In the grain markets, if you don't know who all the players are and what they're doing, you have no business playing. If you are gambling, the grains are just as good of place to lose your money as anything else. Even the best gamblers in the grains are, at minimum playing the pass line, and the house still has that hard to overcome 1.414% edge over them. Is the identity of the players and what they are doing as important in other markets or does the total size of those markets dwarf the individual or commercial? Can an individual move a financial market, for an appreciable time, anymore? In the grain markets the commercial interests expect the speculators to do all the heavy lifting, then skim off the creme and leave the whey to the speculators. Need to check the market in whey, I guarantee there is one.





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2 Comments so far

  1. John ( other John ) on August 18, 2014 5:51 pm

    The ABCs, ADM, Bungee, Cargill, have you at every horizontal. If they don’t own the wheat on the cob, they financed the farmer, if they don’t own the grain on a bulk, they leased the carrier, or hold equity in the terminal, for which they got the license… and who can keep trading on margin, against those with deliverables?

    It’s not only one layer of house vig, but a stack they can shuffle inside the shoe.

    One side effect, of producers escaping a amount of market oversight, is that the same rules can apply to unexpected produce. I trashed my position, and pretty much myself, attempting to make a market in paper deliverables. The kind processed into magazines, and valued per page by the sort of person reading the rest of the pages bound together. Because… that’s a story. Or not. It’s moot, no point waving my hands at a ten year old PDF that saw a distribution of a few souls, a little before cofounder passed suddenly and all bets were off, rather spectacularly, but I once called out Google as a entity which can be argued is a systematic internalizer of trading for spot advertising markets, and one with many more angles to front run than a flow desk has. That was the year, I think, they wrote off a few hundred million for attempting to get the print advertising world to play ball, with online trading. I pretty much spilled the beans on another post, at least what we thought they missed. But talking to friends still investing īn companies that trade online (but not print) ads, there’s still plenty of interest and angles, and new companies popping up, but none, quite as Google has, wit the ability to end to end control the production, the quote, and the delivery, and the settlement. Google are the ABC of advertising, at least online advertising.

    Then anachronism of HFT arguing they are liquidity providers beatifically ignores Vic’s food chain pyramid. Equally, as you say, Jeff, it’s speculators providing for the vig, in grains. Google, however, I sometimes see a beatific Ponzi, for as long as people will write words that appear on the net, and advertisers will seek a path to before the same eyeballs. Reading hackernews, a startup discussion forum, just the other day, a comment from someone involved in producing a website, I think as a ad trap honeypot exercise, if one is uncharitable, no details were given or discoverable, save for a run rate of $3MM or so, that was estopped momentarily, and arbitrarily with a single email, that they were no longer welcome with Google’s program. One assumes, were there a real market, this would be but a momentary discomfort, but it did not sound that way…

  2. Stony on August 21, 2014 5:40 pm

    > 1.414% edge

    √2? Or that’s just a coincidence?


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