buttonwood tree

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pages: 280 words: 73,420

Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market Into a Casino by Jim McTague

algorithmic trading, automated trading system, Bernie Madoff, Bernie Sanders, Bretton Woods, buttonwood tree, buy and hold, computerized trading, corporate raider, creative destruction, credit crunch, Credit Default Swap, financial innovation, fixed income, Flash crash, High speed trading, housing crisis, index arbitrage, locking in a profit, Long Term Capital Management, margin call, market bubble, market fragmentation, market fundamentalism, Myron Scholes, naked short selling, pattern recognition, Ponzi scheme, quantitative trading / quantitative finance, Renaissance Technologies, Ronald Reagan, Sergey Aleynikov, short selling, Small Order Execution System, statistical arbitrage, technology bubble, transaction costs, Vanguard fund, Y2K

Equinix, a trading firm, built a colocation facility the size of five football fields four miles west of Manhattan in Secaucus, New Jersey.2 The NYSE Euronext built a facility for its matching engines the size of seven football fields in Mahwah, New Jersey, and invited HFT firms to collocate there. Mahwah is an Indian name that translates to “where paths cross.” Exchange officials made a big show of planting six buttonwood trees outside the warehouse-like facility to reference the NYSE’s Wall Street roots, where trading supposedly began under a buttonwood tree at the tail end of the eighteenth century. The shade of the buttonwood tree was free. The NYSE Euronext expected its Mahwah operation to become a $1 billion business.3 The brokers, in turn, saw a way to profit by subletting space on their servers at these collocation facilities. They began to offer “naked sponsored access” to their HFT constituents, including hedge funds.

., 194 arbitrage, 161-162 arbitrage opportunities, 70 Archipelago, 33 Arnuk, Sal, 11-25, 44-45, 61, 217 Atkins, Paul, 145-146 ATSs (Alternative Trading Systems), 93 regulation of, 139-144 Australia (film), 78 automated liquidity provision, 161 Automatic Trading Systems (ATSs), 93, 139-144 Aykroyd, Dan, 29 B Bachus, Spencer, 187 Baker, Jim, 130 BATS (Better Alternative Trading System) Exchange, 78 Bee, Samantha, 44 Berkeley, Alfred, 173 Biden, Joe, 47-49, 52-53 “Big Picture” blog (Ritholtz), 234 Birk, Roger, 116 Black Monday (October 19, 1987), 125-133, 179 Blair, Bruce, 160 Blankfein, Lloyd, 99 Blodgett, Henry, 189-190 Bloomberg, Michael, 100 Boesky, Ivan, 126 Boggs, Caleb, 48 Bookstaber, Richard, 157 Born, Brooksley, 99 Boston Stock Exchange, 33 BP oil spill (Deepwater Horizon), 67 Brady Commission, 128 Brady, Nicholas, 83, 128 broken trades after Flash Crash, 83, 225 brokerage houses, internal trades, 31-32 Brown, Alistair, 17 Brown, Gordon, 66 Budge, Hamer, 107 Buffett, Warren, 234 Bulgaria Confidential (newspaper), 42 Bush, George H.W., 102 Bush, George W., 50 busted trades after Flash Crash, 88 buttonwood trees, 168 C Cameron, David, 66 Canaday, Ed, 41 capital crisis of 1969-70, 105-111 Casey, William, 120 CBOT (Chicago Board of Trade), 28-30 Cembalest, Michael, 207-208 CFTC (Commodities Futures Trading Commission), 27 Flash Crash report, 213-227 immediate reaction to Flash Crash, 82 investigation of Flash Crash, 183, 187 consolidated tape delays, 202-204 quick fix rules after Flash Crash, 85-87, 90 CFTC-SEC Joint Advisory Committee Accenture testifying before, 85-90 investigation of Flash Crash, 91-95 Chicago Board of Trade (CBOT), 28-30 Chicago Mercantile Exchange (CME), 28-30 Chilton, Bart, 214 Christie, William, 139 circuit breaker rule, 188 circuit breakers, 63-64, 89 Citigroup, 166 Clinton, Bill, 53, 97, 100-102, 143 Clinton, Hillary, 100 Close Encounters of the Third Kind (film), 49 CME (Chicago Mercantile Exchange), 28-30 collocated servers, 17, 22, 34 collocation, origins of, 165-169 commission structure, fixed commissions, 118-120 commodities exchanges correlation with equities exchanges, 94 history in United States, 27-30 unification with equities exchanges, 36, 70 Commodities Futures Trading Commission.


pages: 218 words: 63,471

How We Got Here: A Slightly Irreverent History of Technology and Markets by Andy Kessler

Albert Einstein, Andy Kessler, animal electricity, automated trading system, bank run, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, British Empire, buttonwood tree, Claude Shannon: information theory, Corn Laws, Douglas Engelbart, Edward Lloyd's coffeehouse, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, Grace Hopper, invention of the steam engine, invention of the telephone, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, John von Neumann, joint-stock company, joint-stock limited liability company, Joseph-Marie Jacquard, Kickstarter, Leonard Kleinrock, Marc Andreessen, Maui Hawaii, Menlo Park, Metcalfe's law, Metcalfe’s law, Mitch Kapor, packet switching, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, railway mania, RAND corporation, Robert Metcalfe, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, supply-chain management, supply-chain management software, trade route, transatlantic slave trade, tulip mania, Turing machine, Turing test, undersea cable, William Shockley: the traitorous eight

No one wanted to own a high risk, illiquid IOU from a brand new government of the United States. Investors were more willing to take the risk if they knew they could sell the scrip at some point. Of course some idiot top ticked it at $310, just like some idiot in 2000 would top tick the NASDAQ at 5000. With risk and liquidity comes volatility. Trading scrip on the muddy streets of a New York was no way to go through life. So on May 17, 1792, 24 brokers and merchants met under a buttonwood tree, which has since been replaced by a building at 68 Wall Street. Voila! They formed the first organized stock exchange in New York. They were hungry for action and someone had to move those bonds and scrip around. A stock exchange could not be much larger than someone’s voice could carry, so they eventually moved indoors to a rented room on Wall Street. This group became the New York Stock & Exchange Board, and all sorts of bonds and other bank stocks began to change hands there.

. *** From its debut as a hot IPO, the Bank of the United States was capitalized with $8 million. The year before, in 1790, the new government of the United States of America sold $80 million in bonds to pay for the Revolutionary War and General Washington’s bar tab. Trading scrip on the muddy streets was no way to go through life, so the first organized stock exchange in New York was formed May 17, 1792 when 24 brokers and merchants met under a buttonwood tree that has since been replaced by a building at 68 Wall Street. Two centuries ago, standing on a soapbox was considered high tech. A stock exchange could not be much larger that someone’s voice could carry. These guys were hungry for action and someone had to move those bonds and scrip around. This group became the New York Stock & Exchange Board, and all sorts of bonds and other bank stocks began to change hands there.

