Trading With Robots
I highly recommend you listen to this podcast from Planet Money on the story of Thomas Peterffy, considered one of the fathers of high-speed trading.
Peterffy is a genius. He was among the first to use computers to determine the value of stocks, and subsequently execute trades without the need of a human.
It’s hard to grasp now, when 88% of all U.S. adults own a cell phone and 46% of all American adults use smartphones, but Peterffy was way ahead of his time. He actually created a robot to execute trades after learning that regulation required all trades by typed on a keyboard.
His innovation created real social value. Automating trading reduced the cost, saving people money on commissions. It’s reminiscent of what we’re trying to do at Betterment with automation and ease of use.
It’s a nostalgic story too, about an entrepreneurial immigrant from Hungary, finding fame and fortune in the US.
I found it interesting to learn that even Peterffy thinks that we’ve reached a point of absurdity in high speed trading. He believes that the ongoing “arms race” to shave milliseconds off of trades offers no social value and makes the market less stable.
It’s a bit like the technology conundrum we’ve discussed before.
Here’s Why Free Trades Might Not Be A Good Deal After All
D-I-Y? How about D-I-No. Here’s why those free trades might not be such a good deal after all.
Jon Stein on “How I Built This:” Reflecting On Our Story
Jon Stein joins NPR’s Guy Raz for an episode of “How I Built This” to look back at how Betterment started, what mistakes were made, and how they turned into learnings for the robo-advisor we are today.
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