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For full disclosure I am a founder of the company but many of the mistakes in math / modeling made in the NYT Tool are corrected at SmartAsset. One example is the tax consequence of ownership - which because of the standard deduction is overestimated for lower value homes (<$250,000).

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I just wanted to reaffirm what you're saying about the deduction on lower value homes. When we bought, people were telling us "you get to deduct the interest, it will be a huge impact!"

Well, these days thankfully, interest rates are relatively low. We paid a little under $200K for our home, and combined with the married standard deduction, the interest at first barely even pushed us into the itemize category. By next year, it won't suffice to even do that and we'll be back to the standard deduction.

The people who were telling us about how great the deduction is were people who all had the means to purchase much more expensive homes, and many of them bought in the past when interest rates were higher and the standard deduction lower. So it was true for them, and continues to be true for certain segments, but is not universally true.

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It varies widely based on where you live, too. For example, in NYC state/local taxes are high (these are deductible on your federal return) so anyone with a reasonably high income is already beating the standard deduction, making the interest deduction a very large advantage.

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I was only able to itemize for the first 5 years. After that, standard deduction ever since.

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Practicality aside, this would be the end of "progress". No new discovery, no new exploration, no deeper understanding of how we got here, where we are or why we are here. The problem with 'bliss on tap' is assumption that there would be no problems left to solve... the mortgaging of our future potential for our present satisfaction.

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Right, but what is the value of "progress" beyond the satisfaction it gives us?

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The OP is stating a truism that I agree with (true with all truisms). Google is your default search engine for any query where (you believe) Google offers the highest probability of delivering the intended content/ answer.

So any product, in any vertical, that can respond to a query with greater utility than google - and condition it's userbase that that is the case - has the potential to supplant google for those queries. Great example is the drift of search traffic for flight travel on google to direct traffic to sites like kayak and expedia. (another example is the shift of people search).

The challenge of competing against kayak-like companies that offer great products in specific verticals, will only grow. So if you believe search traffic will not naturally decline over time you are effectively arguing that google will be able to outperform the pace at which new products will be built that have kayak (flight search) / linkedin (people search) / coverhound (auto insurance search) - like potential.

And I think Eric Schmidt would agree. http://www.youtube.com/watch?v=XeIIpLqsOe4

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Travel search is one vertical in which Google has a serious interest. In 2011, they acquired ITA Software,† which developed QPX, a widely used, Lisp-based airfare search and pricing system. They have since rolled out Google Flights, which competes rather directly with Kayak and Expedia.

http://en.wikipedia.org/wiki/ITA_Software

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Agreed. I think that is the point the OP is making. As sites like Kayak grow in popularity, the usefulness of a discovery tool (search), diminishes.

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Those are profits in absolute terms. I suspect the author is arguing that relative to the size of the company, wage ratios are important. I would argue he is mistaking consequence for cause. Companies with egalitarian wage ratios can afford (read 'need') equitable wage ratios precisely because of the nature of their business (think software firms with barriers to entry, high margins that are dense with human capital vs a company) vs (a chemicals company, that produces a fungible good and can only compete on price - business is characterized by low margins and a greater proportion of unskilled labor - ie more wage equality would put you out of business)

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Author states that Silicon Valley corporate structures are more egalitarian when measured against traditional firms. Author attributes this to a more progressive, 'stakeholder' culture in SV.

Question: human capital is disproportionately more important to building value in the tech sector than it is in the broader economy (think mines, manufacturing etc). Isn't it more likely that a more equitable equity split is a pre-requisite for success in SV as opposed to being a consequence of it?

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This a good point. Investment banks also generally have a very high percentage of employee ownership (50%+) because so much of their value is their employee base.

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50%? That's way better than any SV firm

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It's not quite apples to apples. Bankers get paid way more (so they sell off less of their stock) and they are also often paid in RSUs or other forms of stock comp that can't be sold for several years. Tech workers are generally paid with stock that vests each year, and if they're smart they'll sell that down immediately (as they still generally have lots of future stock they're still exposed on, from a portfolio perspective.)

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sell that down? What does that mean?

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I believe the stakeholder culture is because tech companies often have the potential for rapid growth. For example, a barbershop's capital is mostly human, but there isn't a big chance it will IPO. This means the best barbers don't have much incentive to choose their barbershop based on equity in the compensation package.

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Please help me understand this better?

With a deep understanding of markets and trading I fail to see why you see 'luck' as an explanatory variable is inversely correlated with the frequency of your trades (notwithstanding the effect of trading expenses)?

From what I have gleaned the following seems to be true: 1. Your algorithms worked (made money) 2. Then your algorithms did not work, but you could not figure out why

If you do not know why something stopped working it seems unlikely that you had a full understanding of why it was working in the first place. Without understanding the nature of the predictive value of the algorithm while it was working, its success seems to be good fortune.

Your algorithm could have shown a systematic correlation to any number of factors that could have created strong performance over several months. Performance would then be attributed to accidentally 'timing' a favorable market.

I know you feel differently, what am I missing?

And either way - kudos on the $500k.

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Very important to understand that making $500k speculatively is not evidence of an 'edge', nor is trading frequency evidence of the absence of luck. From March 2009 through much of 2010, the market was strongly bullish - if his algorithm showed a positive market bias then his returns would primarily be a function of timing (read luck: and there are a million variants on the nature of the bias that could be unwittingly responsible for his returns, despite the frequency of trades).

We cannot even tell if $500k is a good risk adjusted return - we have no information on volatility, nature of the exposure or most importantly how much money he started with?

Not exactly shocked Jim Simons didn't return his email. But completely shocking that he walked away from a successful automated trading strategy... the only thing rarer than a free lunch is a man willing to walk away from one. suspect.

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1. Author graphed his daily returns which should give you a handle on his volatility. He also stated his max drawdown was $2k.

2. Author has stated elsewhere than he began with $10k in seed capital.

3. The "bullish" market you cite increased only about %70 in that timeframe while the author's returns were multiples of that number.

4. Author walked away from a _previously successful_ strategy that no longer produced profits. His montlhy returns went to nearly zero so he stopped.

Edited to fix numbers.

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1. I cannot get even a remote sense for the nature of his risk exposure from looking at his daily returns. 2. ok. 3. The point here is that a systematic bias in his algorithm will expose his trading strategy to the good graces of market fortune (luck) regardless of whether he trades a million, billion or once a day. The source of the bias is irrelevant. 4. did not see where he said that but that very much confirms 'timing' / which in this case I interpret as luck as being at least a contributing factor.

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Ian, thanks for the feedback. We do a lot of user testing and the problems you are experiencing are new to us. We pay $30 for a user test session, can you email me at info at smartasset dot com, so we can get something lined up. Thank you.

On the change in your income. When you buy a property there is an opportunity cost associated with the cash that you use to purchase the property (down payment + closing costs). This money would have accrued interest income had you continued to rent, hence the larger value for income in the rent scenario.

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We should have thought of this. We will get this incorporated, until then: without funding you simply need to multiply the exit value by your starting % ownership less dilution from employees (good approximation).

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signed up and eagerly anticipating release. would drive enormous efficiencies in our business.

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