In the first half of the 19th century, transportation was the rage: Turnpikes were funded in the early 1800s and canals were funded between 1820 and 1850. But then in 1844, investors saw the introduction of the Morse telegraph and an era of faster and cheaper communications began. Wall Street immediately saw the benefits. The telegraph gave investors outside of New York access to more up-to-date pricing information. While the area under the Buttonwood Tree didn’t get bigger, the telegraph funneled more cash into the exchange. Technology constantly increased the speed of information and speed meant more profitable trades. Telegrams were invented to relay messages. The most amazing stat I found suggests that trades in stocks and bonds accounted for over half of the telegraph usage in those days. Ezra Cornell wired up the east coast with telegraph lines and consolidated them into Western Union in 1855.


pages: 113 words: 37,885

Why Wall Street Matters by William D. Cohan

Apple II, asset-backed security, bank run, Bernie Sanders, Blythe Masters, bonus culture, break the buck, buttonwood tree, corporate governance, corporate raider, creative destruction, Credit Default Swap, Donald Trump, Exxon Valdez, financial innovation, financial repression, Fractional reserve banking, Gordon Gekko, greed is good, income inequality, Joseph Schumpeter, London Interbank Offered Rate, margin call, money market fund, moral hazard, Potemkin village, quantitative easing, secular stagnation, Snapchat, South Sea Bubble, Steve Jobs, Steve Wozniak, too big to fail, WikiLeaks

The United States became one of the few countries in the world to have its seat of political power in a different place from its center of financial power. The city’s first “stock exchange” was opened at 22 Wall Street on March 1, 1792, by a group of “auctioneers” who had been designated by the Treasury to sell the bonds that were issued in order to pay off the young nation’s debt in accordance with Hamilton’s plan. Farther east on Wall Street, at around 70 Wall Street, stood one of the lone trees—a buttonwood tree, which we now call a sycamore—that had survived the Revolutionary War intact and thus had metaphorical importance to the young nation. Under that tree, a small group of brokers had already been in the business of buying and selling the new nation’s Treasury debt. They had also been meeting and trading at the Tontine Coffee House, farther east on Wall Street, which was named after a seventeenth-century method of raising capital devised by Lorenzo de Tonti, an Italian, and which was particularly popular in France.

They have been around since before there was a Wall Street. So when we imagine that Wall Street is the sole cause of all financial calamities, that is not even remotely correct. It’s a crucial point to remember. Of course, that doesn’t mean Wall Street hasn’t been involved in, or exacerbated, its share of financial turmoil. In March 1817, the brokers who had been trading for years on Wall Street at the Tontine Coffee House and under the buttonwood tree decided to organize themselves more formally in what they called the New York Stock and Exchange Board. They rented a room at 40 Wall Street and started meeting regularly. The purpose of the organization, the precursor of what became the New York Stock Exchange, or the NYSE, was for the president of the board to announce on a daily basis the prices for which the stocks of the companies listed on the exchange were bought and sold.


pages: 290 words: 83,248

The Greed Merchants: How the Investment Banks Exploited the System by Philip Augar

Andy Kessler, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, business cycle, buttonwood tree, buy and hold, capital asset pricing model, commoditize, corporate governance, corporate raider, crony capitalism, cross-subsidies, financial deregulation, financial innovation, fixed income, Gordon Gekko, high net worth, information retrieval, interest rate derivative, invisible hand, John Meriwether, Long Term Capital Management, Martin Wolf, new economy, Nick Leeson, offshore financial centre, pensions crisis, regulatory arbitrage, Sand Hill Road, shareholder value, short selling, Silicon Valley, South Sea Bubble, statistical model, Telecommunications Act of 1996, The Chicago School, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, tulip mania, value at risk, yield curve

Investment bankers appeared to be the miracle workers who made it all happen and by the end of the twentieth century they laid claim to a special place in American life ‘fusing the character of a trusted adviser with the capabilities of a global financial intermediary’.4 Admired by business, fêted in the media and with Washington eating out of its hand, the Trusted Adviser ruled supreme. A Chequered History It had not always been like that. In fact for much of its 200-year history investment banking in America had been viewed with suspicion. The tone was set in 1792 when twenty-four brokers and merchants met under a buttonwood tree on Wall Street to form what would become the New York Stock Exchange and signed a pledge to ‘give preference to each other in our negotiations’.5 This shady understanding encouraged the idea that brokers looked after themselves first and their clients second and helps to explain why the American public has never been entirely comfortable with securities and banking people. It was summed up by the distinguished Wall Street economist Henry Kaufman: ‘Financiers were held in disrepute by most of the nation’s laborers and farmers, who believed that the “money changers” were producing no products of tangible value.

Partnerships and private companies now seemed too risky and under-capitalized and many investment banks went public – Morgan Stanley in 1986, Bear Stearns in 1985 and Goldman Sachs in 1999 – or merged with stronger partners – Salomon Brothers merged with the commodities trader PhiBro in 1981, Lehman Brothers sold itself to Shearson American Express in 1984, Kidder Peabody was bought by GE in 1986. The abolition of fixed commissions finally marked the end of the era of ‘giving preference to each other’ in securities trading that had begun nearly two hundred years earlier under Wall Street’s buttonwood tree. Broking now became more competitive and cut-throat. Increased competition in broking soon spread to the hitherto gentlemanly business of corporate advisory work. Most white shoe investment banks still practised relationship banking in that they gave free advice in the knowledge that clients rarely changed adviser and would eventually pay them through underwriting fees when the time came to raise new capital.

Why else would the price of issuing high yield bonds, which many consider to be quasi-equity, be half the equity equivalent? Why else would American IPO spreads have clustered round the 7 per cent figure? The explanation is unlikely to be explicit collusion, which would be simply too risky. Conspirators would be too fearful of the word leaking out and of the serious consequences. It is impossible to believe senior bankers would be so unwise as to sit round a table and reach a modern-day buttonwood tree agreement: ‘We do hereby solemnly promise and pledge ourselves to each other that we will not work on any initial public offering from this date, for any person whatsoever, at a spread less than 7 per cent of the total capital being raised and that we will give preference to each other in our negotiations.’ As Chen and Ritter point out: ‘With literally scores of people involved in setting spreads at investment banking firms, the ability to explicitly collude and keep it a secret strains credibility.


pages: 356 words: 105,533

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson

algorithmic trading, automated trading system, banking crisis, bash_history, Bernie Madoff, butterfly effect, buttonwood tree, buy and hold, Chuck Templeton: OpenTable:, cloud computing, collapse of Lehman Brothers, computerized trading, creative destruction, Donald Trump, fixed income, Flash crash, Francisco Pizarro, Gordon Gekko, Hibernia Atlantic: Project Express, High speed trading, Joseph Schumpeter, latency arbitrage, Long Term Capital Management, Mark Zuckerberg, market design, market microstructure, pattern recognition, pets.com, Ponzi scheme, popular electronics, prediction markets, quantitative hedge fund, Ray Kurzweil, Renaissance Technologies, Sergey Aleynikov, Small Order Execution System, South China Sea, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stochastic process, transaction costs, Watson beat the top human players on Jeopardy!, zero-sum game

Heading west toward Trinity Church on the western terminus of the famed street, yellow cabs darting by along the deep and narrow canyon of skyscrapers, worried-looking men storming out of subway stations, Levine glanced up at the sculpted Georgia marble façade and Corinthian columns of the New York Stock Exchange, imperious as a Roman temple. Central exchanges such as the NYSE had first cropped up around the coffeehouses of Amsterdam, London, and Paris in the seventeenth century. Founded in 1792 by twenty-four men under a buttonwood tree, the NYSE had maintained a virtual monopoly on stock trading in the United States for nearly two hundred years. As such, it represented everything Levine hated about Wall Street. The inside information, the special deals, the secrecy of the connected. The money. The power. The Big Board. Trading at the NYSE took place on the floor of the exchange, beyond the ken of everyday investors, amid the haggling of a select group of insiders.

