
Re: (Score:1)
Steve Jobs ran a company that produced something.
What does Goldman Sachs produce?
Poor people.
Re: (Score:2)
What does Goldman Sachs produce?
People in western countries produce far more than people in poor countries. Why? It is not because they work harder. People in poor countries work much harder, but they work on the wrong things, because capital is misallocated, and resources are squandered. In western countries, investors seek out even tiny increases in return on capital, meaning that resources are used very efficiently. It is easy to denigrate investors and capitalists as "producing nothing", but they are the reason you don't live in
Re: (Score:1)
Re: (Score:3)
Re: (Score:2)
There was also a tendency for huge enclosed landed estates before the Roman Empire fell. The thing is, if the collapse is large enough, it doesn't matter where they run to, because the shit will hit them there as well.
Re: (Score:1)
Re: (Score:2)
Re: (Score:2)
As I used to think of it, not making money off the stocks but off of the changes in stock prices. A guaranteed winner. Genius!
That's the dream of every hedge fund, right? It works for a while, but if everyone tries it, then the market tanks while the world cheers.
For example, a lot of people were betting on inflation in 2008 by buying gold. Imagine politicians were doing the same thing. Suddenly it is against their own personal economic interest to stop inflation. That's the sort of thing that can ruin an economy.
Re: (Score:2)
No. That's not what happened.
Hey genius, you missed the word "imagine"
Politicians didn't try to profit off of inflation, and they couldn't do so, even if they tried.
Give me control of the printing press, and I'll print off as much inflation as you want. That is a well-understood economic phenomenon.
Re: (Score:2)
Give me control of the printing press, and I'll print off as much inflation as you want. That is a well-understood economic phenomenon.
And then watch the shitstorm as the rest of the world brands you a currency manipulator.
[Sorry phantomfive. I have read many of your posts over time, and respect your opinion. Just had to be contrary here, though. Peace out.]
Re: (Score:2)
And then watch the shitstorm as the rest of the world brands you a currency manipulator.
Well yeah, you are right haha, either that, or the rest of the world would laugh and cry as the country killed itself of avoidable, self-inflicted wounds!
Re: (Score:2)
Oh, yeah... that'll work!
Yes, yes it will. Otherwise we could just print as much money as we want and get free stuff.
Re: (Score:2)
Just because something has been happening for centuries doesn't mean it's a good thing.
Arbitrage is the very definition of making money off the productivity of other people. In an age of margin investing, it's poison for society.
Re:Couldn't [profit] if they tried. (Score:1)
Re: (Score:2)
Re:Yes, that's why they bought Hull Trading. (Score:4, Insightful)
I'd be more impressed if they were putting their AIs to work on macro economics and equity fundamentals analysis and coming up with 3-5 year buy and hold strategies that aligned a company's fundamentals with macro economics to figure out growth patterns.
It seems like a racing team that's given all the money to the guys that get the car down the first straightaway .01 seconds faster than anyone else and forgotten about racing the rest of the track.
Hookers and blow? (Score:2)
According to https://www.theguardian.com/business/2009/nov/18/goldman-sachs-blankfein-sorry [theguardian.com],
.
Who knows what sophisticated and perfectly-executed levels of depravity might be perpetrated by Golden Sox' robot traders? Hookers and blow may well be involved but not in a fun Benderesque sense.
Engineers, eh? (Score:3)
Sooooo.... Russians or Indians?
Re: (Score:1)
Americans and some Russians at first, then as documentation practices improved, 90% of them were replaced with Indians.
Re: (Score:2)
Sergey Aleynikov wasn't the first, nor the last.
Unsurprising... (Score:2)
I bet those engineers don't get performance bonuses or commissions.
Re: (Score:2)
I bet those engineers don't get performance bonuses or commissions.
Commissions, no. Bonuses, yes. I know some techies that work in finance, and the compensation is VERY good. I am not sure it equals the value of a human soul, but still very good.
So tell me again (Score:5, Informative)
Not just all the cost, but all the _risk_ is on the home owner. The banks make sure they get their interest up front. And they take my tax dollars to guarantee the loans and hold the entire f'n country hostage if we don't pay.
Every last one of us except 1% is getting screwed by this. Why the hell do we tolerate it? Why don't we force the banks profits _down_ and our standard of living _up_? Why is the free market so much more God Damned important that we'd throw our lives away chasing Any Rand's ghost? Fuck.
Re: So tell me again (Score:1)
so the math says you cant get a house but you never did the math...enjoy paying rent to landlord/parents or living with parents? 20% down payment will clear that pmi problem. also, living in your means will get you a house you can afford unless parents can kick in. ive known a few dinks with 6 figures each tbat bitch about not getting "decent" houses in high income townships with "enough acres"
Things are bad right now (Score:5, Insightful)
why we tolerate these people? I just realized I can't afford a house because of how the mathematics of mortgages work.
