Good one. Forgot about this one.
Intelligent Investor is good too as per other commenter but I find that it's quite hard reading for a beginner.
263 karma · joined October 3, 2014
Intelligent Investor is good too as per other commenter but I find that it's quite hard reading for a beginner.
Personally I tend to encourage people to read Bogleheads' Guide to Investing first. That should equip you with everything you need in order to get your feet wet.
Then, while you're checking your investments every day (exactly the way the book tells you not to do), start to read as much as you can about Permanent Portfolio. The reason I recommend this is because it allows you to learn the theory of (and indeed watch, if you decide to build your own Permanent Portfolio) different asset classes, and how they move depending on various macroeconomic factors.
Finally, if you want to start stock picking I'd recommend getting started with Peter Lynch's books.
A bit of history how the messaging protocol works might make things clearer.
In the old days a trade would take place over the phone as follows:
You: "I'd like to buy USDJPY, $1 million worth please" Market Maker or broker (MM): "Ok you can get $1 million dollars worth for 123"
At this point there was a gentleman's agreement you would respond within 4 seconds whether you want that price or not (as the market may move)
You: "Mine, I'll take it"
Here you have completed your side of the contract and cannot back out. You just need the MM to confirm that they can still get your USDJPY 1 million 123 (this was traditionally confirmed with a trader sitting nearby who could see all the prices and volumes being published in the market and could give a price at which they could hedge the entire volume and still make a profit. These days traders still perform this role to a small extent but generally the broker would read a price off a screen themselves).
If they can, MM: "It's yours, USDJPY 1 million at 123" and the transaction (contract) is confirmed good. The position is transferred to you, and the trader who provided the original price hedges the risk and gets out of the position, flattening his trading book.
If the market has since moved and the trade is no longer profitable, MM: "I'm sorry the price has changed, you can now buy at 123.1" and you jump back up to the previous
Ok, so all this has been upgraded with technology over the years, specifically messaging is now done via the FIX protocol (same as is used for other asset classes). But the basic flow is still the same:
You: Request price at a quantity MM: provides price You: decide whether to take that price MM: confirms that the price is still good, then sends you confirmation the trade was good (and hedges the trade), or otherwise rejects the trade.
The issue arbitraging causes is that if the prices in the market move and those moves are known to the arbitrageur but not to the market maker then the market maker gets into a position where they accept and confirm the trade, but can't hedge out at the price they thought they could, and so lose money on the trade. A few of these trades and the losses start to build up, and if it keeps happening with a certain client (remember, no anonymous exchanges here) then it's easy to punish that client (show them worse prices, cut them off completely, etc). If an arbitrageur is hiding behind a third party then the market maker might have enough clout to punish the entire third party (in which case it would be in the third party's interest to seek out the arbitrageur and punish them themselves).
Also doesn't take into account that in FX specifically, arbitraging is heavily frowned upon and if you are caught you are likely to have your account closed down.
The reasons for both of the above is that unlike for commodities/equity/futures/etc which are traded on a market, FX is more like a "gentleman's wild west" ie no defined market rules, but a lot of unofficial gentlemans agreements in place about what you can and can't do.
Various exchanges have tried to offer a standardised FX product and they all have the same issue - because a transaction on an exchange doesn't allow "last look" provision and the market makers have to honor the transaction, once an arbitrager infiltrates the market the market makers are basically at the mercy of the exchange (and all the latencies and rules within) and are forced to widen their spreads to the point that it no longer an attractive marketplace for all other market takers.
Having said that, arbitragers still do exist in FX. The most (in)famous one in Japan is a guy "Arb-san" who was making a motza in the countryside in Gifu. He had a great blog where he uploaded photos of his cars and piles of cash and trading rig, and commentary of how he was sticking it to the dumb banks. Unfortunately I can't find this blog anymore, but I did manage to find a profile of someone with the same name online that has some cars that I recognise from the that blog:
> But what if the security blows up? Investors could demand their collateral back, forcing renters out of their homes, even if they never missed a payment. "We could well end up in that situation where you get a lot of people getting evicted—not because the tenants have fallen behind, but because the landlords have fallen behind," says Baker.
At the risk of invoking the "j_lev Law of Eating Hats" I can't see that happening. There is ONE private investment company which has a loan with ONE bank. Investors pull out, the size of the loan just increases by that amount. All the investors pull out and Blackstone Group is left with a lot of (high-yield) property and a large loan with DB. Worst case scenario the properties are sold (potentially at a loss, but the remaining loan is still the problem of Blackstone Group and DB).
The developers are a bit accounting-nerdy, and it has lots of graphs/etc which I think would appeal to the HN crowd.
