emv@math.lsa.umich.edu (Edward Vielmetti) (03/02/90)
Robin Hanson talks about the possibility of creating a "stock-like market mechanism" for betting on future advances in technology. I find it curious that you can trade pork bellies, orange juice, oil, steel, wheat, and rice, but that there doesn't seem to be any publicly available futures market for "commodity" semiconductors. Memory chips have been described as "industrial rice", but there's no way that I can see in the modern marketplace to deal with them in ordinary commodity terms. I mean you can get a quote for Chicago May pork bellies but not for Tokyo 1 MB x 9 100ns SIMMs, and arguably these are similar enough in commodity terms that an open marketplace should be able to flourish. I don't know what the equivalent of a USDA Grade A stamp is on a memory chip, so there might be some 'perishability' questions. Give those program traders another market to work on -- they're using memory-intensive systems, let the programs figure out how to make the most amount of money so that they can buy more memory :-) --Ed Edward Vielmetti, U of Michigan math dept.
bzs@world.std.com (Barry Shein) (03/05/90)
Actually, I think there have been such markets albeit informal. Apple
supposedly signed futures contracts for months in advance to guarantee
a particular price on memory chips. Unfortunately (for Apple), memory
prices dropped and they were stuck taking deliveries, just like buying
a bad pork-bellies contract. It was rumored to have cost Apple
millions.
Anyhow, there's nothing all that magic about futures markets other
than the SEC getting into things when the brokers start bringing in
the public. Maybe it's not real until the prices are listed in the
back of the newspaper?
-Barry Shein
Software Tool & Die | {xylogics,uunet}!world!bzs | bzs@world.std.com
Purveyors to the Trade | Voice: 617-739-0202 | Login: 617-739-WRLDhanson@ptolemy.arc.nasa.gov (Robin Dale Hanson) (03/07/90)
In <9003041927.AA18921@world.std.com> Barry Shein writes regarding Futures markets for semiconductors: > Actually, I think there have been such markets albeit informal. Apple > supposedly signed futures contracts for months in advance ... > Anyhow, there's nothing all that magic about futures markets other > than the SEC getting into things when the brokers start bringing in > the public. Maybe it's not real until the prices are listed in the > back of the newspaper? Actually, having an organized market with public prices, standardized commodities, and guaranteed delivery is a substantial improvement over separate negotiations using whatever information the parties can glean. Transaction costs are substantially reduced, including those due to strategic behavior, distrust, and the need to research prices. This makes it easier for speculators to trade and rationalize prices. This added participation further decreases transaction costs due to market illiquidity. (I won't defend the SEC, however.) We're talking Markets 101 here. Perhaps followup should go to sci.econ. Robin Hanson hanson@ptolemy.arc.nasa.gov (or hanson@charon.arc.nasa.gov) 415-604-3361 MS244-17, NASA Ames Research Center, Moffett Field, CA 94035 415-651-7483 47164 Male Terrace, Fremont, CA 94539