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Comment by nostromo | Hacker News Reader

> [Shareholder pressures] have led many business leaders to manage to the "expectations market" of the public stock exchanges. This in turn has led to narrow short-termism, accounting manipulation, cutting of ethical and legal corners, failures to invest in the long-term, and to the financial crisis.

I've actually heard from a salesperson at a big SaaS company that it's normal to delay sales to the next quarter once your sales quota is fulfilled for this quarter.

This surprised me because it's obviously worse for the company as a whole to not capture that revenue as soon as possible (and to put it at risk entirely) and potentially worse for the customer. However, it's better for the salesperson to have an easy win next quarter, and easier for the management to show nice quarter-over-quarter growth. I think this is a good example of putting short-term gain before the interests of the company, and it seems to be quite common.

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Look at how Apple's stock price got a short pounding this week because they "didn't meet analyst expectations", citing a fall in iPhone sales.

People were waiting for the new phone to launch. Apple moved nearly USD $3,000,000,000 in product in a single weekend just after the quarter ended and before the earnings report. And still, the stock got sold off.

I've heard that Apple tends to underestimate their earnings, and I'm starting to wonder if Jobs played the 4S launch date just to screw with market analysts even more.

I wonder if it is by trading machines running algorithms.

too expensive for most HFTs to play with

If there was a stock trading tax of X cents per share, would it wipe out HFT? What would X have to be?

Yes. You'd also increase the bid/ask spread by at least X, which is not a good thing.

The reason why AAPL is so expensive is because of the TAF (a tax assessed by the SEC). Currently its 19$ / million dollars sold. Note that this fee is proportional to dollars sold, not per share (other transaction costs are per-share).

Let's say you received $.0020/sh for adding liquidity and paid a commission of $.0001/sh. The tax would be, assuming aapl is $400/sh, $.0076/sh. This is much larger than the rebates, which means you need to buy at least one cent below your sell price on every trade.

Now look at bank of america. It's been hovering around 6.50 for the past week. The tax there is .000114, so in fact it's possible to buy and sell BAC at the same price and make money!

But getting back to your question, blind market making loses money when the tax exceeds the returns. For the larger players, they make .00295/sh before commissions (and ostensibly they are free because larger shops have their own clearing divisions), so X would have to be close to .29. For alpha-based (generating a predictive signal) trading, most HF signals have an amortized edge of .2 cents per share after fees, so I would say something like X=.2 would wipe out HFT

Yea, personally I have been thinking instead of motivating salespeople with quotas or commissions, how about having them letting them cooperate with engineering to improve the product.

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