buyer and seller i mean
Aha, so you don't make or add value to anything; you don't even buy or sell complex betting options based on the work of people who actually do something; you act as a middle man between the people who bet on the people who actually do useful things.
That sounds like it must be a very important job for the future prosperity of the planet - at least HK$50K per month then (being 100 times the salary of the poor sod digging coal out of the ground in China, or whatever it is you are being the gamblers' middleman for).
woah,Originally Posted by PDLM:
settle dude. there are a lot of jobs in society that are more worthy of such criticism. we come from a socitey that makes work for itself where it doesn't need to.
as a society a lot of people pay for convenience and accessibilty, and there must be someone to provide that.
if u really want to equate salaries with effort, skill and risk, then pls explain y do some people in IT earn more that a specialist surgeon? y does an investment banker earn such rediculous money for gambling with someone elses. he's not risking his life or limbs?
take a chill pill.
Last edited by dropdedfwed; 22-12-2005 at 09:22 PM.
U obviously have no clue about a broker's job scope. Neither are u clear abt traders' i suppose?Originally Posted by PDLM:
Traders are not simply "people who bet on the people who actually do useful things." so wat exactly do u deem "useful" mr PDLM?
If u minimise risk for the company (by means of hedging), are u useful? If u make recognise an opportunity in the market & strike accordingly making millions for the company, are u considered useful? I believe ur definition of "useful" is alittle too narrow for the world today.
Tangibles are no longer the only determinants of a person's useful-ness. Likewise, the value-added of a person cannot be calculated based only upon the amount of physical/menial labour a person puts in.
A coal miner can be mining all his life, probably(i'm not sure abt the value of coal..so i'm just giving an example here) mining a million dollars worth of coal for company ABC. If an exploration team discovers a huge amount of unmined coal & it goes out in the news, that 1M of coal might end up being worth peanuts before u can say W-O-W.
It's up to the traders to exercise their rights as a legitimate executer to prevent such losses from adverse price movements & to protect the interest (& rice bowl) of everyone along the entire value chain!
Not only do they have to be well informed on the fundamentals, they have to be gd on the techincals. Sure, they have analysts to help. But they bear the responsibilities of millions of dollars, gets the nagging from compliance and the risk management departments & i'm so damn sure not everyone can take that kinda pressure and stress.
Then what value do i add as a broker u ask?
Brokers are the key to an almost perfect knowledge market. We provide information of what's in the market. Not only do we inform, we protect our customer's interest & we watch out on their behalf, whatever that's valuable, with their positions in mind.
Cold & non-interactive programes such as ICE & Clearport might have replaced part of the OTC brokers but there is something they are unable to replace. The human touch.
Progs cant be as flexible as human beings, they cant tell u all the private and confidential deals that happened in the market which are especially valuable, they cant prompt u when a put/call's ITM. They cant discuss with u why their values are such let alone advise u on the possible buyers and sellers for u to know who you're dealing with.
Let's say if u have an interest in selling and u do not wanna be seen in the market. It's time consuming for u to approach every single tradable entity to see if there's mutual interest & u arent that discreet afterall then.
A good broker can tell u who's in the market, on which side, and narrow, instantly, those who can be ur counter. Time-saving, sufficiently discreet & u dun even have to lift a finger to do that.
Still unclear? Then u have to talk to me to be convinced
I have a reasonable understanding of derivatives markets. Fundamentally all derivatives markets are at best zero sum games. In simple terms, one party is betting against another party on the future value of a commodity. If one side wins the other side loses (and since there is "grit in the mill" with various middlemen it is actually a negative sum game - in the long run on average the two trading parties will lose money by trading derivatives).
I have to admit that I am struggling to reconcile two of your statements:
"It's up to the traders to exercise their rights as a legitimate executer to prevent such losses from adverse price movements "
"Brokers are the key to an almost perfect knowledge market."
It seems to me that the first statement is saying that the way you cause somebody to make money is exactly by there NOT being perfect market knowledge - in other words you buy an option to sell coal at a higher price in future because you know (but the other party doesn't) that the price will drop because of this newly found deposit. You profit precisely BECAUSE there is imperfect market knowledge. and the other party suffers by having to buy coal at higher than prevailing market price.
Having said that I would be quite surprised if either of the parties you act as a broker between either produced or consumed (or even transported) coal - what you are doing, I suspect, is facilitating gambling by people whose business is simply gambling, and their game of choice at the moment happens to be coal.
Adding the brokers adds a level of obfuscation and, therefore, lack of clarity and makes the market even more imperfect. By far the most perfect market is when all the producers of coal can talk directly to all the burners of coal without all these people muddying the waters on the way.
Now I realise that that isn't possible in many cases for purely practical reasons, but what I do is provide cheap long distance and international phone calls, which many studies have shown is by far the most effective way for smaller producers of commodities to bypass all the middlemen who play negative-sum games and subtract value from the business and get the best price for their produce directly from the people who actually want to buy it.
Originally Posted by PDLM:
just a neutral comment,
it is not entirely correct.
derivative market is not exactly a zero sum game.
if u insist it is, then u have to imply that the stock market is a zero sum game. which, well, its up to individual to determine if it is.
lets give a fair example. an airline, if they pay money to buy option on kerosene, is that gambling? or are they merely hedging against the potential of kerosene price going up. the trader that sell option (or in other words, volatility) to the airlines, wld be using the oil futures or jet fuel futures (if there is such thing) to hedge and minimize their liabilities in case oil price shoots up.
no doubt, one can insist that its a zero sum game, but if you are a holder of a future contract and oil price went up, u made money in excess of what u paid for the oil. the seller lost money, but probably the seller has an actual oil position to let go and if he let go at a higher price, he is covered. so the overall economical impact becomes the actual value of oil transacted at fair market value. 8-)
brokers are facilitator of the hedging market. and the underlying are enormous.. equity, interest rates, fx, commodities, etc.etc... and of cos the derivatives of these underlying. a good broker is able to secure the most up to date prices for the clients that need to hedge in the market positions that he doesn't want.
for a broker of coal, there would definitely be seller that actually produces coal. and next u have the trading intermediateries.. but if u dun have such traders and intermediateries, the market for coal wld be entirely illiquid and producers/consumers will ultimately lose out in the equation.
as a trader, there is always the necessity to have different avenues to hedge your position and make sure the entity u represents does not lose money.
Err .... its no longer about visas is it?