Running a business is less and less about actual business outcomes and more about juicing stock. And the stock market itself is divorced from reality as companies whose output has gone down over time sees higher valuations because the owner has cult appeal. So everything gets worse and more expensive year over year while feckless suits get sloshed over company dinners.
Can we have a different kind of stock market which forces participants to consider long term outcomes more? E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. As a retail investor I would love to use invest and forget strategy based on trends observed in such a stock market.
>forces participants to consider long term outcomes more
I remember many years ago telling a senior executive that I had concerns that some of the steps we were taking to boost current quarter financials would negatively impact business performance in the long term. He just chuckled and said, "there's no such thing as the long term, only a never ending series of current quarters".
>E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee.
Maybe by "HFT" you only mean "those evil hedge funds that are pushing companies to chase next quarters' earnings", but there's nothing fundamentally wrong with high frequency trading. Market making[1] is high frequency trading, and basically involves offering to both buy and sell and given stock, and pocketing the spread. That increases liquidity, making it easier for other traders to buy/sell stock without taking a huge loss. It's unclear why you'd want to ban this, or how you'd distinguish this from whatever evil HFT you actually want to ban.
I am not saying HFTs can't sell but there should be penalty for higher frequency. It means they have to craft algorithms which will take longer term view of stocks (and their fundamentals) rather than ignorance of other participants
Market makers make fractions of a percent per trade. How will your "penalty for higher frequency" deter traders that prey on "ignorance of other participants" or whatever, but don't put market makers out of business?
All these HFT stuff reminds me of chinese event where people send each other gift money as a good will gesture. Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value.
>Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value.
Liquidity is "real world value". Being able to buy/sell a stock instantly without a massive premium/discount makes stock ownership for the average person possible. Contrast this to an liquid market, like buying houses, where you need to spend months house hunting, and pay a 6% commission on top.
To return to our initial question: does stock market liquidity deteriorate when HFTs compete? The results suggest that competition among HFTs increases speculative high-frequency trades, which could lead to a deterioration in market liquidity.
Taking the study at face value, it only says that competition among HFT is bad. It also specifically admits that "As market-makers, they can update their price quotes fast when news arrives and provide liquidity to the market. In this case, the low-frequency traders in the market – the investors – benefit from lower transaction costs". In other words, at best it's advocating for some sort of monopoly for HFT, rather than getting rid of HFTs entirely.
It's not really high frequency trading in the sense of day trading, it's a bit of a misnomer. I would say it's actually low latency trading, the number of trades isn't huge. It ensures that linkages in the market operate quickly. Linkages between a stock price and its respective options. Or linkages between an index ETF and its components. The price discovery process should be fast, it benefits all of the market participants.
High-frequency traders (HFTs) are market participants that are characterised by the high speed with which they react to incoming news, the low inventory on their books, and the large number of trades they execute. All this is possible for HFTs because they use automated, algorithmic trading, which enables them to analyse markets and execute trades in under a millisecond. The high-frequency trading industry grew rapidly after it took off in the mid-2000s. Today, high-frequency trading represents about 50% of trading volume in US equity markets. In European equity markets, its share is estimated to be between 24% and 43% of trading volume, and about 58% to 76% of orders.
Benefits how? Even if we are all 'market participants', the time investment between a hobbyist and career investor is rarely equal. An LFT/low frequency trading market would egalise this discrepancy.
This subthread is nonsense. As a retail investor, HFT is good for you and lowers your prices. They have a bad reputation because of the book Flash Boys… but basically nothing in that book was true.
What is the long term effect on accuracy when a large mass simply moves XX% of their monthly paycheck into top ETFs?
I don’t disagree with what you said though, simply sharing thoughts - I think it leads to markets being more sensitive to macro strategies rather than actual fundamentals
>What is the long term effect on accuracy when a large mass simply moves XX% of their monthly paycheck into top ETFs?
Such investments are typically market cap weighted, which means their effect on stock prices are neutral. Moreover there's still room for hedge funds (and other sophisticated) investors to engage in price discovery.
Well people are also betting on themselves in sport betting so if we account for ignoring the rules, I don't see why the qualfiier that betting on yourself is allowed would be needed.
software development costs are out of control the whole industry is one big grift, there’s no accountability anywhere, 20% of the devs are doing 80% of the work, the business would instantly terminate the 80% for cause if they could only discern the difference, but they can’t, because the business side is also a big grift with the exact same problem all the way up to the founders recursively
It’s not the devs who are bloating development costs. It’s the layers of management making hour long meetings to discuss button placement.
