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Podcast #231: Jonathan Hoenig on The Workings of Financial Markets

 Posted by on 25 July 2013 at 8:00 am  Podcasts
Jul 252013
 

On Wednesday’s episode of Philosophy in Action Radio, I interviewed hedge fund trader Jonathan Hoenig about “The Workings of Financial Markets.” The podcast of that episode is now available for streaming or downloading.

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Podcast: 24 July 2013

Financial markets are often vilified – and misunderstood. How do financial markets work? What impact do they have on the economy? Are they dangerous – or beneficial? What is the government’s current versus proper role in financial markets?

Jonathan Hoenig is portfolio manager at Capitalistpig Hedge Fund LLC. He appears regularly on Fox News.

Listen or Download:

Topics:

  • The nature and workings of financial markets
  • About hedge funds
  • The workings of trading
  • The purpose of the markets
  • The rationality of traders
  • The basis of prices
  • Traders as “speculators” and “greedy”
  • The risk of markets
  • Innovation in financial markets
  • The hours of markets
  • Labor theory of value and zero-sum trades
  • Government regulations on financial markets
  • The ban on advertising hedge funds
  • The negative effects of regulations
  • The ban on onion futures
  • The financial crisis
  • The proper role of the governments in financial markets
  • Government regulations on price
  • Limits on hedge fund investors
  • Bitcoin
  • “Greed Is Good: The Capitalist Pig Guide to Investing” and Ayn Rand

Links:

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 Podcast #231: Jonathan Hoenig on The Workings of Financial Markets  Add comments
  • John

    Great interview as usual. I thought the later part of the discussion that outlined the real world impacts that regulations have on financial markets was particularly powerful.

    One thing I was disappointed about though was that you guys never got to the question about financial markets being “zero sum”. You mentioned it but it never got answered.

    In a conventional trade where I give you something of value and you give me something of value it is easy to see it as a win-win. We are both getting something more valuable to us than the thing we traded. There are no losers.

    When it comes to the financial markets, though, it does seem, on the surface at least, that the whole system is based on some people being winners and some being losers in any particular transaction.

    I think that either financial markets are indeed zero sum and this is OK since they serve a different purpose than a conventional trade, or, they are not actually zero sum and indeed do not actually involve winners and losers. I don’t know! My gut says it is the first. Well, I guess I’ll have to look for an answer to this question on my own instead of having it spoon fed to me :-). aah nuts.

    • John

      Ok…

      I gave this some thought while heating up my lunch and wanted to add one more quick note.

      I think “zero sum” is not the right concept here. Financial markets are obviously not “zero sum” since as mentioned in the interview all of these various financial instruments are in one way or another connected to actual products and services and in that way they are creating wealth.

      So, maybe the question is not whether it is a “zero sum” game, but that within the financial markets themselves, aren’t there many transactions that are based solely on the fact that there will be both winners and losers? So instead of the win-win situation that you get in a conventional trade, the financial markets seem to involve a win-win-lose :-).

    • JohnGalt Iamoura

      In Mulligan’s Valley (where Reason is primary) there are no losers:

      “One wins … the other learns”

      ie) no abiguity in actions – only certainty and another reason for becoming *indifferent* to the outside world – only possible if you ‘Let it go.’ – withdraw your moral sanction – withdraw your support for the looter/moocher state.

      (the above and below comments as well as the interview reveal this propagation of a contradictory dilemma in the practice of Capitalism by anyone choosing to enable the looter/moocher state – “Blood, whips, guns, or dollars. Take your choice there is no other. And your time is running out.”)

      And I mean it.

      JohnGalt Iamoura

  • Guest

    I gave this some thought while heating up my lunch and wanted to add one more quick note.

    I think “zero sum” is not the right concept here. Financial markets are obviously not “zero sum” since as mentioned in the interview all of these various financial instruments are in one way or another connected to actual products and services and in that way they are creating wealth.

    So, maybe the question is not whether it is a “zero sum” game, but that within the financial markets themselves, aren’t there many transactions that are based solely on the fact that there will be both winners and losers? So instead of the win-win situation that you get in a conventional trade, the financial markets seem to involve a win-win-lose :-).

  • John

    Sorry about the duplicate post… tried to move it around.

    Yeah, that didn’t work.

  • JohnGalt Iamoura

    … This is not to (nit)pick-on this particular reason-advocacy site(Dr.Brook makes the same mis-direct on his book-promo site (capitalism.aynrand.org) when he states “Capitalism is win-win.” – which doesn’t add-up arithmetically. Reason always has to add-up, so in Galt’s Gulch we’ve learned that to be precise over the long term reinforces truth&credibility and it also avoids confusion for the future student of Objectivism as well. Long-term the heirarchy is this:

    Positive sum ……. +ve …….. -> Pro-Man ie) Good

    zero sum ……………. 0 ……… -> non-Man ie) no effect(neutral)

    Negative sum ……. -ve …….. -> anti-Man ie) Evil

    Ah! I just realized that I’m addressing ‘paleo-people’: So,

    Good = nutritive neutral = roughage, fibre, cellulose Evil = poison

    (before you, as the moderator erase/dismiss this comment please note that there is a downturn from “Reason as the only absolute” because every one of the Objectivist sites accepts the naturalist compromise of *middle-ground*. To what end – popularity? statistics? revenue? Well fellow combatants in the battle of ideas, you know where the *middle* is in any conflict — always evil.)

    JohnGalt Iamoura

   
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