QuoteOriginally posted by: ArthurDentSome more thoughts -->An analogy that may aid thinking:IB ................................. = casinospread/fee ................... = house cut/edgeequity/FX/FI ................. = blackjack/roulette/crapsstructured product ....... = a new slot machinequant ........................... = game designerIB trader ...................... = dealer at tableother traders ............... = gamblersinvestors, funds ........... = gamblersThe spread is wide in some games, and narrow in others. A sharp gambler might count cards and win, but most lose.The house constantly introduces new games to bring in more players --> That is their primary model introduce new games, bring in more gamblers.Same with IBs: introduce newer, glamorous products to trade ... that's what quants do - create new ways and means to increase levels of gambling/trading ...---On Spreads and arbitrages --FX = tenths or hundredths of a cent.Equities = a few cents.Fixed income = a few basis points.Structured products has ??The trend is increasing liquidity/age of product/ awareness of how to model/ etc. reduces the spreads. Hence the need to introduce "innovative new products".The next generation of financial "innovation" will be even more illiquid to begin with,even less understood by many (most?) participants, and,considered even more of a rip-off / high profit -> depends on who you ask!Look historically for farmers' reactions to commodity futures -- how they thought the traders in Chicago were ripping them off by setting bogus prices.This happens even today - in USA, India, China, you hear people screaming how the foreign traders are "setting" high oil prices.It is easier (and more populist) to ascribe to malice what should be ascribed to ignorance.---On winners and losers --A free market gives its participants what they want... even if they don't explicitly state that they want it... a lot of lenders wanted to desperately write a lot of loans (who knows why? maybe to meet quarterly earnings and growth targets?) .... a lot of homeless people wanted to live in million dollar McMansions....A lot of fund managers and asset managers wanted to invest in more risky products to increase their returns....A lot of investors wanted their fund managers to invest in higher risk/reward vehicles....A government of a large country wanted to blame someone/anyone/anything for a 3-trillion dollar war gone wrong....Guess what? The whole society got its wishes fulfilled in the subprime drama.Cool.

AD, that's a lot of f-word...

QuoteOriginally posted by: ArthurDentQuoteOriginally posted by: YuraI am amazed at how newbies here say "I am interested in equities, but I would consider FI too" like FI is some sort of a plague. What do you know about FI to say that you like equities better?!! I might be a little drunk right now and a little bit judgemental, but I still want to say to all of you, newbies, that when you say stuff like that, you really give away how shallow you are!!!! You want to get quantitative -- get into FIXED INCOME!!!! newbies say the prefer equities to Fixed income, commodities, currency because they've traded stock before, maybe in their 401k, but it has been beaten into their head by th epopular press that ficc is a dangerous beast and stock picking is the goal of wall st.reason #2: newbies don't know that bond and fx markets are bigger than equities. For a newbie, a bond is something his grandma bought.reason #3: at a cocktail party, what is a newbie rather more likely to have heard: foreign currencies, treasury debt, pork bellies, or GOOG? QuoteOriginally posted by: YuraAD, that's a lot of f-word... It has been sanitized. Tell me, do you also buy "cleaned" DVDs from Walmart?