It’s the hours of retros, design meetings, and skip-levels designed to remove any personal investment or sense of ownership from everything.
Since so few individuals are trusted with real decision making power, you need a lot more people to achieve some kind of consensus/buy-in so that you can ship anything.
The devs are at the extreme bottom of this totem poll.
It’s like blaming construction workers for houses being expensive.
And, ofc, that goes without mentioning the multimillion yearly bonuses for C-suite, but we can just forget about that and blame the lowest ranking corporate employees (devs)
Source: I worked at a large tech firm for many years and saw this over and over again.
Right every step of every dev task is ticketed, scheduled and measures within a millimeter of its life in many orgs. The people working the tickets aren't to blame when it all goes wrong in the big picture.
I've worked at shops with agile coaches, consultants, product teams, multiple management layers, etc all attending agile planning/retro/blab sessions. They always had really strong opinions on the minutae of each footstep (tickets/sprint), but couldn't speak to where the path was to take us. Essentially zero quarterly let alone annual planning.
A lot of management these days is the equivalent of driving and saying "I'll decide where I'm going when I get to the next stop light", repeated every 2 weeks.
> I'll decide where I'm going when I get to the next stop light
Surprisingly, this type of iteration can actually work; but the caveat is that the people behind the wheel, and reading the maps, need to be very good, and also, experienced enough to make sound decisions. If mediocre (or inexperienced) people try it, it’s a disaster.
From what I can see, the entire tech industry has been institutionalizing mediocrity, so this type of approach is not really available.
It doesn’t sound like the type of iteration matters at all.
If your leadership is good and competent, they can drive the company any way they feel and have it work.
The most productive I’ve been in my career was when my PO put all tasks that needed to be done in a Google sheet and the whole dev team spent a week just picking tasks off the list. It ended with us shipping our app on time.
No planning, no grooming, no nothing.
It was a high trust, high ownership team.
I've definitely been at shops that screen hard in interviews for people that should be given high trust & ownership, but then is agile product team micromanaged.
Sort of worst of both worlds. Everyone develops learned helplessness, checks out or leaves.
If you’re copying this approach from someone who copied it, after hiring an agile coach and reading the phoenix project, you are likely definitionally mediocre.
Also it’s not a one size fits all solution even for the competent. Requires a more direct interface and two way dialogue with users than most devs actually face.
Generally you see stuff like this turn into bikeshedding and/or sales features only. Way too often I see companies push for new features because they will generate sales that in the long run cause more customer loss because performance and stability was neglected to implement them.
Second that, scrum teams having 3 business analysts, scrum master, product owner, ops/it, ux designer, 2 testers, 4 developers is basically how it goes.
Heh, and there's at least one FAANG where it's not even the layers of management.
They've just removed a huge amount of manager discretion and initiative through multiple top-down dictates that are pretty much killing any low level desire to really innovate and try risky initiatives.
IBM, but with same level product market fit as IBM had for its mainframes, but in this case for markets 100x more important for the global economy.
I’m not saying just leave everyone to their own devices, but some individuals should be able to have ownership and make decisions without layers and layers of process.
Ofc decisions can have consequences, but that’s what the high pay should be for.
It’s not a black and white issue and I don’t think you need to present it like one.
A more risky job should be compensated more ? It'd be the opposite, if it's risky then the variance of the income should be greater (success = more income)
I don't want to present the problem as black and white but merely express a simple idea : developers DO want to be managed to simplify their lives and focus their time on more important things for them
Risk = variance = you should make less or make more depending on outcome.
You want the cake (freedom, more impact) and eat it too (guaranteed higher salary)
Risk is the relative impact your decisions have on the org at large. If you make the wrong choice as the CEO, you can tank the company.
If someone’s job involves risk, and you pay them peanuts, they’ll either go to a job that doesn’t involve that much risk or make decisions that are always maximally safe, regardless of potential upside, usually at the cost of company growth.
You want your staff to feel comfortable taking risks so that the company can grow, because a stagnant company will die. So you pay your positions more when they have more risk.
