Tuesday, July 30, 2013

Clever Dicks

At the next opportunity, when you see a clever-looking high-frequency trader, coder, developer or other predatory HFT enabler in the local Wholefoods market foraging for his dinner after "work", shadow him  (and it will be a him for few of us girls have such unashamedly bad manners) to the fresh fruit & veg section. Observe him patiently, and wait.  When he appears to covet something, say a mango signed at @$1.50/piece, non-chalantly drift closer. When he reaches for his chosen piece of fruit, make your move, and seize the object of his affection before he can get his mitts on it, using  your sharp elbows if necessary to pry it from his hands. I can tell you in advance that this will not curry his favor. Nonetheless, open a dialogue and, without emotion (or an inkling of kindness or warmth) and without any indication as to your actual indifference to the item, ask whether he wanted that one. Accompanying a look of exasperation, he will likely say something like "Duh!" (a response testing the limits of his non-PERL, non-C++ interpersonal vocabulary). If so, empathize for a brief moment at how lovely indeed THAT mango is, and offer to sell it to him at $1.55 or whatever [higher] level you serendipitously desire. Should he hesitate, place it in your cart. Rinse. Repeat. If he turns his shopping chariot in the other direction to get away from a seeming nutcase like you, place the mango back on the display (preferably when he's not looking), but do not be deterred, and follow him. Do exactly the same again with whatever he chooses next, be it the acorn squash, and/or perhaps the very fine-looking white asparagus (the exact item is of course, of no importance so long as he seems interested in buying it). At around the third or fourth item, he will likely become rather distressed (as may the store manager). Stay calm and detached. For being a shy and somewhat introverted persona with a facility for math and a weakness for video games (and porn), he will likely have difficulty directly expressing his dislike of your behaviour and frustration with your  insouciance. Indeed you may have to spell out for him the root rhetorical question: "How does it feel, asshole?"

He may, by happenstance, be on the tail of HiFTers ability to communicate, and might muster up the courage to hypocritically ask you why you have done what you've done. An appropriate answer might be: "Because I can" (at least until the store manager calls the police or store regulations codify etiquette), with no need to expand to your fall-back explanation that you admire his choice of products...so much so that you wish to use this admiration and thus his intention to acquire them BEFORE he does, and that you see nothing philosophically, or morally wrong with that.  After all, you are both in the market (albeit a supermarket).

When you return to your own place of business (perhaps your Wine Shop), hopefully one that is rather isolated from competitors, you may - from time to time - have HiFTers who enter your place of business, who you might identify by their highly-corrected vision, overly-informal dress sense, laptop bag and baseball hat with their HFT firm's logo embroidered on the front. Greet them normally. They may head for the whites, and choose an over-oaked Chardonnay, a sad caricature of the white burgundy they are trying to imitate, and bring said bottle to the checkout behind which you reside. The price may be marked at say $30 (he buys on Parker's ratings because he doesn't know any better). Tell him, "I'm sorry the price has gone up and is now $40". I can tell you in advance (from experience) he will be none-too-enthused at this apparently swift change in the price, and, because it is the first occurrence and he's been caught unawares, will likely ask "why?", (rather than the more appropriate "WTF Dude!").  Serenely reply, in the most detached of tones, that in the nanoseconds before he reached for the bottle, you saw there was heightened interest in that vintage of that vineyard and in that same split-second, you used your privileged access to acquire the entire inventory of the same, but that you would be happy to part with a bottled (or two even) at the new quoted price. He may lift your offer, but will likely return to the shelves and pick out another bottle - one with greater inventory depth, perhaps, marked at $22/bt., and tentatively return to the checkout. Being charitable, and since you ARE in the business of selling wine and since you are not the Monty Python Cheese Shoppe (something outside the cultural reference of the avg HiFTer being twice its age), inform your customer that while the 750ml is now $30, he can partially fill his order by having a half-bottle of the same (the 375) @ $12. A second 375ml however, will set him back $18. Before he has the chance to inquire, just tell him you saw demand building and bought (most) of the inventory leaving a token amount for him, because, after all, you are there to sell wine. Feel free to point out that the nearest alternative is a 15-minute drive west.

Should we try, we might imagine, in Jimmy Stewart 'Ghosts of Xmas Past' style,  all manner of what life would be like were we to apply the principles of predatory HFT to seemingly mundane transactions. Booking.com attempts to stir the browser into action with apparent transparency into (real or feigned) supply and demand. Airlines routinely move quotes at signs of heightened interest on a route. Convention and rules develop to grease the life, add integrity and trust, in the interests of efficiency. Situations where people who have no natural interest, who forcibly intermediate to take advantage of privileged information access, flawed market structure, reveals warning signs of market failure. Until this is addressed, we can each, when the opportunity presents itself, demonstrate some instructive payback to the misfits who ignore or who are unable to understand the coarse, corrosive effects of their pursuits.





7 comments:

Anonymous said...

Well, in the first effort you'd need to collude with the shop owners, and have them simultaneously raise the price to $1.56 or higher once you've taken the mango he was eyeing. Otherwise you're trying to step in between him and a willing trading partner. Maybe you should do this to brokers that your fund is using.

Unknown said...

Not sure whether the purpose is to raise moral awareness of HiFTers or just take random revenge, but I think now understand why elected officials avoid supermarkets in most countries.

Anonymous said...

Brilliant. Very well written, and lays out the situation quite nicely.

Great work.

Erik said...

Agreed, brilliant indeed.

In the most basic of marketplaces, such as a flea market one could indeed hire a ringer to be summoned up when a prospective buyer eyes an item. No "natural interest" and forcible intermediation.

At any level these perversions of the market are egregious.

Anonymous said...

just great
one of your best

Deep Value Letter said...

I love this blog :)

My Wine Shoppe will have digitized price displays which adjust faster than human rod and cone cells can bleach. They are fiberoptically linked to a sophisticated eye tracker so at the first indication of potential interest prices automatically seep imperceptibly higher.

My system will add marvelously to market efficiency and the price that is paid will by definition be Correct. They will not notice that whatever they glance is transiently the most expensive thing in the store. And I will not notice that all my effort and expense on constructing said Shoppe could have been better spent on something of actual value to people.

Anyway, it's all rebottled Franzia.

Anonymous said...

The nerds keep you from doing God's Work?