<story><title>Capital Is No Longer Scarce</title><url>http://continuations.com/post/134920840275/capital-is-no-longer-scarce</url></story><parent_chain></parent_chain><comment><author>jondubois</author><text>Misallocation is a massive problem. I think a significant amount of money is going into advertising, pointless startups, entertainment and social media.&lt;p&gt;Basically, we are spending huge amounts of money getting numbed out of our minds instead of solving real fundamental problems.&lt;p&gt;In general, I think it reveals a deeper problem about capitalism; none of us understand value anymore (we have more junk in our lives than we could possibly need)... So we struggle to allocate capital properly. We just blindly follow trends. The people who are getting rich now are not those who want to make the world a better place; the winners are those who just want to make quick cash (short-term thinkers who take insane risks).&lt;p&gt;Does society prefer Snapchat or a cure for cancer? In the current economic environment, investors prefer Snapchat because Snapchat is pretty likely to get a ROI within the next 5 years.&lt;p&gt;The return on investment for a cancer cure is probably small (especially given the large amount of recurring revenue that big pharmaceuticals are currently making by selling cancer drugs). Also, it&amp;#x27;s much riskier than Snapchat... Could take 5 years, 10 years or 20 years.&lt;p&gt;Ultimately, we are satisfying people&amp;#x27;s short-term &amp;#x27;wants&amp;#x27; at the expense of their long-term needs. We&amp;#x27;re a society of addicts who just want to get a quick buzz.</text></comment>
<story><title>Capital Is No Longer Scarce</title><url>http://continuations.com/post/134920840275/capital-is-no-longer-scarce</url></story><parent_chain></parent_chain><comment><author>vlehto</author><text>High frequency trading gets shat on frequently. It&amp;#x27;s stupid. This is only a tool that evens out price differences across geological distance. If someone buys significant amount of AAPL stock in New York, the price goes up in NY. Then someone from London can profit by buying small amount of AAPL stock in London and selling it in NY.&lt;p&gt;High frequency trading is this, but with very high speeds and lots of competition. This means they have to exert value out of almost infinitesimal price changes.&lt;p&gt;&amp;gt;As HFT strategies become more widely used, it can be more difficult to deploy them profitably. According to an estimate from Frederi Viens of Purdue University, profits from HFT in the U.S. has been declining from an estimated peak of $5bn in 2009, to about $1.25bn in 2012.&lt;p&gt;That&amp;#x27;s 0,007% of U.S. GDP. And probably going down.&lt;p&gt;&amp;gt;&amp;quot;DEFINITION OF HFT: 
1. a strategy which trades for investment horizons of less than one day 
2. a strategy which seeks to unwind all positions before the end of each trading day 
thus HFTs can&amp;#x27;t deploy large amounts of capital&amp;quot;&lt;p&gt;&lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;www.sec.gov&amp;#x2F;comments&amp;#x2F;s7-02-10&amp;#x2F;s70210-129.pdf&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.sec.gov&amp;#x2F;comments&amp;#x2F;s7-02-10&amp;#x2F;s70210-129.pdf&lt;/a&gt;</text></comment>