July 14, 2008
The information content of trading floor photos
I've been noticing lately that whenever the New York Times runs a market-related story, they always include a photo of traders at the relevant exchange looking troubled and/or frantic. (Today's example is here.) This raises a number of questions:
- Given that all these photos are basically the same, do they actually go to the floor and take new ones each time or just post from a collection of stock photos?
- And isn't it likely that floor traders always look like this, not just when something newsworthy happens?
- What will the journalists do when the exchange floor closes entirely as a result of the shift towards electronic trading? (Probably just keep using the stock photos.)
- If only there were a more informative graphic they could fill the space with... if there were an "index" reflecting recent market movement that could be plotted as a function of time. Someone should invent something like that.
- Instead of complaining about lame photos in the NYT, shouldn't I just subscribe to the Wall Street Journal like everyone else in the industry?
- Or has Rupert Murdoch already turned it into the financial equivalent of the New York Post or Fox News?
June 22, 2008
Thought I was done with exams
Tomorrow I take the Series 7 exam, which is the standardized licensing exam for stockbrokers. Even though I work in a proprietary trading group, and don't go anywhere near any brokering-related activities, this is apparently one of the certifications I need if I'm going to be involved with the details of trading.
I think the last time I studied for a standardized test was when I was preparing for the physics GRE; needless to say this is a very different experience. I'm used to tests where I reason out the answers from a few basic rules, but the Series 7 mainly tests knowledge of the regulations concerning brokerage firms, so it's almost all memorization and nothing more. There's some logic to the general boundaries of these regulations but almost all of the specifics are arbitrary: there's no way to derive the Regulation T margin requirement from first principles.
So I'll get a question like, "How many additional shares may an underwriter sell under the green shoe option?", and unless I can remember the one line in the phone-book-sized study guide that referred to this, and not get the percentage mixed up with the countless other similar numbers in other regulations, I'll be stuck. And it doesn't help that "green shoe option" only makes me think of this:
If only securities laws were as easy to remember as Mario trivia...
(Actually, there's a mnemonic here: the Kuribo's shoe only appeared in world 5-3 of Super Mario Bros. 3, and 5x3 is 15, exactly the percentage allowed in the green shoe option. Having discovered this, I'm unlikely to miss a similar question on the actual exam. This suggests that if I can just create a mapping between my Mario knowledge and the Series 7 material, I'll do very well (and then I can write the Super Mario Guide to the Series 7 Exam). However, I expect to pass the test as is and higher scores are frowned upon in my group, as they indicate too much time spent studying rather than doing something more productive.)