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Comment: Re:Technology as a totem (Score 1) 730

by Luxemburg (#36154690) Attached to: Can Computers Be Used To Optimize the US Tax Code?

You mean, you would have been able to come up with google's optimization (which one would that be exactly?) or with any classic algorithm, without understanding the problem? I think you're merely benefiting from other people's understanding of these problems.

My DNA came from a billion year run on a gigantic parallel processing farm (you know, all organisms on the earth ever). I'm still puzzling on how to interpret this run's output however. I don't even know what problem needed to be solved in the first place.

Comment: Technology as a totem (Score 1) 730

by Luxemburg (#36151508) Attached to: Can Computers Be Used To Optimize the US Tax Code?

To think that because the tax system is so complicated, a more simpler solution must exist without any by-effects seems to be inspired by a religious belief in technology as a solution to anything we can't figure out by ourselves. This belief is the product of not really understanding then nature of technology: to be able to solve a problem, one needs to understand it first.

Let's apply the same principle to exchange rates (let's use a computer to determine the exchange rates between currencies, those computers are so smart), democracy itself (no more need for arguments or elections), the distribution of rewards, making consumptive choices... I haven't read anything by David Brin, but I would expect him to specialize in fantasies about dystopian societies where a skynet-like system controls the fate of humanity.

Comment: Re:An attempt at an explanation (Score 1) 124

by Luxemburg (#35361808) Attached to: Gosper's Algorithm Meets Wall Street Formulas

To be more exact, there is no easy formula of the hypergeometric kind, which is a formula "involving binomial coefficients, factorials, rational functions, and power functions" according to It would thus theoretically still be possible that an easy formula exists, but it must involve constructions more exotic than that.

Comment: An attempt at an explanation (Score 2) 124

by Luxemburg (#35361540) Attached to: Gosper's Algorithm Meets Wall Street Formulas

When pricing options the bionomial way, one creates a sort of decision tree for movements the underlying value makes. (scroll down on to see such a tree).

This paper seems to prove that there is no easy formula short cut for the tree: if one wants to know the answer, one really needs to build the entire tree.

Comment: Re:Obvious Missing - GOLD (Score 1) 868

by Luxemburg (#34967812) Attached to: I'd rather my paycheck be denominated in ...

How about the tools to obtain those necessities? How about the tools to create these aforementioned tools? How about some entertainment in between your valiant efforts to obtain the necessities and create the tools?

The point you seem to be making is that "things on paper" like contracts and securities only have value insofar they are credibly enforced. This has no bearing however on the notion that gold has no intrinsic value, whereas, say, an apple production plant has.

Comment: Re:Time for a deep breath (Score 1) 178

by Luxemburg (#34169878) Attached to: How To Profit From Planetary-Scale Computing

It's not about decisions but about information (did I tell you I'm a mathematician working in the industry?)

Marginal information has a marginal influence on human decision making, and thus its providers should be allowed to charge a marginal fee for it. The point you should be making is that this fee is too large, not that it is there in the first place.

BTW, perhaps you should provide more information regarding the exact mechanism of your delay mechanism. I do not see how it is going to prevent arbitrage at all: is all trade information delayed? then all arbitrage will take place at a delay, with similar profits.

Market participants will also invest in acquiring superior information as long as this process is profitable. There are other ways to acquire price information than from the exchange (for instance by collecting information from a sample of the traders themselves, at a charge). Non-arbitrageurs will not invest the resources to beat your delay, whereas arbitrageurs will. Therefore I expect the extra hurdle for the retrieval of information to benefit the arbitrageur.

Comment: Time for a deep breath (Score 1) 178

by Luxemburg (#34161708) Attached to: How To Profit From Planetary-Scale Computing

First of all, you're not talking about HFT really, but about arbitrage: making use of inefficiencies in the dissemination of information in a market. Arbitrage is as old as trading itself and now that trading happens with fast computers, the same goes for arbitrage. If some knowledge becomes available in some place, it will quickly spread over the entire market. In this process, the arbitrageur plays an important role: the parties that profit from trading are the parties that actually spread the information: if you buy/sell an instrument because it's under/over priced, you actually help to in/decrease its price. The fact that arbitrage rakes up big profits only means that the trading system is efficient. You should thus work to make it more efficient instead of killing the arbitrageur.

