

Funds Run by Robots Now Account for $400B - sergeant3
http://www.bloomberg.com/news/articles/2015-03-16/smart-beta-etfs-attract-billions-with-critics-blaming-dumb-money

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fiatmoney
"Run by robots" in roughly the sense that McDonald's is "run by minimum wage
workers".

They're not talking algorithmic trading or any particularly sophisticated
investment methodology (in a lot of cases their methodology is in their
prospectus); it's just a slightly different programmatic weighting scheme.
This has existed for a long time.

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fitzwatermellow
Agreed. The math for portfolio weighting maximization can be implemented in an
Excel Solver. The bread and butter lies in identifying which specific market
sectors to target.

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fitzwatermellow
Apologies in advance for hijacking this thread with a solicitation, but I'm
currently seeking mentorship in this exact area. If anyone has experience in
starting an ETF, getting it funded, listed with exchanges and distributing it
to clients I really need to pick your noggin. Email in my profile. Thanks!

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foobarqux
You'll need a lawyer specialized in the field. Check the SEC filings for ETFs
similar to the one you want to start, they have the law firm listed.

It costs a lot of money and is a slow process, usually performed by
professionals with many years of experience in finance. It's almost certainly
a bad idea for you to pursue the idea.

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mschuster91
What would happen if someone were to resolve the whole networks of debts,
funds and obligations between all market entities? With such enormous amounts
of cash (Apple has enough to buy entire countries, and these funds have more
than enough money to buy out Greece) everything seems possible...

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bequanna
I'm not sure I follow.

What exactly do you mean by: '...resolve the whole networks of debts, funds
and obligations between all market entities?'

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mschuster91
Let's take a simple network of three parties A, B and C. A owes B 100$, who in
turn owes C 100$, who in turn owes A 100$.

In theory, the debts cancel out each other... and the same can be done e.g.
with debts of states. What I don't get is why we prefer to pay debts and
especially interests when we could just take the debts and cancel them out
where possible.

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phillc73
> What I don't get is why we prefer to pay debts and especially interests when
> we could just take the debts and cancel them out where possible.

Working capital.

Perhaps you borrowed $100,000 and are obliged to pay that back at 10%
interest. If you happen to have $100,000 in your pocket, perhaps you're better
off using that $100,000 to generate additional revenue, which would hopefully
show a better return that 10%, thus effectively covering the 10% interest on
the loan and a small profit margin.

If you used the $100k cash to pay off the $100k loan you'd have no working
capital, which would likely stymy cashflow and hamper further growth.

That's the theory anyway. You need money to make money and the one way to
obtain money is borrowing.

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alexkus
If you cancelled out the cyclical/reciprocal debts then you'd still have the
same amount of working capital as you'd pay back $X but also get $X back as a
creditor.

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sebastianconcpt
It seems that a group of humans have discovered how to automate vampirism.