It's also very flexible. One example I can think of, my friend installed it on his wife's smartphone so she could record spending on groceries wherever she was. But my wife doesn't like this level of monitoring so I just give her a wad of cash each month and enter that as a general "cash for groceries" entry.
I've also seen people in the US say good things about Mint.com, which was not available to me here in Japan.
Normally this would be a good place to put my own 10%-off referral link. Instead I'm going to give a link to a forum thread where you can get 10% off AND someone else will then use your link:
http://forum.mrmoneymustache.com/reader-recommendations/43-d...
> I spent Fridays working on a cool idea my brother and I had. That idea proved useful enough to pay the bills so I quit my job.
Regarding this, it sounds like you already had a good idea of what your expenses were, and I think people underestimate how important this is.
I recently quit my job and have jumped into the unknown. Firstly knowing where all my money was going, and secondly spending about 12 months trimming off all the fat was an important part of the process to give me the confidence to try this. These days I live in one of the most expensive cities in the world with my wife for about $2000/month (and over half of that is rent). We want for little. Several years ago this figure was closer to $4000/month.
Otherwise you can kick them between rounds.
There are ways around it but it seems most people go with "my base was XX.... and that's one of the reasons I'm out there looking to change jobs."
http://edition.cnn.com/2013/12/11/living/6-year-old-suspende...
Fortunately "inability to connect with people" wasn't an issue for me. But I stayed out of the big cities for the most part, and a clean-shaven face and mischievous smile can go a long way in getting conversation started.
I lived primarily off savings, though I worked for three weeks at a beer garden over the summer, two weeks washing dishes at the Sumo in Tokyo and did some consulting work here and there for previous clients.
Once you find your groove it's easy. For me, it was 1) from about 6pm try to find a place to shower, then a place to park. 2) spend about an hour planning the next day's activities. 3) get into some sake, read some comics, then sleep. 4) wake up early enough and move on so that no-one notices you just camped there overnight. Head into town and start sight-seeing.
Fortunately it was 2007 when I came to Tokyo to look for "proper" work and there were all these jobs supporting these people working in something called "sub prime mortgages"...
I was 27 at the time. Still here almost 10 years later though I live in an apartment now. Next month I'll be heading back to Australia to work on a few projects and the thought is a bit daunting. It was much easier at 27 to quit the job and pack it all up, but I think having the experience under my belt makes it easier the second time around.
Second time around will be more like what you describe above, the "quit your job and into the unknown." My tips (as much for you as for me) from doing it once are 1) less is more when it comes to luggage. If I didn't have to work I'd probably go entirely bagless (see: Scottevest) or close too it. 2) A lot of it comes down to a few simple requirements that need to be taken care of every day. Once you have these under control your mindset changes in ways that could fill a blog post on their own. 3) For many hiring managers, a year traveling on your CV is poison. That's their shortcoming, not yours. 4) Consider doing "local" jobs while traveling. I was working and being paid minimum wage but loved every moment of it, and I still keep in touch with my colleagues from those experiences (I've since worked at a bean-sweets factory and a hot spring resort, another stint at the Sumo, and there was a hotel somewhere in there too). 5) The more food prep you're prepared to do the more you can save. If I knew there was a market nearby I'd be up at the crack of dawn jostling with the old ladies for discounted local produce. I learnt and employed time-tested methods for preserving food (salting, spicing, fermenting, drying, etc) or bought from markets pre-preserved (I spiced and dried some meat hanging in my car one time while on the freeway with my windows open. The drag probably cost me more in fuel than I saved by being able to buy the discounted meat lol). I had several go-to meals, and became a master of one-pot cooking. Worst case I would go without, or spend a buck getting some cheap calories from the convenience store. 6) Talk to people. Everyone has a problem they need solved, and you might be the person to solve it. Maybe one thing leads to another and you have a source of income for a while, or more. All of my part-time jobs above bar one came from introductions from people I had spoken to or worked with along the way. Often you can bring a unique perspective, or worst case you learn something yourself.
People who place stop-loss orders would not do so if they were faced with an order book with no bids. However this is effectively what happens when the market starts to drop and the bids are all pulled.
Until they don't. The moment people need liquidity the most is the moment the market makers have pulled all their orders and the market is in free-fall.
Most of the "conversation" was about this level.
Every time we switched to or from DST there were a couple of outliers that got caught. We'd update the tables to handle the case correctly next time, but would miss something else, if the change didn't break something else completely.
Polyurethane is definitely superior in many regards, but they are less stretchy than latex and if you're not used to them they can be a little frustrating.
Would like to do another course at some stage. Mind was massively productive and I fleshed out several ideas over the period. Also got rid of the "mind fog" that starts to creep in from around 30 years old onwards.