Such it up you clueless millennial whiner. You understand nothing, nothing at all.
Want to pay more principal early on in your loan? Just [...]
Many people will say your problems are due to your own personal choices.
They are not.
Certainly there's a certain group of people who make bad choices and ruin their lives, or who can't seem to get ahead.
But there's another group of people, who we used to call the "middle class", who make intelligent choices but who are on the brink of poverty, or falling into poverty, or generally having a tough time getting ahead.
We see articles here about the rising cost of education, and the answer is always "some people don't need higher education". We see articles about how few jobs there are, and the answer is always "move to where the jobs are". We see articles about outsourcing, and the opinions are "you lose your job, but the population benefits overall due to lowered costs".
We are gutting the middle class in this country, have been for about 20 years, and the overall sentiment is "expect less out of life". Don't expect to own a house, don't expect to send your kids to college, don't expect to live as long, don't expect to get paid more, don't expect to be able to pay your medical bills...
You're ahead of the curve by actually doing the calculations and trying to predict your finances - a lot of people up to 2009 didn't do that, and thought that they could have the same opportunities as people had in the 1980's.
There's lots of people who think everything's fine and will try to pin this back on you, but it's most likely not anything you did.
Don't listen to them.
Things are bad right now [gallup.com], and whether they will get better remains to be seen.
Re: (Score:2)
All the things that give people stability in life and thus access to cheaper loans are getting more expensive. Healthcare, for example, because if a lender knows that the state will offer you free/cheap healthcare you are less of a risk. Education, because higher levels of education usually tally with high levels of income and better careers prospects, lower chance of being laid off etc.
Combine that with older people who already have houses continually voting for policies that make their assets rise in valu
Re: (Score:2)
But there's another group of people, who we used to call the "middle class", who aren't necessarily lazy but still usually choose easy options in life who are on the brink of poverty, or falling into poverty, or generally having a tough time getting ahead.
FTFY. People making intelligent choices are quickly moving into the upper middle class (2/3 of people leaving the middle class are getting wealthier not poorer) because of those intelligent choices. What is being lost is the ability to keep your head down and coast through life but still make a comfortable living.
Re: (Score:2)
why we tolerate these people? I just realized I can't afford a house because of how the mathematics of mortgages work. I never bothered to do the math since I never thought I could buy one. After 10 years of paying down debt and saving I thought I was ready. Not so much. The way mortgage math works out you're paying almost all interest for the first 15 years of a 30 year loan (...) Not just all the cost, but all the _risk_ is on the home owner. The banks make sure they get their interest up front.
Not sure why you think this is some special mortgage math or evil in any way. Think of it as the big brother of credit card debt, the rest of the loan that you don't repay this month you push to next month and pay interest. The interest is at all times proportional to the amount of debt you push in front of you. Changing that is like asking to change the rocket equation, you get a lot more delta-v from the last galleon of fuel when the rocket is empty than the first galleon when the rocket is full and that'
Very frustrating. Maybe I can help (Score:2)
It sure can be a frustrating thing. You know financially you're much better off owning (landlords make money because renting costs more than buying), but getting the down payment together and everything can be pretty difficult. I studied mortgages and such extensively when I bought my houses (without a huge down payment) - maybe I can help, if you'd like to discuss it.
> Then I need extra insurance since the 2008 crash & a couple family illnesses (thanks private medical system) wiped out my savings.
Ps Have the seller chip in $3,000 to make 10% down (Score:2)
I forgot to include another good tip that will get you $3,000 closer to 10% down. In your offer on the house, make the top line offer $3,000 more, with the seller kicking you back $3,000 to cover the cost of appraisal and such.
Technically, the seller isn't supposed to pay any of your down payment, but they can hand you money to cover expenses like appraisal.
Depending in the mortgage company, the 1.5% refund from your agent may or may not be allowed to go *directly* toward the down payment. If it's not allo
3,500 not 35000. Big, but not THAT big (Score:2)
I just saw that I typed "3,5000" square feet. Obviously that should be 3,500. It's a pretty big house, five bedrooms, but it's not 35,000 square feet. 35,000 is a neighborhood, not a house. :)
Re: (Score:2)
I can't afford a house because of how the mathematics of mortgages work
That's like saying I can't fill a bathtub by pissing it once because of the mathematics of how volume works.
Re: (Score:2)
That's the way any long loan works. It's almost all interest up front, and turns to almost all principal at the end. The good thing is that, by paying extra principal early on, you can reduce the effective term of the mortgage. In any case, this is not of interest if the idea is to buy a house and keep it, rather than buy and sell it.
It's like that Mitt Rhomey meme/joke (Score:2)
Re: (Score:2)
Thanks. In other words, people the lender has less confidence in pay more, just like every other lending decision I know of.