The length of several football fields, the 400,000-square-foot building would allow computer-driven trading firms to put their computer servers right next to the NYSE’s matching engine—the computers that brought buyers and sellers together in the frictionless ether of cyberspace. Twenty-inch-wide pipes pumped in water to cool the computers. Twenty surge protectors, each the size of a tank, protected the site against power outages. In August 2010, just months after the Flash Crash, Project Alpha was ready for action. Evenly spaced around the large, nondescript building—nearly invisible to the traffic flowing around it on nearby roads and highways—were six buttonwood trees, planted in apparently un-ironic homage to the origin of the venerable stock exchange on Broad Street. That exchange was all but dead. Mahwah was the new floor, a powerful confluence of capitalism and state-of-the-art computer technology. While tourists snapped photos of the exchange’s marble façade on the corner of Wall and Broad, the real trading was taking place thirty miles away in Mahwah’s vast air-conditioned floors of computer servers.

Getco’s general counsel was John McCarthy, who’d formerly served as an associate director of the SEC’s Office of Compliance Inspections and Examinations. In June 2010, Getco hired Elizabeth King, a seventeen-year SEC veteran and an expert in options markets. And now, with its move onto the NYSE’s hallowed floor, Getco was taking its place as the new king of the hill in the stock market, the direct descendant of the traders who’d founded the exchange under a buttonwood tree in 1792. The revolution started by Levine on January 16, 1996, with the launch of Island had come full circle. WEEKS after the NYSE’s Mahwah data center opened for trading, in early September, two old adversaries met again. The Financial Industry Regulatory Authority, formerly known as the National Association of Securities Dealers, or NASD, fined a New York trading firm $2.3 million and suspended several of its traders.


pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

AI winter, algorithmic trading, asset allocation, banking crisis, barriers to entry, Big bang: deregulation of the City of London, business cycle, butter production in bangladesh, butterfly effect, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, citizen journalism, collateralized debt obligation, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, Emanuel Derman, en.wikipedia.org, experimental economics, financial innovation, fixed income, Gordon Gekko, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, John Nash: game theory, Kenneth Arrow, load shedding, Long Term Capital Management, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Renaissance Technologies, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, semantic web, Sharpe ratio, short selling, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, too big to fail, transaction costs, Turing machine, Upton Sinclair, value at risk, Vernor Vinge, yield curve, Yogi Berra, your tax dollars at work

Notice the same distinguished-looking CME official, Everett Harris, then president of the Merc, banging on the gong with a salami. This guy had a great job. These are the little details that make market history come alive for me. 9 10 Nerds on Wall Str eet There’s so much technology in modern markets that it’s easy to forget that some of our favorite markets, like the New York Stock Exchange (NYSE), started out as very low-tech places. In 1792, the New York Stock Exchange was a bunch of guys standing around a buttonwood tree at 68 Wall Street shouting at each other on days when it didn’t rain or snow: We like our markets to be liquid, efficient, resilient, and robust. But this is hard to do when all the participants have to crowd around a tree and hope for good weather. So in 1794, we see the first big technological solution: the roof. Everybody moves inside, to the Tontine Coffee House at the corner of Water and Wall streets.

When you can do enough simple computation, remarkable things can happen. MIT recently merged its Artificial Intelligence Laboratory and Computer Science Laboratory, reflecting this merger of ideas. Along the path from hand signals to Deep Blue and the World Wide Web, we’ve seen some remarkable market applications of technology. This isn’t going to stop. We’ve come a long way since the traders moved from under the buttonwood tree into the Tontine Coffee House, but we’ve really just moved indoors in our use of information technologies. There is so much written about information overload that we have an information overload information overload. But as we have seen, technological patterns repeat. An Illustrated History of Wir ed Markets 29 Living through a technology revolution isn’t easy. We aren’t exactly trapped in the cogs like Charlie Chaplin in Modern Times, or racing steam-powered Victorian dune buggies, but it often feels that way.

I’m confident in saying that there will in fact be room in the future for new people in the wired markets of the world, whether they are trading securities, emissions, or electrons. Ner ds Gone Gr een 341 Ogden Nash was mildly nostalgic but mostly joking when he said, “Progress might have been all right once, but it has gone on too long.” None of us will be going back to shouting under the Buttonwood tree. Notes 1. CUSIPs are issued by the U.S. Committee on Uniform Security Identification Procedures; they are nine-character alphanumeric security identifiers. See www.cusip .com for more than you need to know. 2. Brent Barker and Lucy Sanna, “Turning on Energy Efficiency,” EPRI Journal (Summer 2006): 4–13, http://mydocs.epri.com/docs/public/000000000001013720.pdf. 3. Ahmad Faruqui, Ryan Hledik, Samuel A.


pages: 77 words: 18,414

How to Kick Ass on Wall Street by Andy Kessler

Andy Kessler, Bernie Madoff, buttonwood tree, call centre, collateralized debt obligation, family office, fixed income, hiring and firing, invention of the wheel, invisible hand, London Whale, margin call, NetJets, Nick Leeson, pets.com, risk tolerance, Silicon Valley, sovereign wealth fund, time value of money, too big to fail, value at risk

When I think of Wall Street, I think of alpha dogs generating revenue at all cost, getting deals done, fighting for market share against all the other firms, and then at the end of the year, the political knives come out trying to carve up the ever growing bonus pool, though often each other. * * * So let’s go back. It’s been said that a stock exchange can only be as large as a voice can carry. On May 17, 1792 after years of shouting out on the street, a group of 24 prominent brokers met under a Buttonwood tree at what is now 68 Wall Street, and decided to move indoors, so to speak. They created the New York Stock and Exchange Board, copying European exchanges and “pledge ourselves to each other that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at least than one quarter of one percent Commission on the Specie value and that we will give preference to each other in our Negotiations.”


file:///C:/Documents%20and%... by vpavan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, asset allocation, Berlin Wall, business cycle, buttonwood tree, buy and hold, corporate governance, corporate raider, disintermediation, diversification, diversified portfolio, Donald Trump, estate planning, fixed income, index fund, intangible asset, interest rate swap, margin call, money market fund, Myron Scholes, new economy, price discovery process, profit motive, risk tolerance, shareholder value, short selling, Silicon Valley, Small Order Execution System, Steve Jobs, stocks for the long run, stocks for the long term, technology bubble, transaction costs, Vanguard fund, women in the workforce, zero-coupon bond, éminence grise