I never use numbers and exact equations to think about business, economics and politics. You have the wrong guy. You want more money in a predictable way, go incentivize the employees the correct way. In the meantime, workers are also responsible for the layers of “useless” managements
It’s the devs too. Do you really need an army of developers to build a web app or put text onto screen? No, a small team can easily handle that much faster and at higher quality without all the framework bullshit.
You also have to consider that developers are not sales people. They are a cost center.
> you really need an army of developers to build a web app or put text onto screen? No, a small team can easily handle that much faster and at higher quality without all the framework bullshit
Got news for you, too: it's both. It's the useless management, it's the "developers" who send me screenshots of stack traces while they cry and soil themselves because they have no clue what they're doing.
So much of the software industry is just an outrageous combination of inexperience and "YOLO". Every problem can be solved by just giving AWS another $100,000 this month because we don't have time (and don't know how) to make even basically optimized software. So just burn the gas and electricity and give more money to the YAML merchants at Amazon.
I still have PTSD from around 2012 when a company I worked for and loved very much (chumby) imploded financially and almost all of the employees including myself got vacuumed up in an acquihire-type deal into a streaming media company that was building a would-be netflix competitor.
Us former chumby developers were working primarily on the front-end across a variety of embedded-system-like devices (writing code for early versions of 'Smart' TVs from the likes of Vizio, etc) while another team was creating the backend and whenever they would show us the infrastructure diagrams of what they were working on they would just place a "HADOOP Server" wherever they had no idea how they were going to solve some large difficult problem, it was effectively a stand-in for "magic happens here".
Got to the point where there were a hilarious number of layers upon layers of little cylinder icons in the system design titled "HADOOP Server" all interlinked in non-decipherable directed graphs.
I'm pretty sure every single one of us left the new company within 6 months, I lasted about a month and a half.
The big tech companies paying the largest salaries are raking in billions in profits. How does this square with the view that software development costs are out of control?
Layoffs today seem more like execs following management fads for easy visible actions and this data would suggest that the actions are actually detrimental to company profits. Juice the numbers for a quarter but add another long term drag to the company
Just because a company can be overall profitable doesn't mean costs aren't out of control. If you make enough profits, you can literally feed money into a shredder and still come out ahead if you earn profits faster than your shredder can eat them.
What you're describing isn't out of control, all businesses have income and expenses, good management is watching both sides and building the organization that connects the two in the middle.
Sudden drastic moves if the business is delivering profits seems like the out-of-control action to take. If the business salary structure is off, or if you need to a different skill mix there are ways to shift that in a profitable business without sudden layoffs damaging the very organization that delivers your current profits.
So maybe we don't take jobs away from people with families and mortgages then, if all we have to do is sacrifice some profits, yeah? Gee, maybe the company can only make $9 billion instead of $9.5 billion, and everyone can stay employed.
The twist is that when you layoff the 80% who supposedly only did the 20% part, you pretty much still have to hire the same amount of people to do that 20%.
But with lower rates, and with abysmal rampup period (or even afterwards).
Don't blame managers, they just follow money, why else would they work those crappy jobs. Blame idiots who think short term bonuses should be massive instead of some long term performance and investment of oneself in company's success.
Blame the board, full stop. "Follow the money", there is really no other possible answer. Some set of people are responsible and to determine who that is, you read the corporate ledger, you read the financing contracts, you read the bylaws and governance structures, and what they literally state is that the board of directors are responsible for directing the company. The board is responsible. If you wish to be a director and responsible, then go incorporate, now you are the board! You are responsible! Good luck!
I'll start to call this mindset the "DOGE mind-virus": "80% of workers are doing absolutely nothing and can be cut with no repercussions whatsoever". Sure buddy.
Well, it worked for Twitter. Lots of people screamed that Twitter would implode withing 6 months, after the massive cuts. There was some scrambling for a while, but I haven't noticed any issues. In fact, they've added tons of new features and Grok AI (which is much better than competitors).
My understanding is that twitter's struggles are/were a result of advertiser and customer boycotts, not site functionality.
People were aghast at the brutality of the layoffs, and ideological direction. However, my impression was that there was in fact a tremendous amount of bloat.
If by worked you mean steadily losing users for the first time in the history of the platform and a 0.2x of the company's valuation, then sure. That worked.
And what's that about Grok AI being better than the competition? I think I misheard.
They also removed old features. Or can we look at threads without being logged in? It's clear people who say Twitter didn't change don't remember at all what Twitter was like.
