A nice explanation for how high frequency trading makes its outsized gains:
Trading in Milliseconds: When Correlations Break Down
In the comments (most of the comments on his blog are intelligent) is another nice analogy:
It would be like someone standing between you and the cashier. Anytime they see that the price tag on your can of beans is higher than what the cash register expects (the stock boy hadn’t gotten that far with new price tags) they step in the middle and take the difference. They pay the cashier the 95cents the store is now charging and then take your 98cents. Except not just anyone can set themselves up to stand between customers and cashiers. It takes having many billions of dollars of capital to back up those brief moments of holding the product. So only people who are already extremely fat and happy can get into this no-lose skimming position.
This week I am promised feedback on two positions I have interviewed for, one back in Columbia, MD another in Vienna, VA. Both unclassified, I haven’t had the slightest nibble for an IC job. The push-back on the IC pay rates has been very aggressive: I am looking at a $30K per year cut on most of the positions I have looked at, yet on the outside I might only need to take additional $5-10K cut. I suspect I am not the only one deciding now is the perfect time to get out from the ‘golden handcuffs’ and the intelligence community is going to have a very substantial brain drain over the next year or so.
Because of the rather draconian pay cut I am looking at when (increasingly ‘if’) I get a job, we have been forced into some rather depressing calculations. We are increasingly unlikely to be able to continue to afford our two houses (that we never intended to have). About a week ago my beautiful wife came up with a rather astounding idea: rather than sell our house in Virginia, where we have invested so much sweat, tears and blood (mostly mine), not to mention lots and lots of money, lets sell our house in MD and she can make the insane 4 hours a day commute from Shenandoah. If I shift my job search to Virginia, she can drop me off and pick me up on her too-ing and fro-ing, so I don’t have to drive at all (except those odd days when she is sick or whatever). Since I married her because I want to be with her, sitting in a car 4 hours a day, as long as it is with her, is a reasonable alternative to selling the house we have worked so hard on.
Yesterday my beautiful genius came up with an even more intriquing alternative: sell our place here in MD and then rent a basement appt. That eliminates the commute and she insists she has seen places for well under a grand. I figure it costs us around $3,300 a month to keep this place (I estimate at least $50K in pre-tax dollars), so saving 2/3 of that is a substantial amount of money. If I take a pay cut _less_ than that amount, it is as if I got a net pay _increase_, thus making the search for unclass jobs so much easier to contemplate. Of course, I might get lucky now that I have shifted my job search to the NOVA area and find an IC job that pays a nice premium over unclass, but it won’t matter so much.
Of course, if I don’t get an offer from either company this week (one has me very hopful, the other not so much) then I would shift my focus to prepping our MD house for sale (not that it will really eat in to my job search efforts, last week was nearly a total zero based on the job ads) and hope we can have it sold by the end of summer. My wife would start that insane commute, but then I would have each day to work on the greenhouse construction, so there is still a reasonable chance we could be doing aquaponics by this fall. Lots of options by moving to Shen (and making that insane commute, why we haven’t considered it to this point), according to my budget spreadsheet, we could be ‘bleeding’ around $2K a month (as opposed to bleeding by about $6,500 a month at the moment; knocking that extra grand off would be by giving up such things as satellite TV) so it wouldn’t take much for me to make up that shortfall. Indeed, if our house sells for what Zillow thinks it is worth, we could net around $40K out of the deal which would easily pay for me to be out of a regular job for a couple of years, more than enough time to get something going.
My DNA efforts are surprisingly going quite well. I have a company that has expressed genuine interest in paying for the test chip fabrication (not a working prototype, but a test for the element most critical to overall success), though they want me to pony up for the testing. I got quotes from my fab guy and testing guy at the end of last week (just as I was suffering from some sort of virus that had me on the toilet 20+ times a day), now I have to put everything together and send it to the interested parties and see if they will indeed cut a check. I would be a lot more excited about this if I had a job, right now it is a bit difficult to get enthusiastic.