But while both markets have made huge strides, more can be done, especially at the New York Stock Exchange, which has resisted trading technologies that would erode the franchise of its specialists and floor brokers. The evolution of our markets is like the nine innings of a baseball game— and we're only in the top of the third inning. The Buttonwood Tree To understand the stock markets of today, it helps to understand the origins of the NYSE. On May 17, 1792, twenty-four commodities merchants and traders signed a pact to trade securities, at fixed commissions, under a buttonwood tree facing 68 Wall Street. At the time, about the only securities that traded were government bonds issued to pay for the Revolutionary War and stocks issued by the Bank of the United States. But soon there were more bank stocks and shares issued by insurance companies and railroads.


pages: 415 words: 125,089

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

"Robert Solow", Albert Einstein, Alvin Roth, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, Bayesian statistics, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buttonwood tree, buy and hold, capital asset pricing model, cognitive dissonance, computerized trading, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Lloyd's coffeehouse, endowment effect, experimental economics, fear of failure, Fellow of the Royal Society, Fermat's Last Theorem, financial deregulation, financial innovation, full employment, index fund, invention of movable type, Isaac Newton, John Nash: game theory, John von Neumann, Kenneth Arrow, linear programming, loss aversion, Louis Bachelier, mental accounting, moral hazard, Myron Scholes, Nash equilibrium, Norman Macrae, Paul Samuelson, Philip Mirowski, probability theory / Blaise Pascal / Pierre de Fermat, random walk, Richard Thaler, Robert Shiller, Robert Shiller, spectrum auction, statistical model, stocks for the long run, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas Bayes, trade route, transaction costs, tulip mania, Vanguard fund, zero-sum game

Simply that a coffee house was the birthplace of Lloyd's of London, which for more than two centuries was the most famous of all insurance companies.18 Insurance is a business that is totally dependent on the process of sampling, averages, independence of observations, and the notion of normal that motivated Graunt's research into London's population and Halley's into Breslaw's. The rapid development of the insurance business at about the time Graunt and Halley published their research is no coincidence. It was a sign of the times, when innovations in business and finance were flourishing. The English word for stockbroker-stock jobber-first appeared around 1688, a hundred years before people started trading stocks around the Buttonwood tree on Wall Street, New York. Corporations of all kinds suddenly appeared on the scene, many with curious names like the Lute-String Company, the Tapestry Company, and the Diving Company. There was even a Royal Academies Company that promised to hire the greatest scholars of the age to teach the 2,000 winners of a huge lottery a subject of their own choosing. The second half of the seventeenth century was also an era of burgeoning trade.

Actually, it seems, options gave more people an opportunity to participate in a market that had previously been closed to them. The opprobrium attached to options during the so-called tulip bubble was in fact cultivated by vested interests who resented the intrusion of interlopers onto their turf 2 In the United States, options appeared early on. Brokers were trading put and call options on stocks as early as the 1790s, not long after the famous Buttonwood Tree Agreement established what was to become the New York Stock Exchange. An ingenious risk-management contract was issued on June 1, 1863, when the Confederate States of America, hard up for credit and desperate for money, issued the "7 Per Cent Cotton Loan." The loan had some unusual provisions that gave it the look of a derivative instrument.3 The principal amount was not repayable in Confederate dollars nor was it repayable at the Confederate capitol in Richmond, Virginia.


Frommer's New York City Day by Day by Hilary Davidson

Berlin Wall, buttonwood tree, Chuck Templeton: OpenTable:, Donald Trump, East Village, glass ceiling, Saturday Night Live

(The real stars of the Forbes collection, 12 Fabergé Over 10,000 miniature figures are on view at the Forbes Galleries. 06_579312 ch02.qxd 10/3/05 10:01 AM Page 39 39 8 New York Stock Exchange. The serious action is here on Wall Street, a narrow lane dating to the 18th-century. At its heart is the NYSE, the world’s largest securities exchange. The NYSE came into being in 1792, when merchants met daily under a nearby buttonwood tree to trade U.S. bonds that had funded the Revolutionary War. In 1903 traders moved into this Beaux Arts building designed by George Post. The NYSE is surrounded by heavy security and is not open to the public. 20 Broad St. (btwn Wall The New York Stock Exchange. Imperial Eggs, were sold, fittingly, to a Russian tycoon in 2004; he plans to return them to their Russian homeland.) Changing exhibits have included a selection of letters written by First Ladies, jeweled flowers and fruit by Cartier, and historically accurate miniature rooms. @ 45 min.


pages: 273 words: 72,024

Bitcoin for the Befuddled by Conrad Barski

Airbnb, AltaVista, altcoin, bitcoin, blockchain, buttonwood tree, cryptocurrency, Debian, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, Isaac Newton, MITM: man-in-the-middle, money: store of value / unit of account / medium of exchange, Network effects, node package manager, p-value, peer-to-peer, price discovery process, QR code, Satoshi Nakamoto, self-driving car, SETI@home, software as a service, the payments system, Yogi Berra

Satoshi Square If meeting with strangers one-on-one makes you uncomfortable, you may be interested in going to a Satoshi Square event. Several major cities, such as New York, San Francisco, Boston, Toronto, and Vancouver, have had regular live Bitcoin exchanges where large groups of people meet in public spaces to buy and sell bitcoins. These meetups are also called buttonwood exchanges, named after the buttonwood tree under which the original Wall Street traders supposedly traded in the 1700s. Still Don’t See a Buying Option That Works for You? If none of the options discussed in this chapter meet your needs for acquiring bitcoins, you have another alternative to acquire bitcoins that is probably better than any other: Sell something to bitcoiners for bitcoins! Die-hard bitcoiners dream that someday they’ll be able to relinquish all fiat currencies.


pages: 318 words: 87,570

Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio by Sal Arnuk, Joseph Saluzzi

algorithmic trading, automated trading system, Bernie Madoff, buttonwood tree, buy and hold, commoditize, computerized trading, corporate governance, cuban missile crisis, financial innovation, Flash crash, Gordon Gekko, High speed trading, latency arbitrage, locking in a profit, Mark Zuckerberg, market fragmentation, Ponzi scheme, price discovery process, price mechanism, price stability, Sergey Aleynikov, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, stocks for the long run, stocks for the long term, transaction costs, two-sided market, zero-sum game

Matthew Vincent, “Speed Fails to Impress Long-Term Investors” (Jan. 1, 2011), Financial Times, Sept. 22, 2011, Financial Times website, http://www.ft.com/intl/cms/s/0/df141604-e070-11e0-bd01-00144feabdc0.html#axzz1n3cofl4o. 5. New York Stock Exchange, Service Description, New York Stock Exchange website, http://www.nyse.com/pdfs/Colocation-NYSE-Euronext-US-Liquidity-Center.pdf. 6. New York Stock Exchange, Price List 2012, U.S. Equities website, https://usequities.nyx.com/sites/usequities.nyx.com/files/nyse_price_list_01.01.12_0.pdf. 7. Peter Chapman, “A Buttonwood Tree Grows in Mahwah” (May, 2010), Traders Magazine.com, http://www.tradersmagazine.com/issues/23_308/buttonwood-nyse-mahwah-nyfix-colocation-data-center-105760-1.html. 8. Bob Ivry, Whitney Kisling, and Max Abelson, “How America Ceded Capitalism’s Bastion to German Boerse Seizing Big Board” (July 5, 2011), Ethnic Cliques, Bloomberg website, http://www.bloomberg.com/news/2011-07-06/how-america-ceded-capitalism-s-bastion-to-germans.html. 9.


