Great Expectations Essay

As part of my GCSE coursework, I have read two novels written by Charles Dickens. The first novel is ‘Oliver Twist’, from, whwhich I will look at a villain called Bill Sikes who is a thief, a housebreaker, a murderer and one of Ddickens’ most menacing characters. I will look at how Dickens characterises him as a villain. s makes him a villain. The second book I read was ‘Great Expectations’, infrom which I will look at another villain called Magwitch who bullies a young boy named Pip into helping him q. escaping from prison. I will also look at how Dickens characterises himmakes him as a villain.. I will then compare Bboth characters will then be compared and contrasted in my study. . The first person I will look at is Bill Sikes who is a murderer, a thief, a housebreaker, a bully and is part of Fagan’s gang. Before we meet Sikes, Dickens dDescribes his environment. Firstly it is described as an ‘obscure parlour of a low public house’, a ‘dark and gloomy den’, ‘in the filthiest part of Little Saffron Hill’ and ‘where no ray of sun ever shone in the summer’. Adjectives such as obscure, low, dark gloomy and filthiest are all negative and suggest to me a very unpleasant and rough environment. The place being described as ‘where no ray of sun ever shone in the summer’, suggests to me further of the place’s depravity and that the public house is set in a back ally. The room Sikes is situated in is called a ‘Den’, A den is a place where animals usually live, so it suggests to me that this is an inhuman place, not suitable for a persons habitation. Over all I can say that the atmosphere is excessively bleak and miserable, the setting is used to reflect character and to create atmosphere suggestingand Sikes is in part, athe product of his own environment. Sikes is said to have been ‘brooding’, this suggests that Sikes had been in deep thought, scheming and plotting evil things. Sikes is described as ‘strongly impregnated with the smell of liquor’, this suggests to me that he we was highly intoxicated and the result, would mean that he would be grumpy, and irrational. He wares ‘a velvet coat, drab shorts, half-boots and stockings. As you can see his clothing is very drabmonotonous and this suggests to the reader the obscure and sinister nature of Sikes and the world he inhabits. ity Sikes of which Sikes can possess. Sikes is described as ‘even by that dim light, no inexperienced agent of police would have hesitated for one instant as Mr. William Sikes’. This suggests to the reader that Sikes is well known by the police and is obviously a common criminal. Sikes’ dog is described as being ‘red-eyed’. This is symbolic of depression and anger and many other negative emotions, so it is apparent that the dog is symbolic to the negativity in Sikes’ environment and is also a product of bad environment may be symbolic that the dog is symbolic of the harsh environment. The dog sits at his mastersmaster’s feet, this shows the relationship between the dog and his master as being close and intermit and proves Sikes’ ownership of the animal. Later the ‘unoffending’ dog is attacked and by Sikes, this shows that Sikes is very volatile, unpredictable, unstable and dangerous because he attacks his dog for no cause and acts very spontaneously with his aggressiveness. After the attacking, the dog avenges his attack it, by attacking Sikes’ half-boots. This shows that the dog has a bad temper and has a lot in common with his master. This eventually leads to a fight and Sikes’ attempted murder of the dog. This shows how malevolentsatanic Sikes’ can be. Sikes is a very aggressive man in his language, he ‘blasphemes’ and ‘curses’, ‘thrusts’ and ‘swears’ This type of language is rather unpleasant, shows negative emotions to a reader. This sort of dictionspeech gives a sense of violence to the reader. When Sikes speaks to his dog he says ‘Keep quiet, you warmint! Keep quiet! ‘ Here he commands and insults, so it shows that he is violent when he talks. We know this because Dickens has used exclamation marks to show that he was talking in anger. This can also be seen when he talks to Fagan for example ‘you white-livered thief! ‘ This shows the anger in the voice with the use of insults and exclamatoryion phrases. marks. Sikes also seeksspeaks to Fagian with a ‘fierce gesture’gesture’; this adds to Sikes’ sinister character because it suggests that again Sikes is angry and violent with his oral expression. Sikes’ often ‘growled’, had a ‘fierce sneer’ and speaks ‘savage like’. This further makes him look obnoxious and unhappy. These details present him as brutal, animalistic and primitive. Sikes speaks with the ‘harshest key of a very harsh voice’. This suggests that he is very unpleasant when he usually speaks. Therefore I would say that the way in which Sikes’ speaks shows that cruelty and ill-intent of his character. Thus from this extract we are given the impression that Sikes is incredibly evil, menacing, he is unhappy, intimidating, ferocious and volatile. This impression is reinforced later in the novel in which we look at Sikes killing his prostitute lover Nancy and the events leading up to it. It begins with Noah, repeating what he told Fagin to Sikes. Fagin ‘cries’, and says ‘Tell him that, tell him that.

