I remember when a bunch of nobel prize winning economists founded "Long-term Capital Management" on the theory that, because they only traded relative value arbitrage, they couldn't lose money.
Then they levered the strategy without realizing that these value arbitrages could shift against them and result in additional margin requirements.
Those were the smartest people in finance at that time, and they nearly took down the world's financial system.
The only real similarity here is the "long-term" name, but I don't think that anyone with a true understanding of capital markets would name their firm "long-term" after that fiasco.
The equivalent would be an architect naming their new building project 'the world trade center'. A lot of people just aren't going to touch it because of the image it evokes.
LTCM nearly broke the world's financial system and I don't think that's an exaggeration.
Naming a firm LTSE is a good way to make sure a lot of people won't want to work with you.
The name also reminded me of LTCM. I was working at Credit Suisse when that went down. I think if you were in the financial space during that time you'd also suggest steering clear of four word names starting with "Long Term..."
They did know that they could lose money. They just underestimated the amount of risk involved, as well as the level of correlation between their different trades. Fat tails, black swans, etc etc
This is a pretty solid breakdown.
IRR isn't mathematically valid though.
I might take a run at cleaning up this spreadsheet tonight to make it look a little more professional.
Need to include things like tax and exit valuations to get to the correct decision.
There are a few very important caveats that they miss though. Revenue determinants are heavily based on conversations with healthcare payers to determine market size which dramatically effects revenue projections.
Most firms that do deep development plan to sell successful drugs and exit as early as possible so transaction costs need to be included in the terminal value, which isn't calculated terribly well in this model.
I'd also use corporate bonds for pharma companies (or biotechs, depending on which you are looking at) for the cost of capital, as ultimately that's what debt costs
Correct.
Despite this, I choose to donate to my universities because a) when its my children's turn, I want the organization to remember my name, and b) I honestly believe that education is a truly worthwhile pursuit and I want to expand access to, and quality of, education and discovery.
PhDs and grad students may be a bunch of blowhards but they drive a lot of innovation.
> when its my children's turn, I want the organization to remember my name
When it's time for my children, I want the organization that will be teaching them about professional and ethical conduct in the real world to not only not be corrupt, but also demonstrably free of all prejudicial biases in the applications process.
Which is to say, I want my children to be assigned a randomized identifier and their personally identifiable information anonymized, before their application is given to an admissions officer, so that irrelevant qualifications like the amount of money parent alumni have given to the organization are not and cannot be used for an admit/no-admit decision.
I'm fine with your kid getting a 2nd-floor room in the posh dormitory, and first bite at class scheduling. You can pay for additional conveniences, but not to deny someone else an opportunity earned by their own hard work.
Well, okay, so I should stop donating to the scholarship fund then? If alumni stopped donating then quality of education or number of students would have to go down.
If my kids aren't going to get preferential status then there is no reason to be a sponsor of that institution over any other.
Given that your top comment is, "I don't understand why people donate to Universities," I'm not sure that you're in a great position to say that others shouldn't receive priority admission. If everyone did what you did then our University system would collapse.
Well, you would have lost out on a lot of innovation for one. I would be willing to bet that nearly half of the world's high performance computing specialists cut their teeth with a trading firm at one point or another.
By your logic, there would have been no benefit to video games or going to the moon even though each of these things have helped deliver large amounts of technological advancement.
IE, Facebook is a giant waste of resources but they employ many of the world's smartest engineers. Because of that they've spawned things like ReactJS which has completely changed web development for thousands of other companies.
Market makers need to be able to close arbitrage opportunities or they won't participate in the market. Speed matters just as much to them as it does to the prop traders.
Of course market makers wouldn't want to compete in a market where they are forced to make much slower trades than anyone else. But market making existed long before HFT, so it can't possibly be a unique benefit of it. You can argue that market making has become better because of HFT, but not that it requires HFT.
The technical aspects are more cross-cutting than your labels. "HFT" is for the most part just a latency threshold being crossed, whereas more functional roles such as market making, various forms of "pure" arbitrage, statistical arbitrage, prop trading, etc. have existed at the older latencies as well as the newer. All participants benefit from having lower-latency access than their competition, which creates a (thus far) neverending arms-race as firms leapfrog each other.
Arbitrage is not illegal. Latency arb certainly isn't easy.
"Dark Pools" is a book. It's also a thing, but that's obviously not what I was talking about.
There's nothing especially shady about dark pools. We'd call them "private exchanges" if the exchanges weren't themselves already private companies, I think.
Front running has not always been illegal, front-running if you have a fiduciary duty to clients has always been illegal, and many forms of front running are still legal today.