pages: 304 words: 91,566

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption by Ben Mezrich

"side hustle", airport security, Albert Einstein, bank run, Ben Horowitz, bitcoin, blockchain, Burning Man, buttonwood tree, cryptocurrency, East Village, El Camino Real, Elon Musk, family office, fault tolerance, fiat currency, financial innovation, game design, Isaac Newton, Marc Andreessen, Mark Zuckerberg, Menlo Park, Metcalfe’s law, new economy, offshore financial centre, paypal mafia, peer-to-peer, Peter Thiel, Ponzi scheme, QR code, Ronald Reagan, Ross Ulbricht, Sand Hill Road, Satoshi Nakamoto, Schrödinger's Cat, self-driving car, side project, Silicon Valley, Skype, smart contracts, South of Market, San Francisco, Steve Jobs, transaction costs, zero-sum game

As far as the twins were concerned, getting the Bitcoin story out there was only the first step in the journey. Getting people into Bitcoin was the next; it wasn’t a coincidence that they were spending most of their time discussing Bitcoin in New York, which was ground zero of the world’s financial system—where it all began. In 1792, twenty-four stockbrokers signed the Buttonwood Agreement under a buttonwood tree located outside 68 Wall Street, creating the New York Stock Exchange. No matter what the ideologues believed, no matter how much they brayed about bringing down banks and governments, the twins knew that if Bitcoin was going to succeed, Wall Street was going to have to get involved. After Mellon was off, blending into the foot traffic on Astor Place, Tyler turned back to his brother. “Let’s get Charlie on the phone,” Tyler said.


Fodor's Costa Rica 2012 by Fodor's

Berlin Wall, buttonwood tree, call centre, car-free, carbon footprint, David Attenborough, haute cuisine, Pepto Bismol, place-making, sustainable-tourism, urban renewal, urban sprawl

One of the first northern Nicoya beaches to experience the wonders of overdevelopment—a fact immortalized in the concrete towers that straggle up the hill above the bay—Flamingo still has some hidden charms, including one of the loveliest Blue Flag beaches and one of the best restaurants in Costa Rica. The place is still abuzz with real-estate activity, and any ledge of land with a view is a building site. But Flamingo Beach, hidden away to the southwest of the town, is picture-perfect, with almost-white sand sloping into a relatively calm sea and buttonwood trees separating it from the road. This beach is great for swimming, with a fine-sand bottom and no strong currents, though there are a few submerged rocks in front of the Flamingo Beach Resort, so you should swim a bit farther south. There’s sometimes a bit of surf, so if the waves are big, keep your eye on little paddlers. There is little shade along the beach’s 1-km-long (½-mi-long) stretch, and no services, though there are restaurants in the beach resort and the adjacent town.

Surfer culture is apparent here in the wave of beach-shack surfer camps along the road that leads to this rocky strand, but there are also some new interesting cafés and restaurants now, catering to beachgoers and residents of an upscale residential development called Rancho Playa Negra. Contrary to the name, the beach is not black, but rather beige with dark streaks. It’s not great for swimming because it tends to have big waves and is lined with rocks, though there is one short stretch of clear sand to the south of the one hotel and at low tide a large tidal pool forms there. The spindly buttonwood trees that edge the beach provide sparse shade. Getting Here and Around From Playa Avellanas, continue south 10 minutes on the rough beach road to Playa Negra. If it’s rainy season and the road is too rough, you can approach along a slightly more civilized route from Santa Cruz. Drive 27 km (16½ mi) west, via Veintisiete de Abril, to Paraíso, then follow signs for Playa Negra for 4 km (2½ mi).


The Rough Guide to New York City by Martin Dunford

Anton Chekhov, Berlin Wall, Bonfire of the Vanities, Buckminster Fuller, buttonwood tree, car-free, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, colonial exploitation, colonial rule, desegregation, Donald Trump, East Village, Edward Thorp, Exxon Valdez, Frank Gehry, glass ceiling, haute cuisine, illegal immigration, Jane Jacobs, market bubble, Norman Mailer, paper trading, post-work, Saturday Night Live, sustainable-tourism, The Death and Life of Great American Cities, the High Line, transcontinental railway, Triangle Shirtwaist Factory, upwardly mobile, urban decay, urban planning, urban renewal, white flight, Yogi Berra, young professional

It was here in 1735 that printer John The early days of stocks and bonds 52 In order to help America finance the Revolutionary War, Secretary of the Treasury Alexander Hamilton offered $80 million worth of bonds up for sale. Not only did the public snap them up, but merchants also started trading the bonds, along with bills of exchange, promissory notes, and other commercial paper. Trading became so popular that in 1792 a group of 22 stockbrokers and merchants gathered beneath a buttonwood tree on Wall Street, signing the “Buttonwood Agreement” and forming the initial trading group that would go on to be renamed the New York Stock Exchange in 1817. In the 1840s, a more individualistic group of stockbrokers forged a similar bond on the curbs of Broad Street. These “curb brokers,” who specialized in risky stocks, were unable to meet the requirements of the New York Stock Exchange, but survived nonetheless, with phone clerks in the windows of buildings several stories above the street using hand signals to relay customers’ orders.

All this expansion stimulated the city’s cultural growth. Walt Whitman eulogized the city in his poems and Henry James recorded its manners and | History The late nineteenth century CONTEXTS In 1790 the first official census of Manhattan numbered the population around 33,000. Business and trade were steadily increasing, with the forerunner of the New York Stock Exchange created under a buttonwood tree on Wall Street in the early 1800s and ferry service established between New York and Albany, and between Brooklyn and Manhattan, a few years later. In 1825, the completion of the Erie Canal (running from the Hudson River across the state to the Great Lakes) opened up internal trade and increased demand for cheap labour. The first waves of immigrants, mainly Irish and German, began to arrive in the mid-nineteenth century, the former forced out by famine, the latter by the failed revolutions of 1848–49.


Fodor's Costa Rica 2013 by Fodor's Travel Publications Inc.

airport security, Berlin Wall, buttonwood tree, call centre, car-free, carbon footprint, David Attenborough, glass ceiling, haute cuisine, Pepto Bismol, place-making, sustainable-tourism, urban sprawl

One of the first northern Nicoya beaches to experience the wonders of overdevelopment—a fact immortalized in the concrete towers that straggle up the hill above the bay—Flamingo still has some hidden charms, including one of the loveliest Blue Flag beaches and one of the best restaurants in Costa Rica. The place is still abuzz with real-estate activity, and any ledge of land with a view is a building site. But Flamingo Beach, hidden away to the southwest of the town, is picture-perfect, with almost-white sand sloping into a relatively calm sea and buttonwood trees separating it from the road. This beach is great for swimming, with a fine-sand bottom and no strong currents, though there are a few submerged rocks in front of the Flamingo Beach Resort, so you should swim a bit farther south. There’s sometimes a bit of surf, so if the waves are big, keep your eye on little paddlers. There is little shade along the beach’s 1-km-long (½-mile-long) stretch, and no services, though there are restaurants in the beach resort and the adjacent town.

