Nassim Taleb talks with Bloomberg’s Erik Schatzker about the May 6 stock market selloff and his investment strategy. Taleb also discusses the drivers for the financial crisis, the U.S. economy and the performance of Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.
Quants are the math wizards and computer programmers in the engine room of our global financial system who designed the financial products that almost crashed Wall st. The credit crunch has shown how the global financial system has become increasingly dependent on mathematical models trying to quantify human (economic) behaviour.
Now the quants are at the heart of yet another technological revolution in finance: trading at the speed of light. What are the risks of treating the economy and its markets as a complex machine? Will we be able to keep control of this model-based financial system, or have we created a monster? A story about greed, fear and randomness from the insides of Wall Street.
Director: Marije Meerman
Research: Gerko Wessel
Prince Alwaleed Bin Talal sits under an almost full moon near a campfire at his rustic retreat in Riyadh, Saudi Arabia. He’s surrounded by a zoo with zebras and giraffes, an artificial lake and a lodge that has an indoor pool, saunas and steam rooms. Three hooded falcons are perched on stands in front of him.
Five young women, dressed in black miniskirts and jackets and orange knee-high boots that match their nail polish, serve clove-and-cardamom tea to Alwaleed and his entourage, which includes his personal physician.
On this evening in late March, the prince perks up in his easy chair as a newscast on a large-screen television behind the campfire reports on a rally in global hotel stocks — a sign of hope for the billionaire investor who’s trying to revive his slumping fortune, Bloomberg Markets magazine reports in its June issue.
“Hotels are on the way up; they’re taking off,” says Alwaleed, before he rises to lead about 15 courtiers and retainers down a hill for a feast of Saudi, Lebanese and Italian food.
Alwaleed, 55, one of the world’s richest men, saw his net worth climb to $21.1 billion in May 2000, according to his tally of investments and personal wealth. He achieved that mostly by investing in big-name companies such as Apple Inc. and News Corp.
Since then, many stocks have turned against him, especially those of Citigroup Inc. and Time Warner Inc. The Saudi royal’s fortune has been trimmed to $16.6 billion, based on the value of his Kingdom Holding Co. stake on March 31 and his personal assets as of Feb. 10.
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HFT is a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.
High-frequency trading (HFT) is suddenly one of the most talked-about and mysterious forces in the markets, the NY Times reports.
Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.
These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.
Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.
And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could “manipulate markets in unfair ways” — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.
Yet high-frequency specialists clearly have an edge over typical traders, let alone ordinary investors. The Securities and Exchange Commission says it is examining certain aspects of the strategy.
Read more from the source: NY Times
