cyu
28th March 2012, 11:28
the ONLY people who make money on Wall Street
http://www.jamesaltucher.com/2012/03/who-makes-money-on-wall-street/
- People who hold forever. These are usually the founders of companies, who build their companies up, take them public and never sell their shares.
- People who hold for one trillionth of a second. These guys have computers with cables hooked right into the exchange who slip in the middle, buy some someone else, sell to you 1/10 of a penny higher and makes a sliver of money. probably more than 50% of trades on the stock market are done by these guys and a single mistake (think: flash crash) can cause the market reeling within seconds.
- People with inside information: my guess is they only got about 1/10,000 of the people who have inside information. Every hedge fund manager trades on inside information all day long. They use every means at their disposal. Not the old-fashioned bribery stuff of the 1980s. They hack into networks, they vacation where your CFO is vacationing, they use so-called "expert networks".
- Congressmen. It's legal for congressmen to trade on inside information. So, let’s say your congressman knows that a vote on some energy tariff is going to go a certain way he can go to his local casino table (stockbroker) and place his bets accordingly.
- People who take fees. You raise $100 million and you make about $2 million straight off the top in fees which you split with your partners and the people who raise you money. Then you split any money that comes in off the profits on the $100 million. In the long run you lose money for all of your investors but you make a TON of money on fees. example is hedge fund manager John Paulson. net-net he lost about $10 billion to the markets. And yet, he's pocketed about $3 to $4 billion in fees, making him one of the richest people in the world. He made that money simply by losing even more money. That's a pretty good job if you can get it.
http://www.jamesaltucher.com/2012/03/who-makes-money-on-wall-street/
- People who hold forever. These are usually the founders of companies, who build their companies up, take them public and never sell their shares.
- People who hold for one trillionth of a second. These guys have computers with cables hooked right into the exchange who slip in the middle, buy some someone else, sell to you 1/10 of a penny higher and makes a sliver of money. probably more than 50% of trades on the stock market are done by these guys and a single mistake (think: flash crash) can cause the market reeling within seconds.
- People with inside information: my guess is they only got about 1/10,000 of the people who have inside information. Every hedge fund manager trades on inside information all day long. They use every means at their disposal. Not the old-fashioned bribery stuff of the 1980s. They hack into networks, they vacation where your CFO is vacationing, they use so-called "expert networks".
- Congressmen. It's legal for congressmen to trade on inside information. So, let’s say your congressman knows that a vote on some energy tariff is going to go a certain way he can go to his local casino table (stockbroker) and place his bets accordingly.
- People who take fees. You raise $100 million and you make about $2 million straight off the top in fees which you split with your partners and the people who raise you money. Then you split any money that comes in off the profits on the $100 million. In the long run you lose money for all of your investors but you make a TON of money on fees. example is hedge fund manager John Paulson. net-net he lost about $10 billion to the markets. And yet, he's pocketed about $3 to $4 billion in fees, making him one of the richest people in the world. He made that money simply by losing even more money. That's a pretty good job if you can get it.