Development

I heard the story about the monks in monastery in mountains.  The young monk asked the old monk what sort of advancement you have achieved over the 40-year training.  The old monk said "I meditated, ate meals and swept the floor when I started.  40 years later, I meditate, eat meals and sweep the floor now".  "What have you achieved?"

Replied the old monk "40 years ago, when I meditated, I think about my meal; when I ate, I think about the work I need to do later; when I clean the floor, I think about meditation" "Now, when I meditate, I do meditate, when I eat, I just eat and when I clean the floor, I only clean the floor".

I remember this stupid story when seeing people looking at their phone when walking.  Not to be judgmental, why is it hard not to respond?  I still do not have a smartphone, perhaps that's why I do not understand.

Coo coo coo (4)

Dad settled in the shed by the farm, and the family is responsible for feeding the pigs, which belonged to the farming union.  The pigs were to be slaughtered at Chinese New Year.  When food was scarce, Dad's family could barely get enough to eat.  They discovered the barn shipped over to farm meant as pig food contained some starch, if washing the barns in water. 

The family managed to scraped enough carbohydrates to survive the famine.  But the pigs were not so well fed, they were so trim and lean that they jumped over the fence, so fit and powerful just like a greyhound, instead of a big fat beast that we normally think a pig looks like. 

Dad cannot stop giggling when telling me this story.   

Picture of Omi

 

Coo coo coo (3)

I am planning to keep a record of Dad's memories, his life stories, etc..  Some of those are sad, and depressing, some are the happy memories of his childhood or even adulthood.  All very good stories, worth keeping in the cyber space - they might be of interest of some.

Dad is the oldest son and he went to make a living in the Guangzhou - also because he went to high school there before China was liberated by communist.  He somehow got a "hukou", the right to stay in the city and worked for meager wages.  Because of his background, he cannot get a good job such as joining the communist party or become a government official.  Not to mentioned that he is under constant threat if there is any political movement.  I suppose that's the famine in early 60s, dad was 20 something and the villagers sent his 2 younger brothers (8 and 10 years old) on the train to Guangzhou.  When dad saw those 2, he cannot believe how emaciated they were.  In the rural country side, it seems like food is even harder to get.  He recalled that the youngest uncle not only very skinny but started to grow hair all over his body like monkey.  He took them in.  Later I suppose my aunt got married to a some guy who can provide food for her, and managed to arrange Dad to live in a barn next to a farm by the edge of city center.  Grand mum also came to live with Dad. 

The first paycheck Dad got, he could buy some meat but he decided to buy a air gun.  That is the start of this bird hunting years.  Before he went to the steel factory for work every morning, he went around the farm and forest to shoot some fowls, birds, anything that flew and his air gun can take down.  The catch were taken home for Grand mum to cook for the whole family.  

He constantly feels guilty about those birds he killed.  He talks about birds all the time when we were growing up, how pretty they are, how graceful they look, how the daddy/mummy bird feed their young ones. 

Flash boys, is it really flashy (3)?

There is also no concrete evidence such as any HFT company's financial report.  I suppose if the capital gain via stock trading is taxable, it should be available if you look hard enough.  I know the HFT programmer's market price, it is definitely a tiny percentage of Brad Katsuyama's 2 million annual salary RBC was paying him.  I only wish Lewis can explain why Brad should be compensated this way. 

Flash Boys, is it really flashy? (2)

The book is not very clear about how HFT makes money (or rig the market).  One of the theories is Front Running.  The HFT trader finds out that you are going to buy 1000 shares, he buys those and sells them back to you in a higher price to be profited by the margin.  However, there is no way to know the size of an order.  You see trade data published by exchanges, but not the intention of buying/selling stocks and their quantities. 

Market makers stick their neck out to tell the world the bid and ask prices for a certain quantity of a stock, not the average traders trading on exchanges.  How HFT profits from front running? 

In addition, market price is a moving thing.  The price feed you see is always the price of a trade that was done in the past, no one can accurately tells you a real-time price now.  Regulators are trying their best to come up with some solution such as the NMS,  national market system, order protection rule and the SIP- security information processor - which takes the price quotes submitted by exchanges and comes up with the closest to real-time price of a security.  This is not perfect but perhaps it is the best we can do to make sure an investor is not ripped off by his/her brokers. Because the bid/ask price should have the SIP prices as the benchmark. 

NMS is working to keep the market functioning reasonably smooth.  For example, after the flash crash in 2010, SEC and CFTC are contemplating the possibility of shutting down trading for 10 minutes to restore sanity.  This might effectively stop HFT trading algorithm to dump shares without considering the price when volatility is high. 

Flash Boys, is it really flashy? (1)

Michael Lewis is obviously a good writer, his book sells!  He was invited to give a talk on TV, his work has turned into a movie "The big short".  I bought the book "Flash Boys, Not so Fast" by Peter Kovac by accident, instead of Lewis' work "Flash Boy".  It was quite an eye opener.

Lewis is very good story teller, the whole book is condemning HFT traders (or firms), explaining they are rigging the market.  However, there is no concrete evidence or data proving his theory.  Every single trade done in any exchange should be logged.  I do not think it is impossible to find the data to show how much damage HFT has done.  But there is no such supporting document in his book.  All we know is he said "the profit HFT made over the years could be billions".  But from where?  How he reached this conclusion? 

People questioned regulators are part of the game hence they have more incentive to cover up with HFT.  I tend to disagree with this.  If regulators want to make money, they should ban HFT and keep the limited licenses for brokers and market makers (also insists all orders and matching should be done by human beings, human beings who they can have deal with, rather than servers).  That can maximize their profit greatly.  However, the result will be US stock markets lose liquidity and transparency.  No investments would want to get in, and slow down of the capital market movement.  The result no one wants to see.  Although I think regulators and governments are short sighted and greedy crooks, I suppose building a better, faster, more efficient market actually benefit themselves in a way that outweighs short-term gain.  For example, the recognition, sense of achievement and praise/envies from other capital market practitioners. 

In addition to the regulator side, I think exchanges, brokers and market makers are also have good incentive to comply.  It gets harder and harder to cheat since every single trade is logged and price information is so readily available for everyone.  There is no big profit to gain by cheating, why take the risk of losing your license. 

Coo coo coo (2)

Dad seems to like birds a lot, he has special communication with them that no one understands.  When my cousins visited Taipei years ago, Dad came up with a new game for the 2 young kids to play after we exhausted all possible activities.  He shut the windows and doors, let out the myna we have kept in a cage, gave each kid a water gun, the hunting began.  The bird was so frightened and flying around the living room at the same time shouting some language.  Kids were so entertained.

Dad once kept the pigeon in the shoe cupboard and when we got home, he is like, oh listen, I hear something.  And proudly opened the cupboard door to present the pigeon "why is the pigeon here!!" he exclaimed.  Of course, every one knew he put it the box.  I think that happened when I was in my uni age.  That's really beyond me why Dad thinks it is funny.  My mum went nuts, I think that's the last straw on the camel, Dad was kicked out.

Just recently years, Dad reduced the number of pigeons he keeps due to the neighbor pressure.  But the pigeon who has followed him for nearly 15 years is still around.  She recently become single and appears very bored.  She walks around Dad's living room, following Dad around the apartment.  Dad thinks she is depressed so decided to take her out for a ride.  He put her in a box with a screen, and drove around to make sure she has some exposure to the outside world.  Most of my friends smack their hands on the forehead when hearing this. 

We have another picture!