The solutions you propose are exactly symptom killers:
1. Adding a delay means you're withholding information from the markets. With less information, market participants make decisions that are less informed and thus poorer.
2. Adding a tax has actually the same result: if you raise a tax, you're actually putting a threshold on the level of information that can be disseminated with a profit. This will in effect mean that new information will only be sent once it reaches a certain level of impact and the tax thus functions as a delay for this information.

Why don't you propose a more open economy, where information is easier to get by and cheaper. This will automatically result in better prices (one of the important functions of financial markets: knowing what something is comparatively worth) and it will reduce the profits of the arbitrageurs.

Comment: high frequency "trading" = an overhyped subject (Score 1) 178

by Luxemburg (#34160514) Attached to: How To Profit From Planetary-Scale Computing
Ofcourse I haven't read the article. The summary provides enough information: 1. The subject is arbitrage, not trading. The impact of the ideas summarized here on trading is negligable. For actual trading, latency is a much less important issue. 2. Arbitrage makes money by exploiting (and thereby reducing) inefficiencies. 3. The profits made by arbitrageurs should go down to reasonable levels, under the assumption that markets are efficient 4. The fact that arbitrageurs are still making enormous profits shows that we have much more serious issues in our financial system than the lag between exchanges

Comment: Re:An abuse of the free market system. (Score 2, Interesting) 624

by Luxemburg (#28808207) Attached to: Stock Market Manipulation By Millisecond Trading

This kind of activity is an abuse of the free stock market system.

This activity does not generate wealth. It doesn't create something from nothing. And it doesn't add value to society. If they generated 21 billion, then 21 billion was necessarily lost by others.

People should look down on this kind of business and method of trading.

A common and understandable misconception.

For the remainder of this comment, I choose shares in Google as an example. I have no position in Google, not an opinion on their current price.

Both arbitrage (making use of inconsistencies in the market) and speculation (trading for immediate short term profit, and not for long term investment) are activities that add value. It is important to understand that markets are not only there to facilitates exchanges (e.g. trading in securities), but they also play a vital role in information processing. The activity of trading feeds information into the world: If a person buys 1 share of Google for the price of x, this person is also saying "I am willing to put my money on the notion that 1 share of Google is at least x". The current price of Google is nothing else than the consensus opinion of all market participants.

The accuracy and efficiency of said consensus depends heavily on the tools available to the speculators and arbiters. Say I think that Google is currently overpriced. If the market rewards me for supplying this information, then I would do it. For instance, I could sell Google shares short (i.e. I would sell shares that I don't have, hoping to buy them later on at a lower price and thus make a profit). At the beginning of the financial crisis, a lot of governments disallowed trading short, naively expecting the market to stabilize. What actually happened ofcourse is that information exchange slowed down: if Google was indeed overpriced, this would be known much later to the world if short trading wasn't possible.

The bottom line: speculation and arbiters bring their information into the market and are rewarded for this by their profits. If the information is incorrect, they will be punished with a loss.

Comment: Re:Using bots in S.American countries (Score 1) 440

by Luxemburg (#23384116) Attached to: USAF Considers Creation of Military Botnet

Yes, I claim however that shooting human shields used by irregular opponents (non-uniformed or otherwise not clearly recognizeable or people who fight in an urban zone) is NOT a crime in the geneva convention.
I counterclaim that the non-uniformedness of the opponents is of no consequence here. If a party undertakes an operation that puts civilian lives at risk, the importance of the operation must be so that it justifies taking that risk. These are the principles of proportionality and the protection of civilian lives at work.

The other parts of your response are mere conspiracy theories.
Is this the best you can do?
The Internet

+ - RIAA Wins In Court Against U of Wisconsin-Madison

Submitted by
Billosaur writes "A judge has ordered the University of Wisconsin-Madison to turn over the names and contact information for the 53 UW-M students accused of file sharing over the university's networks by the RIAA. "U.S. District Judge John Shabaz signed an order requiring UW-Madison to relinquish the names, addresses, telephone numbers, e-mail addresses and Media Access Control addresses for each of the 53 individuals." The ruling came as no surprise to the university, which had previously rejected the request of the RIAA to hand out their settlement letters to alleged copyright violators on their campus. The school feels the RIAA will have a hard time tracking down who did the file-sharing anyway, as the IP addresses the RIAA has for the violations may be mapped to computers in common areas, making it difficult to determine just which people may have made the downloads."

Civilization, as we know it, will end sometime this evening. See SYSNOTE tomorrow for more information.