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Weekend reading: The end of open outcry

Good reads from around the Web.

You might find it strange to read on Monevator a slight sniffle on news [1] that the CME Group in Chicago is going to close most of its futures trading pits.

After all, shouting incomprehensible phrases while pushing and shoving and sticking two fingers up at the person next to you is the stuff of a Saturday night out in Blighty, not the kind of sober-minded investing we espouse around here.

But in truth I’ve long been attracted to the romance of the markets. I admit that unlike my die hard passive investing [2] co-blogger, I’m partly an active investor [3] for that reason.

I mean, one of my favourite investing books is Reminiscences of a Stock Operator [4], an old classic which The Accumulator would probably round up and burn if he was ever made Chancellor.

(Of course I’m well aware of the downsides [5] of excitement in investing, too…)

Buy buy buy! Sell sell sell!

Doesn’t everyone love this scene in trading places?

Here’s a few eloquent words [6] from somebody who knew the trading pits (which incidentally disappeared from London with the financial Big Bang back in 1986):

The floor was the place for dreamers.  It was the place for entrepreneurs, because that’s what independent traders really were.  It was a place where a guy that never graduated from high school but had his wits about him, and a high appetite for risk could make a living.  Some even got rich.

The floor was a place for everyone and anyone.  It was like America, democratic.  All walks of life.  All you needed was enough money to rent a seat and you were a trader.  No special qualification or certification. No degree.  Sure, there were cliques.  It was clubby.  Not everyone was ethical.  Not everyone liked everyone else.  There were fights.  But, the floor reminds me of startup companies today.

The floor was a constant vaudeville show.  Colorful.  Frenzied.  Loud.  Smelly.  Smoky.  It was on the run entertainment from 5AM to 4PM. Every day. Tourists would come like the zoo, stand behind thick panes of glass and point at the animals.

The floor was an economic engine that built all of the cultural institutions in Chicago.  All of them.  They have roots in the floor.  The banks that line LaSalle Street are here for one reason.  Chicago would be nothing without its exchanges.  Fortunately we made the right choices in the late 1990’s and Chicago still has its exchanges.  The city and state would be in even worse shape without them.

But maybe most of all, the floor was about hope.  It was a place where you could realize some of your wildest dreams.  You could go from electrician, cop, milk man, farmer, military, to wealthy trader.

You and I know that sensible investing for your retirement is about rebalancing a portfolio [7] of index tracking funds.

But nobody is ever going to make a movie about that.

Have a good weekend!

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Product of the week: Want to boost the savings rate on your cash ISA? Check out this table [23] of the best contenders courtesy of The Telegraph.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1 [24]

Passive investing

Active investing

Other stuff worth reading

Book of the week: I haven’t read it yet, but Hipster Business Models [40] sounds intriguing, especially to an owner of a fairly successful investing website that should surely be generating more money. If you want to find out how to stick it to the man by selling him stuff, it looks a good read.

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  1. Note some FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [ [43]]