Teachers and Faculty Carry Concealed Weapons on Campus Essay

Teachers and Faculty Carry Concealed Weapons on CampussImagine the feeling of safety as if it is invariably within our control or ability. people that are in ownership of a hidden arm are cognizant of the duty and the consequences of what can go on when utilizing a hidden arm. Safety of instructors. all other employees and pupils at a larning intuition can greatly better if the staff could be armed with hidden arms. Besides we must retrieve that all citizens of the United States have the right to transport and have a arm as guaranteed by the 2nd amendment of the fundamental law of the United States of America. Safety and security could be greatly improved with instructors and module transporting concealed arms on campus. hence. the instructors and module addition security ; the safety of the pupils can besides be achieved. The 2nd amendment to the fundamental law guarantees people the right to have and utilize a arm without intervention from the authorities ( Constitution ) . Although to transport a hidden arm requires extra permitting in all the provinces and districts of the United States. This is to assist everyone is safe and guarantee that a arm does non stop up in the incorrect custodies. This can dwell of a complete and through back land cheque. fingerprinting. and even mental wellness ratings may be required in some provinces. Some provinces besides require the applicant exhausted clip on the shot scope. schoolroom. and go to a basic huntsman instruction class. This includes the safety demands that a individual is expected to follow when in ownership of a arm and the proper manner to procure a arm when finished with its usage. After the certification procedure is completed this ensures the individuals has the ability to decently have and keep a hidden arm license. Most instructors and module accordingly would hold to take the clip to procure the proper certification so that they would be compliant with all the province and local Torahs to transport a hidden arm. Since. the instructors are traveling to hold more cognition of the pupils to cognize how to defuse a hostile or bad state of affairs. On the other manus the module being familiar with the campus layout would cognize how to procure the campus for the safety of everyone else on the campus. Even if this state of affairs merely happened one more clip and it saved the life of one individual instructors and module transporting a concealed arm could extinguish this state of affairs from of all time go oning at any learning establishment. Most instructors have already spent at least four old ages or more in school to learn and assist people larn in a safe and unafraid environment. Not to be in fright that a disturbed or disquieted pupil brings a arm to school and intends harm person. Besides teacher’s giving a class that a pupil thinks they should hold received a better class than they did. Then the pupils that carry arms to school to settle a mark with another pupil or even the spill over from an incident related to old pack activity. As a consequence of instructors and module transporting a concealed arm a 2nd idea would hold to be raised in the culprits mind cognizing they were traveling into a state of affairs where the resistance is besides transporting a hidden arm. Besides. let’s non bury that this is a right that we have and are non in any manner be forced into or even have to take part in. Similarly. school systems all over the United States are engaging a school resource officers and private security contractors to hold armed forces on campuses. This is known to diminish the opportunities of state of affairss intensifying with armed individuals on campuses. This would supply the added security that is needed to keep order and safety on our campuses. This will guarantee the pupils. instructors. module members are stay safe to foster their instruction and keep the unity of the acquisition establishments today and forever. However. the cost for the added constabulary or contracted security forces. and this will far transcend the cost of developing instructors or module forces to transport a hidden arm on campus ( Lewis ) . Therefore. allow us non bury that all of us will necessitate to utilize these establishments for schooling. proving. and larning a new occupation. It is safe to state that making these things in a safe environment is traveling to do that easier on anyone when preforming any undertaking required at larning establishments. Merely people that are willing and able to take part in this type of plan feel a demand for the added protection and security for our kids in school. instructors. and module. What would hold happened if a keeper noticed the culprit at Sandy Hook Elementary School and challenged him and he ne'er breeched the school. What if the gunslinger was challenged by the keeper before even acquiring inside the school. With a hidden arm on the module member this could hold been wholly avoided and ensuing in no loss of any lives. As a consequence of the presence of arms on campuses or anyplace we are ever traveling to hold the menace of force proving our security steps. As a consequence of instructors and module members transporting a concealed arm this will cut down the menace of force in our school guaranting that our kids safe and unafraid when we leave them at a learning establishment. Plants CitedLewis. Lyndsey. â€Å"Nevada Considers Arming Professors. † Chronicle of Higher Education 53. 44( 2007 ) : A20. 1/7. Print.Fundamental law of the United States of America. Bill of Rights the Second Amendment. † The rightto have and utilize a weapon† . World Wide Web. archives. gov/exhibts/charters/bill_of_rights. ( 1789 ) .

