My views have not changed directionally, but I do feel happier with them than I did at the time for a couple of reasons:
I thought and continue to think that the best argument is some version of āclever arguments aside, from a layperson perspective what youāre doing looks awfully similar to what caused the GFC, and the GFC was a huge disaster which society has not learned the lessons fromā.
If you talk to people inside finance, they will usually reject the second claim and say a huge amount has changed since the GFC.
In particular, regulatory pressure shifted many āinterestingā risks from too-big-to-fail banks to hedge funds and firms like Jane Street (JS), where I used to work. JS arguably has much better incentives to keep its house in order than the big banks did, and it shouldnāt have any call on public funds if it fails to do so.
But of course there was a reasonable question of whether JS and its ilk would actually succeed in doing this. And if they failed, would society pick up the tab somehow. As more time passes, the GFC looks more like the outlier event here.
On the positive side of the ledger, most of my work at JS was improving the pricing of equity ETFs. When I started there I felt like almost nobody I spoke to outside JS knew what an ETF was and when I explained it they couldnāt really see the point. Now I feel like virtually all UK personal financial advice I see will mention ETFs as a solid option; a cheap and simple way to invest in a diversified fashion. Iām fine with having been a very small part of what made that happen.
With my more recent work it seems much too soon to say anything definitive about social impact, so I always try to acknowledge some chance that Iāll feel bad when I look back on this.
ETFs do sound like a big win. I suppose someone could look at them as āfinance solving a problem that finance createdā (if the āproblemā is e.g. expensive mutual funds). But even the mutual funds may be better than the āstate of natureā (people buying individual stocks based on personal preference?). And expensive funds being outpaced by cheaper, better products sounds like finance working the way any competitive market should.
My views have not changed directionally, but I do feel happier with them than I did at the time for a couple of reasons:
I thought and continue to think that the best argument is some version of āclever arguments aside, from a layperson perspective what youāre doing looks awfully similar to what caused the GFC, and the GFC was a huge disaster which society has not learned the lessons fromā.
If you talk to people inside finance, they will usually reject the second claim and say a huge amount has changed since the GFC.
In particular, regulatory pressure shifted many āinterestingā risks from too-big-to-fail banks to hedge funds and firms like Jane Street (JS), where I used to work. JS arguably has much better incentives to keep its house in order than the big banks did, and it shouldnāt have any call on public funds if it fails to do so.
But of course there was a reasonable question of whether JS and its ilk would actually succeed in doing this. And if they failed, would society pick up the tab somehow. As more time passes, the GFC looks more like the outlier event here.
On the positive side of the ledger, most of my work at JS was improving the pricing of equity ETFs. When I started there I felt like almost nobody I spoke to outside JS knew what an ETF was and when I explained it they couldnāt really see the point. Now I feel like virtually all UK personal financial advice I see will mention ETFs as a solid option; a cheap and simple way to invest in a diversified fashion. Iām fine with having been a very small part of what made that happen.
With my more recent work it seems much too soon to say anything definitive about social impact, so I always try to acknowledge some chance that Iāll feel bad when I look back on this.
Thanks!
ETFs do sound like a big win. I suppose someone could look at them as āfinance solving a problem that finance createdā (if the āproblemā is e.g. expensive mutual funds). But even the mutual funds may be better than the āstate of natureā (people buying individual stocks based on personal preference?). And expensive funds being outpaced by cheaper, better products sounds like finance working the way any competitive market should.