Re: (Score:2)
Ok, now tell me where I get that money (Score:2)
The places without HOAs are slums thanks to white flight. We abandon the inner cities and let them all go to shit. The HOAs don't just do that. They maintain a ton of crap that used to be maintained with tax dollars. Again, if I want things that everybody used to take for granted I need to live in ridiculously expensive places. Anything affordable is a hell hole by design.
Re: (Score:2, Insightful)
after a) a large scale economic crash caused by deregulation b) several medical problems outside my control (other family members).
The places without HOAs are slums thanks to white flight. We abandon the inner cities and let them all go to shit. The HOAs don't just do that. They maintain a ton of crap that used to be maintained with tax dollars. Again, if I want things that everybody used to take for granted I need to live in ridiculously expensive places. Anything affordable is a hell hole by design.
And read my f'n post you damned troll. I'm bitching _because_ I understand the terms of the mortgage. I understand that I'm paying the interest up front so that the bank gets all of the profit and none of the risk. I pay interest up front because the longer I'm in the house the better the odds my life'll go to shit again when somebody gets sick or my job gets offshored or whatever disaster strikes next. Interest is suppose to be the profit a bank makes for risk. Why the hell are they getting so much damned profit for zero fucking risk?
You say you understand loan amortization but you really do not. It has nothing to do with "up front profit for risk".
I have a $457,000 30 year mortgage at 3.375% fixed. It was a zero point loan with low closing costs.
The monthly payment includes $752 principal and $1287 interest. The interest is tax deductible to me.
This loan has multiple forms of risk:
Repayment risk - I may not repay
Interest rate risk - interest rates could climb (and probably will), but my rate is fixed for 30 years
Capital risk - the mo
Where do I get started? (Score:2)
2. Banks don't pay interest like you and me. Especially large banks.
3. Outside of an economic crash even the 3.75% you're paying will beat inflation.
4. You're in the top 10% of earners judging by the price of your home. That means you get to deduct interest because you have enough to itemize. Folks like me don't make enough to itemize unless we're paying crazy high interes
Re: (Score:2)
I'm bitching _because_ I understand the terms of the mortgage. I understand that I'm paying the interest up front so that the bank gets all of the profit and none of the risk. I pay interest up front because the longer I'm in the house the better the odds my life'll go to shit again when somebody gets sick or my job gets offshored or whatever disaster strikes next. Interest is suppose to be the profit a bank makes for risk. Why the hell are they getting so much damned profit for zero fucking risk?
Based on your comments you don't seem to understand much. You are paying interest up front because you don't have enough money to pay for a house in full, and no one outside of maybe your immediate family is likely to loan you money without any compensation. Current mortgage rates are at around 4.25%, which becomes more like 3.2% to someone in the 25% tax bracket. That is hardly highway robbery. Most people wouldn't be happy if their retirement accounts were returning them 4.25% per year over 30 years, but
Re: (Score:2)
You've also got a lot more luck than most people. It's comforting to think that you did well because you made the right decisions, but a larger part of it than you think is just luck.
Re: (Score:2)
Those holding all the capital are sharing a little bit with you in exchange for your services. How much money have your made your clients/employer? Are you really enjoying the scraps from the table?
His employers are giving the portion of their income that he has earned from commanding a certain wage in the marketplace. He may complete a project for $100k, and his company may have increased profits of $1 million, but his contributions were not the sole cause of the income. Their existing client base, IP, salesmen, marketing, business processes, capital expenditures, and so on were also involved. This is often lost on individual contributors who only see their contribution and ignore the other costs of
"Engineers" my ass (Score:2)
Yes, yes, I'm perfectly aware that there are programmers who fit the description of engineer in every way, but I doubt these ones are.
Re: "Engineers" my ass (Score:1)
Next, replace the 200 engineers with 10 physicists.
H1B, the Future of the "American" Workforce (Score:5, Informative)
Goldman Sachs 600 Traders (Score:5, Funny)
Comment removed (Score:3)
Re: (Score:2)
Thats due to the Dodd-Frank rules. Prior to them UBS was able to gamble on the markets with their clients money for their own benefit. Thats what that trading floor was for. They are not allowed to do it any more.
That is what is terrifying about the roll back of those laws by Trump. It brings the gambling by the banks back into the system.
Remember traders (Score:1)
200 engineers (Score:1)
Re: (Score:2)
"trading" isn't "economic activity" (Score:2)
Unless you count sucking the lifeblood out of the real economy and depriving small traders of the margins to which they would be entitled in a fair stock market.
Think about it. What does Goldman Sachs or any other big investment bank provide to economy in terms of actual goods and services? Are their multi-billion dollar annual profits really commensurate with the actual value of the services that they provide? Why does everyone out in the real economy, producing the real value struggle under perpetual d
Re: (Score:1)
Maybe Trump will bring back those 400 lost jobs by reverting to doing it all manually.