Computers and Economics BY ARJUN TANGUTURI. Economics ec·o·nom·ics ˌ ek ə ˈ nämiks, ˌ ēk ə ˈ nämiks/ noun noun: economics ; plural noun: economics 1.

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Presentation transcript:

Computers and Economics BY ARJUN TANGUTURI

Economics ec·o·nom·ics ˌ ek ə ˈ nämiks, ˌ ēk ə ˈ nämiks/ noun noun: economics ; plural noun: economics 1. the branch of knowledge concerned with the production, consumption, and transfer of wealth.

Stock Market-History  The exchange of securities, and derivatives  In stock exchange, or OTC (over the counter)  Merchants of Venice- Exchanged debts  Barter System – Commodities as an intermediate  High Frequency Trading

Quick Stock Market Vocabulary  Keywords: Long, preferred stock, common stock, short sell, derivatives, options, forward contract, margin trading, P/E, trading strategies

Problems for Society  Nanosecond-rate volatility – Price Discovery  HFT might make market less informative  Less incentive for human information retrieval  Short term trading vs long term value  Too much investment in financial sector

Solutions to Current Problems  Regulation of trades made  Reduce # of trades made by systems  Perhaps enforce a tax on transactions  Regulate derivatives market

Future Problems  Several Tech companies  Possible market collapse  P/E ratios incredibly high  Valuations in general are high

Important People- Warren Buffett  Business magnate, and investor  Doesn’t invest in technology  High dividend paying stocks  Long term rather than short term  Diversify  Invest in fluctuations

Sources  buffett-made-berkshire-hathaway-worldbeater.asp   hft-joe-stiglitz-edition/   frequency-trading-ruined-the-stock-market-for-the-rest-of-us.aspx