Why Silicon Valley Funds Instagrams, Not Hyperloops

[tw]

Originally Posted by Lamplighter

I stopped reading the link, and LOL'ed when I read his complaint about hedge funds making huge profits based microsecond-trading of minute (tiny) stock price differences (e.g., Chicago vs New York exchanges).

Many trading firms spent big bucks on Manhattan real estate to get their computers located as close as possible to stock exchange computers. To shave microseconds data transfers via fiber optics. Because these computer trading ventures estimated something like $10,000 per minute for every millisecond cut from that communication time (numbers are only examples and probably wrong since I forget the exact figures).

As a result, the NYSE made a rule that all such traders must have at least so many feet of fiber between their computers and stock exchange computers so that all fiber optic communications take at least a same number of microseconds.

How does this make America wealthier, more innovative, or stronger? It doesn't. Just another example of companies more interested in profits rather than the product or productivity.

Another example is IPOs. Powers that be tell us how bad Facebook's IPO was because that stock dropped in value after the IPO release. Reality, that was good or best for the public - the common man. IPOs that increase in value on the market only enrich the bankers and other insiders at the expense of the public. Facebook did good by offering a stock at a price that would then stay lower for the next year. Because Facebook reaped more capital, the little investor got an opportunity to make a good investment (the common man is not permitted to invest in the IPO), and bankers, stock brokers, hedge funds, and other insiders did not reap 50% of the IPO's capital.

Twitter, on the other hand, sold for something like $26 and closed on the market for something like $50. IOW Twitter screwed us by enriching the finance people with almost half the capital investment - for doing nothing but being privileged insiders.

Both are examples of harm to America because the insiders believe profits - not the product - are more important.