Surfer culture is apparent here in the wave of beach-shack surfer camps along the road that leads to this rocky strand, but there are also some interesting cafés and restaurants catering to beachgoers and residents of an upscale residential development called Rancho Playa Negra. Contrary to the name, the beach is not black, but rather beige with dark streaks. It’s not great for swimming because it tends to have big waves and is lined with rocks, though there is one short stretch of clear sand to the south of the one hotel and at low tide a large tidal pool forms there. The spindly buttonwood trees that edge the beach provide sparse shade. Getting Here and Around From Playa Avellanas, continue south 10 minutes on the rough beach road to Playa Negra. If it’s rainy season and the road is too rough, you can approach along a slightly more civilized route from Santa Cruz. Drive 27 km (16½ miles) west, via Veintisiete de Abril, to Paraíso, then follow signs for Playa Negra for 4 km (2½ miles).


pages: 366 words: 109,117

Higher: A Historic Race to the Sky and the Making of a City by Neal Bascomb

buttonwood tree, California gold rush, Charles Lindbergh, Everybody Ought to Be Rich, hiring and firing, margin call, market bubble, Ralph Waldo Emerson, transcontinental railway, Works Progress Administration

By 1929, half a million commuters a day stepped into the Wall Street district alone to work at one of the eighty banks, nineteen trust companies, one hundred railroad corporations, four hundred insurance companies, twelve safe deposit companies, fourteen cable and telegraph companies, and the hundreds of coal, iron, steel, copper, and steamship companies—among many others. Exchanges traded everything from stocks and bonds to sugar, coffee, rubber, and leather. The rattle of ticker tapes and elevated trains had long since replaced the blackbird’s song. Shoeshine boys lined the corners and chauffeurs and taxicab drivers crowded the streets waiting for their customers. It was a long way from the whipping posts that once populated the area and the old Buttonwood Tree underneath which merchants traded the first stocks. Severance and the Starrett Brothers entered this melee, charged with the job of demolishing buildings of heavy masonry, setting foundations seventy feet deep into bedrock, delivering seventeen thousand tons of steel, and managing the legions to do the work. It was May 1929. They had less than a year and the shoeshine boys, taxi drivers, and bank clerks couldn’t exactly be told to take a holiday until the building reached hundreds of feet in the air.


Lonely Planet Jamaica by Lonely Planet

British Empire, buttonwood tree, carbon footprint, estate planning, European colonialism, food miles, jitney, Kickstarter, talking drums, trade route, transatlantic slave trade, urban planning

Treasure Beach 1Sights 1Calabash Bay BeachB3 2Fishermen's BeachA2 3Jack Sprat BeachA2 4Old Wharf BeachC4 4Sleeping 5Golden Sands Beach HotelA2 6Ital RestD4 7Jake's HotelB2 8Katamah Beachfront ResortA1 9Kudeyha GuesthouseB3 10Marblue Villa Suites Boutique HotelB3 11Treasure Beach HotelA1 12Waikiki Guest HouseA2 13Welcoming VibesA1 5Eating 14Hold a Vibz CafeC3 15Jack SpratA2 Jake's Country CuisineB2 16Kim's PlaceA1 17Mellow YellowA2 18Pardy'sB2 19Smurf's CafeA1 6Drinking & Nightlife 20Eggy's Beach BarA2 21Fisherman's NightclubB2 22Frenchman's ReefA2 3Entertainment 23Treasure Beach Sports ParkB2 7Shopping 24Africa VillageC3 25Callaloo Gift ShopA2 26Treasure Beach Women's GroupC3 Beaches Fishermen's BeachBEACH ( MAP GOOGLE MAP ; Frenchman's Bay) This is the most centrally located beach running east from the Treasure Beach Hotel as far as Jack Sprat Beach. It is watched over by a landmark buttonwood tree that has long attracted the attention of poets, painters and wood-carvers who ply their wares. It's a good place for sunning and swimming, and a popular spot for watching the sunset. Jack Sprat BeachBEACH ( MAP GOOGLE MAP ; Frenchman's Cove) At the western edge of Jake’s Hotel, brightly painted wooden fishing boats are pulled up on the sand, and there is invariably a fisher or two on hand tending the nets.


pages: 374 words: 114,600

The Quants by Scott Patterson

Albert Einstein, asset allocation, automated trading system, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Swan, Black-Scholes formula, Blythe Masters, Bonfire of the Vanities, Brownian motion, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, fixed income, Gordon Gekko, greed is good, Haight Ashbury, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, index fund, invention of the telegraph, invisible hand, Isaac Newton, job automation, John Meriwether, John Nash: game theory, Kickstarter, law of one price, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, merger arbitrage, money market fund, Myron Scholes, NetJets, new economy, offshore financial centre, old-boy network, Paul Lévy, Paul Samuelson, Ponzi scheme, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Robert Mercer, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sergey Aleynikov, short selling, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

True arbitrage is virtually a sure thing. It involves buying an asset in one market and almost simultaneously selling that asset, or its near equivalent, in another. Say gold is trading for $1,000 in New York and $1,050 in London. A fleet-footed arbitrageur will buy that New York gold and sell it in London (instantaneously), pocketing the $50 difference. While this was difficult when traders were swapping stocks beneath a buttonwood tree on Wall Street in the eighteenth century, the invention of the telegraph—and the telephone, the high-speed modem, and a grid of orbiting satellites—has made it much easier to accomplish in modern times. Such obvious discrepancies in practice are rare and are often hidden in the depths of the financial markets like gold nuggets in a block of ore. That’s where the quants, the math whizzes, step in.


pages: 482 words: 121,672

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) by Burton G. Malkiel

accounting loophole / creative accounting, Albert Einstein, asset allocation, asset-backed security, beat the dealer, Bernie Madoff, bitcoin, butter production in bangladesh, buttonwood tree, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Detroit bankruptcy, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial innovation, financial repression, fixed income, framing effect, George Santayana, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Long Term Capital Management, loss aversion, margin call, market bubble, money market fund, mortgage tax deduction, new economy, Own Your Own Home, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stocks for the long run, survivorship bias, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond, zero-sum game

High-frequency trading (HFT) has been alleged to give a select group of traders an unfair advantage over the public and even over institutional investors such as mutual funds and pension funds. HFT involves the placement of high-speed computers in close proximity to stock-market servers to give some participants the ability to buy and sell stocks faster than the blink of an eye. In a sense, it is merely the next development in response to investors’ ever-increasing appetite for speed. From shouting orders from office buildings to traders standing under a buttonwood tree on Wall Street in 1792, technology has dramatically improved the efficiency of trading, reducing transaction costs and increasing liquidity for all investors. It has also helped ensure that market-moving news is reflected in stock prices as rapidly as possible. It’s easy to stir up fear over such trading activity, but most stock-market volume is conducted over these high-speed networks. And whether you’re buying 100 shares of a stock or 100,000 shares, you directly or indirectly participate.


pages: 1,164 words: 309,327

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, asset allocation, automated trading system, barriers to entry, Bernie Madoff, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, fault tolerance, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, interest rate swap, invention of the telegraph, job automation, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, Nick Leeson, open economy, passive investing, pattern recognition, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, race to the bottom, random walk, rent-seeking, risk tolerance, risk-adjusted returns, selection bias, shareholder value, short selling, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