Nowhere did I imply that arbitrage is illegal and latency arbitrage is a big driver of revenue for several hedge funds, especially those which track baskets against their components.
There isn't anything shady about dark pools, except that there is little public information about the trades which take place within them, they are sparsely regulated, and you have even less insight into your counter parties than you do on open exchanges. And my response referencing dark pools was a response to your comment about execution services.
Front-running has been illegal (under that name) since 1987, long before the full automation of trading. Again: front-running involves an agency relationship; by law, you're not "front running" simply by beating a part of someone's block trade to an exchange.
Are you sure you worked at an HFT firm? Front running has always been illegal as it is basically insider trading.
Being fast is not an easy way to make money. It's an incredibly hard and difficult way to make money. I don't know what kind of HFT you worked at, but I guess you just plugged in a laptop to a GBit/s network line and plugged away making "easy" money?
Also, the first dark pool was created in the 80s, so you're a little late on that development as well.
I'm a LA resident. People in this city like to talk about congestion as though they see it as a problem, but they don't actually see it as a problem.
Only people in the valley see it as a problem because there are limited choke points into and out of LA proper which keep people from getting to work.
LA's limited transportation infrastructure prevents DTLA's homeless from getting to Beverly Hills, Long Beach's gang-related activity from getting to Brentwood, etc.
If LA wanted to fix their transportation problem then they could build trains parallel to the 405 and 110 and solve the problem, but they don't want to fix the problem because the problem allows them (us?) to keep the city segregated by income.
LA is building a rail parallel to the 405, and the Silver Express (bus) has run down the 110 for more than a decade. LA is also building 2 more rail lines in the SFV. The reason they're not already built is that the SFV opposed these lines 3 decades ago when they were originally proposed and only recently dropped its opposition.
Also, Buses run from downtown to Beverly Hills, and getting from Long Beach to Brentwood can be done entirely by public transportation.
Sorry, I see now the above comments are more a refutation than a statement of, "Look how good the transportation system is." I'll leave these though just to make my general point about how horrible the options are.
-- END EDIT --
Just pulled up google maps for Long Beach to Brentwood:
To be fair, that was at 7:30pm, the tail end of traffic and after the busses switch to a reduced schedule. I'd be curious to see those results at 5:30pm.
Plenty of people still need to get around at 8PM at night. So, I'd say a bodega worker in Brentwood going home to their less expensive apartment in Long Beach would prefer to be able to commute home at 10PM without it taking 3 hours :)
> LA's limited transportation infrastructure prevents DTLA's homeless from getting to Beverly Hills, Long Beach's gang-related activity from getting to Brentwood, etc.
Gangsters have cars and don't rely on public transportation. DTLA homeless can and do use the MTA bus that goes literally from downtown to Beverly Hills.
No, your perception of LA's public transportation is completely out of touch with reality.
Subway and train systems are fundamentally different modes of transit than bus systems. They are more accessible, run on regular schedules, and they are anonymous.
The urban poor in other cities utilize them disproportionately which is why Beverly Hills shuts down every hint of a conversation of adding public transit connection beyond commuter buses.
It's too bad if you're offended by what I said, but LA has more nimby's per capita than anywhere I have lived which is exactly why we do not have a public transportation system.
For the specific example you gave: does an irregular schedule really create an obstacle for a homeless person who wants to make a trip from DTLA to Beverly Hills? What does it mean "more accessible"? What do you mean by "anonymous"?
What makes you think I'm offended? I just didn't understand your argument (and still don't), and I wanted to see what you meant.
And what does it mean "my perception of LA's public transportation is out of touch"? I only said two sentences, one about gangsters typically having cars, and the other about homeless people often taking MTA bus from DTLA to Beverly Hills. Which of those was incorrect?
Edit: I can think of a reason why rich people may not like subways going to their neighborhoods. Slow and unreliable buses are a problem not for gangsters and homeless, but for the hard-working middle-class and poor people who need to commute to work - even if they have cars, traffic makes it very tough, and subway would have made it really nice. It's quite possible that rich people don't want too many middle-class and poor people getting jobs in their neighborhood. I have no idea if it's true, but at least it sounds plausible.
My argument is that the west side has had many opportunities to alleviate our transportation problem and has consistently decided that we would rather deal with hour long traffic jams than even incremental amounts of change.
People have been trying for years to do things like add safe bike lanes, rebuild the streetcar system, and build a subway system. Angelinos have been far more concerned with the temporary traffic disruptions, slight inconveniences, and potential demographic shifts of each.
My entire neighborhood threw a fit when someone tried to install a roundabout instead of a 4 way stop to reduce congestion.
