ill-hedge's  Instablog

Solow Growth Model and Cobb Douglas function - tells us the growth and productivity of economies,

apply this on a smaller scale to another smaller macroeconomy, the Financial Markets.

"A"- TPF is the technology, access to information,

Possibility of creating a production and growth model for an individual trader, given some statistical measures (probability of success, level of diversification, weightings of asset allocation, probability distribution), and "A".

- InsT have comparative advantage in trading vs. RT.


Institutional traders have many advantages over Retail Traders, greater capital, greater labor, and great "A", which is technology, access to information, sheer numbers of people working for you that add wealth,

The "A" is also known as the bloomberg terminal. That is what creates such a big difference,
- it is very costly to retailers
- is a great information advantage

** perhaps a retail trader who owns a Bloomberg Terminal can trader better, along with prerequisites, ie. not too emotional, diversifies, has experience, ....

those who create efficiency within the markets:
market makers, analysts, short sellers, arbitrageurs, speculators, information companies,

distortion:
politics, red tape, regulations, lack of accountability in government, rent-seeking behavior, psychological irrationality (herd behavior...)