Their rules specify how their members arrange trades and how they should relate to their clients. We discuss the implications of exchange rules throughout this book. Many securities exchanges also regulate their listed firms. For example, their listing standards generally require a minimum level of financial reporting. * * * ▶ The Buttonwood Tree Agreement The New York Stock Exchange traces its beginnings to an agreement traders made in 1792 to regulate their commissions and to trade with each other. According to legend, the traders met under a buttonwood tree, near what is now Wall Street in lower Manhattan. Their written agreement—which entered the NYSE archives in 1840—indicates that they all would charge their clients no less than 0.25 percent commission for their brokerage services. The full text of their agreement, signed by 24 brokers and merchants, is as follows: We the Subscribers, Brokers for the Purchase and Sale of Public Stock, do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at a less rate than one quarter per cent Commission on the Specie value and that we will give a preference to each other in our Negotiations.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Berlin Wall, Bernie Madoff, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, Gordon Gekko, Henri Poincaré, high net worth, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, means of production, Menlo Park, merger arbitrage, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Ponzi scheme, price mechanism, principal–agent problem, profit maximization, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Sand Hill Road, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, technology bubble, The Wealth of Nations by Adam Smith, time value of money, too big to fail, transaction costs, underbanked, Vanguard fund, working poor, yield curve

With the French Revolution beginning in 1789 and the Napoleonic Wars lasting until 1815, disruption and destruction in France and the Low Countries cleared the way for a rising England.67 88 Investment: A History The American Experience In the United States, the federal government floated $77.1 million in debt in 1790 to pay back costs incurred by the American Revolution, giving birth to the first US public debt markets.68 On May 17, 1792, the Buttonwood Agreement (so named because it was signed under a buttonwood tree by twenty-four stockbrokers) was executed. Soon, in 1793, the Tontine Coffee House in New York City became a forum for trading government debt and equities, while many of the stockbrokers’ colleagues traded securities in the street nearby.69 The Buttonwood Agreement created what is today the New York Stock Exchange. It is of interest that the agreement specified that the brokers were to deal directly with one another and that commissions for trades would be twenty-five basis points (or one-fourth of 1 percent).


pages: 519 words: 148,131

An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, clean water, collective bargaining, Corn Laws, corporate governance, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, financial independence, Frederick Winslow Taylor, full employment, global village, imperial preference, informal economy, interchangeable parts, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, lone genius, Louis Pasteur, margin call, Marshall McLuhan, means of production, Menlo Park, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable, Yom Kippur War

With the success of the Bank of the United States stock offering, the nascent securities markets in New York and Philadelphia had their first bull markets, in bank stocks. Philadelphia, the leading financial market in the country at that time, thanks to the location there of the headquarters of the Bank of the United States, established a real stock exchange in 1792. In New York a group of twenty-one individual brokers and three firms signed an agreement—called the Buttonwood Agreement because it was, at least according to tradition, signed beneath a buttonwood tree (today more commonly called a sycamore) outside 68 Wall Street. In it they pledged “ourselves to each other, that we will not buy or sell from this day for any person whatsoever any kind of Public Stock, at a less rate than one quarter per cent Commission on the specie value, and that we will give preference to each other in our negotiations.” The new group formed by the brokers was far more a combination in restraint of trade and price-fixing scheme than a formal organization, but it proved to be a precursor of what today is called the New York Stock Exchange.


Discover Caribbean Islands by Lonely Planet

active transport: walking or cycling, Airbnb, Bartolomé de las Casas, buttonwood tree, call centre, carbon footprint, clean water, colonial rule, food miles, Ronald Reagan, transatlantic slave trade, urban decay, urban sprawl

Beaches At the eastern ‘bottom’ of Treasure Beach you’ll find Great Bay, a pretty, rural patchwork of fields and beach; Jack Spratt Beach, at the western edge of Jake’s Place, is next along as you head north and west; here brightly painted wooden fishing boats are pulled up on the sand and there is invariably a fisherman or two on hand tending the nets. This is the safest beach for swimming. The next beach to the west is Frenchman’s Beach, watched over by a landmark ‘buttonwood’ tree that has long attracted the attention of poets, painters and woodcarvers who ply their wares. It’s a great place to arrange trips to the Pelican Bar or Black River. In the opposite direction from Jake’s there’s Calabash Bay Beach, with a few cook and rum shops and a sandy beach. Sleeping Nuestra Casa Guest House Guesthouse $ (965-0152; www.billysbay.com; d US$50; ) Nuestra Casa is just gorgeous; it’s a pretty house run by the lovely Roger and his mum Lillian, who together with their Jamaican staff are the epitome of hospitality.


The Rough Guide to Jamaica by Thomas, Polly,Henzell, Laura.,Coates, Rob.,Vaitilingam, Adam.

buttonwood tree, call centre, centre right, colonial rule, computer age, ghettoisation, jitney, Kickstarter, post-work, Ronald Reagan, Saturday Night Live, sustainable-tourism, trade route

He’ll also take you to Little Ochi (see p.252; 3hr 30min; $120); a ride up the coast and along Black River to see the crocodiles (4hr; $120); and line fishing ($60/hr). All prices are for two people, and there are good reductions for larger groups. Another option is a sunset cruise on Shabba’s Shallow Bar (a home-made catamaran partially shaded with a thatch roof that covers the bar; $20/person) that cruises from the famous twisted Buttonwood tree at the end of Jack Sprat beach to Great Bay and the Pedro Bluff when the weather is nice and the sea is calm. Joseph “Blacka” Brown (T 376 9944) is another reliable tour operator who offers a popular Kingfish Cook-Out tour – a day-long trip (weather permitting) that takes you to a private beach where he will cook up king fish or lobster and serve drinks. Call for prices and more information. 249 Fishing boats, Treasure Beach BREDS THE S OUTH | Treasure Beach and around This nonprofit association was established in 1998 by Jason Henzell of Jake’s and Peace Corps volunteer Aaron Laufer to promote awareness of Jamaican cultural heritage, sports development, entrepreneurship and healthcare for the residents of Treasure Beach.


pages: 650 words: 204,878

Reminiscences of a Stock Operator by Edwin Lefèvre, William J. O'Neil

activist fund / activist shareholder / activist investor, bank run, British Empire, business process, buttonwood tree, buy and hold, clean water, Credit Default Swap, Donald Trump, fiat currency, Hernando de Soto, margin call, Monroe Doctrine, new economy, pattern recognition, Ponzi scheme, price stability, refrigerator car, reserve currency, short selling, technology bubble, trade route, transcontinental railway, traveling salesman, Upton Sinclair, yellow journalism

No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play. 2.1 By the late 1890s, the New York Stock Exchange was already a 100-year-old institution that had survived wars, depressions, fires, and panics. Begun in 1792 by 24 securities brokers who agreed on a minimum commission of 0.25% when trading between each other, it moved progressively from beneath a buttonwood tree on Wall Street, to the Tontine Coffeehouse near Water Street, to the back room of the defunct Courier & Enquirer newspaper, and finally to the grand structure at 12 Broad Street, where Livermore and colleagues would view it with a mixture of respect, awe, distrust, and hopefulness. Although Livermore was not a member of the NYSE and therefore could not trade from the floor, he would have been familiar with the sights, sounds, and smells of the exchange building, which was torn down and rebuilt in its current form in 1903.