Nobody would have been negatively impacted for more than a few months, but the people here just don't care about collective benefit, at all.
And that's before we start discussing the people who have deliberately induced greater congestion by adding speed bumps to side streets in an effort to protect property value.
LA chose to have this problem. It's not something that just happened on its own.
And to your point, they absolutely could solve the chokepoint issues with eminent domain, and adding additional arteries, but they choose not to.
For people who think a congestion tax will improve traffic, it won't. Congestion taxes work if they can shift behaviors to alternate modes of transportation. If there aren't any alternatives, it's just a levy.
Induced demand doesn’t say that nothing happened. It says that demand just fills up the new supply.
There are no alternatives to a road system in LA for most residents. If the roads were choked and there was an underutilized subway that I could use, I’d totally get the argument of taxing the road system or capping capacity, so as to push people toward more efficient methods. But, it’s not feesible to build out a subway system in this city that is expansive, so we need to work with what we have- Cars.
Make LA the autonomous car capital of the world. Let’s be the best and first at linking cars together in convoys and shuttling them fast down our massive freeway network.
Let’s build tunnels under the mountain passes to add more connections into Hollywood so people have better access than winding canyon roads.
Let’s build expansive subway networks through south central and downtown to bring cost effective transportation to lower income neighborhoods.
Let’s do a ton. But let’s also build a bunch of roads.
> Let’s build tunnels under the mountain passes to add more connections into Hollywood so people have better access than winding canyon roads.
This is an interesting idea. I just measured it out, and assuming you could build a straight tunnel to bypass the canyon at the 405, it would be 5.3 miles.
To bypass Laurel Canyon would be a 3.0 mile tunnel.
Coldwater bypass would be 4.1 miles.
So the question is, do we the technology to build tunnels that long and deep (all of those are about 1000 feet). And is it a good idea to build a 1000 foot deep tunnel in an area known for earthquakes?
I'm not an engineer of that sort, but I'd imagine if we can build subways in earthquake-prone zones like SF, LA, and Tokyo, we can build safe tunnels under mountains in an earthquake zone.
Congestion taxes can also shift road use to other times. Imagine many people on the roads are making relatively short trips (eg. a trip that takes 20 mins in traffic instead of 10 mins) that generate a lot of lane changes and contribute to congestion. A congestion tax could encourage them to drive in non-peak times, use the bus, or not make the trip.
The city is already built this way and people already made decisions on where to work and live based on facts on the ground. Unless congestion charges are levies only on newcomers, it has no legitimacy. Try these social experiments on a new city.
> The city is already built this way and people already made decisions on where to work and live based on facts on the ground.
This would indicate to me that they are already OK with the level of congestion they currently have. But that's not what they say. Some kind of disconnect.
You consent to public policy changes by living in society. In particular, you chose to live in a city with lawmaking bodies that are expected to enact policies to adapt to changing times. If you think the pros of some change outweigh the cons, make the argument, but don’t claim that public policy writ large is illegitimate.
I can't tell if this is a humorist take on the issue or not because its so completely off base. If you were really a knowledgeable LA resident you would realize that the Valley actually pays for most of LA's expenses (which is why the vote to make the Valley a separate city decades ago failed), but also more importantly realize that there is a lot more to LA's traffic situation than just the 405 and 110 chokepoints.
The simple fact of the matter is that LA has a serious housing and urban planning crisis with no real solution. The city has already been investing heavily in public transportation for years now with multiple heavy rail lines been under construction (purple and crenshaw) and some already opened (gold) - but the fact of the matter is that until a public transportation system that can replicate the freeway system - meaning a system that can replicate both the breadth and depth of the system (Think a 'good' Euro rail system spread across a 30-60 mile radius) - LA will always be a congested mess - unless a paradigm shift in transportation occurs (hyperloop, Uber Elevate, etc.)
I spent a lot of my childhood in Beverly Hills and still have friends in the area: what you're saying has historically been absolutely true, but in the last 5 years, my perception has been that the seemingly all-the-time-and-everywhere traffic has gotten to the point where even people living in the nice parts of West LA are fed up and opening up to a functional transit system.
This is obviously somewhat anecdotal, though; it's possible that for some reason my sample is skewed enough that it's different from the population's views in general.
Eating more fruit and vegetables. Spell the whole damn word. It takes less than a second to finish typing that. I saw 'thru' in an academic journal yesterday as well. Drives me insane.
"Veg" seems used more in British English. As an American, it never really sounds right to me, and I usually see/hear it from UK or Australian sources. Just an idiomatic difference, I think.