pages: 701 words: 199,010

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal by Ludwig B. Chincarini

affirmative action, asset-backed security, automated trading system, bank run, banking crisis, Basel III, Bernie Madoff, Black-Scholes formula, business cycle, buttonwood tree, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, corporate governance, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, discounted cash flows, diversification, diversified portfolio, family office, financial innovation, financial intermediation, fixed income, Flash crash, full employment, Gini coefficient, high net worth, hindsight bias, housing crisis, implied volatility, income inequality, interest rate derivative, interest rate swap, John Meriwether, Kickstarter, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low skilled workers, margin call, market design, market fundamentalism, merger arbitrage, Mexican peso crisis / tequila crisis, Mitch Kapor, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Northern Rock, Occupy movement, oil shock, price stability, quantitative easing, quantitative hedge fund, quantitative trading / quantitative finance, Ralph Waldo Emerson, regulatory arbitrage, Renaissance Technologies, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, Sam Peltzman, Sharpe ratio, short selling, sovereign wealth fund, speech recognition, statistical arbitrage, statistical model, survivorship bias, systematic trading, The Great Moderation, too big to fail, transaction costs, value at risk, yield curve, zero-coupon bond

How could a well-functioning market spawn such chaos? What caused the Flash Crash? What happened to those poor souls who bought stocks at $100,000 per share or sold them for as little as a penny? Could crowd behavior be partly responsible for the distortions in the market movements of May 6? FIGURE 17.1 Apple, Accenture, and Sotheby’s Stock Prices Source: Nanex. Background In the 1700s, stock traders met under a buttonwood tree on Wall Street. In 1792, they created the New York Stock Exchange (NYSE). For more than 200 years, individuals traded stocks face to face. Computer technology has since made trading blindingly fast and largely anonymous. In 2006, the NYSE became an electronic exchange, saying goodbye to the traditional floor brokers and specialists who ran around on those old wooden floors, screaming prices as they went.2 Stock purchases and sales can be completed through a variety of networks: a national exchange such as the NYSE, an electronic communication network (ECN), a large broker-dealer, or a dark pool.


pages: 1,073 words: 302,361

Money and Power: How Goldman Sachs Came to Rule the World by William D. Cohan

asset-backed security, Bernie Madoff, business cycle, buttonwood tree, buy and hold, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, fear of failure, financial innovation, fixed income, Ford paid five dollars a day, Goldman Sachs: Vampire Squid, Gordon Gekko, high net worth, hiring and firing, hive mind, Hyman Minsky, interest rate swap, John Meriwether, Kenneth Arrow, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, mega-rich, merger arbitrage, moral hazard, mortgage debt, Myron Scholes, paper trading, passive investing, Paul Samuelson, Ponzi scheme, price stability, profit maximization, risk tolerance, Ronald Reagan, Saturday Night Live, South Sea Bubble, time value of money, too big to fail, traveling salesman, value at risk, yield curve, Yogi Berra, zero-sum game

CHAPTER 6 / The Biggest Man on the Block CHAPTER 7 / Caveat Emptor CHAPTER 8 / The Goldman Way CHAPTER 9 / A Formula That Works CHAPTER 10 / Goldman Sake CHAPTER 11 / Busted CHAPTER 12 / Money CHAPTER 13 / Power CHAPTER 14 / The College of Cardinals CHAPTER 15 / $10 Billion or Bust CHAPTER 16 / The Glorious Revolution CHAPTER 17 / It’s Too Much Fun Being CEO of Goldman Sachs CHAPTER 18 / Alchemy CHAPTER 19 / Getting Closer to Home CHAPTER 20 / The Fabulous Fab CHAPTER 21 / Selling to Widows and Orphans CHAPTER 22 / Meltdown CHAPTER 23 / Goldman Gets Paid CHAPTER 24 / God’s Work ACKNOWLEDGMENTS NOTES INDEX Other Books by This Author PROLOGUE THE PYRRHIC VICTORY Wall Street has always been a dangerous place. Firms have been going in and out of business ever since speculators first gathered under a buttonwood tree near the southern tip of Manhattan in the late eighteenth century. Despite the ongoing risks, during great swaths of its mostly charmed 142 years, Goldman Sachs has been both envied and feared for having the best talent, the best clients, and the best political connections, and for its ability to alchemize them into extreme profitability and market prowess. Indeed, of the many ongoing mysteries about Goldman Sachs, one of the most overarching is just how it makes so much money, year in and year out, in good times and in bad, all the while revealing as little as possible to the outside world about how it does it.


Debt of Honor by Tom Clancy

airport security, banking crisis, Berlin Wall, buttonwood tree, complexity theory, cuban missile crisis, defense in depth, job satisfaction, low earth orbit, margin call, New Journalism, oil shock, Silicon Valley, tulip mania, undersea cable

Once peopled with products of the Harvard or Wharton business schools, the new crop of "rocket scientists" were just that—largely holders of science degrees, especially mathematics and physics. MIT was the current school of choice, along with a handful of others. The reason was that the trading houses all used computers, and the computers used highly complex mathematical models both to analyze and predict what the market was doing. The models were based on painstaking historical research that covered the NYSE all the way back to when it was a place under the shade of a buttonwood tree. Teams of historians and mathematicians had plotted every move in the market. These records had been analyzed, compared with all identifiable outside factors, and given their own mathematically drawn measure of reality, and the result was a series of very precise and inhumanly intricate models for how the market had worked, did work, and would work. All of this data, however, was dedicated to the idea that dice did have a memory, a concept beloved of casino owners, but false.


Caribbean Islands by Lonely Planet

Bartolomé de las Casas, big-box store, British Empire, buttonwood tree, call centre, car-free, carbon footprint, clean water, colonial rule, cuban missile crisis, discovery of the americas, Donald Trump, glass ceiling, haute cuisine, income inequality, intermodal, jitney, Kickstarter, microcredit, offshore financial centre, place-making, Ronald Reagan, Rubik’s Cube, Search for Extraterrestrial Intelligence, sustainable-tourism, urban planning, urban sprawl, white picket fence

At the eastern ‘bottom’ of Treasure Beach you’ll find Great Bay, a pretty, rural patchwork of fields and beach; this is the least-developed portion of Treasure Beach, where the main business remains a Fishermen’s Co-op building. Jack Spratt Beach , at the western edge of Jake’s Place, is next along as you head north and west; here brightly painted wooden fishing boats are pulled up on the sand and there is invariably a fisherman or two on hand tending the nets. This is the safest beach for swimming. The next beach to the west is Frenchman’s Beach , watched over by a landmark ‘buttonwood’ tree that has long attracted the attention of poets, painters and woodcarvers who ply their wares. Local boat captains congregate here, as does everyone else in the area once the sun starts to set. It’s is a great place to arrange trips to the Pelican Bar or Black River. In the opposite direction from Jake’s there’s Calabash Bay Beach , with a few cook and rum shops and a sandy beach, and Old Wharf Beach , the most private of the bunch, although still accessible by anyone who makes the effort to totter down to the sand.