Causes of XY females Essay Example | Topics and Well Written Essays - 500 words

Causes of XY females - Essay Example Studd (2003) points out that earlier such condition was called Testicular Feminization Syndrome (TFS), but this is now being considered somewhat inappropriate and inaccurate because the testes are not known to produce feminizing factors. This phenomenon is therefore known as Androgen Insensitivity Syndrome (AIS). This insensitivity too is found to occur in varying measures in people. The condition when the Androgens find no response with age, is termed as Complete Androgen Insensitivity Syndrome (CAIS). The growth as an 'XY female' is considered as abnormal and hence put into the category of patients. Researchers have found that such patients lead a normal life till their abnormal condition is diagnosed by doctors. For example, when a form of male pseudohermaphroditism or testicular feminization syndrome is detected. In this case the androgen receptor sees mutations which in result in X-linked recessive form androgen insensitivity. The childhood of such persons remains quite normal but when the child enters the age of puberty, problem starts. In fact, normally even the parents fail to fathom the distinctive nature of their children and they come to know about it only when they visit specialist gynecologists in order to treat the sterile behavior. Abnormality in Androgen Receptor (AR) is stated to be the reason behind CAIS.

Case Study Essay Example | Topics and Well Written Essays - 500 words - 39

Case Study - Essay Example Hence, training will make him learn how to stay composed and calm when he faces a stressor, and he will prove to be confident and solemn. Don should also encourage Gary to focus on his strengths and shine his capabilities that he has, through practicing them. 2. It is all about employee development. Employee development is a kind of strategy that employers adopt to increase employees’ knowledge, talents, and expertise in particular areas they work in. It is important for Don to create a balance between Gary’s individual career objectives and organizational milestones, in order to make him achieve employee development. Don should use techniques of training, coaching and empowerment (Ellinger at al.) to enhance Gary’s development as a leader. Employee development activities that Don should use include: (1) stress-coping training courses in work time, (2) work-based development activity in work time, (3) career planning activity in work time or in Gary’s own time, and (4) voluntary learning in Gary’s own time (Birdi, Allan and Warr). All of these development activities will produce beneficial results and commitment to work. If Don is training Gary himself, then the training aids that he can use include: pr esentations, slides, projectors, movies, charts, graphs, flash cards, pictograms, handbooks, manuals, libraries, internet, reading rooms, posters, and enlarged drawings. 3. Certain techniques help employees to bring out their leadership skills and learn new one. For example, teamwork creates such an environment in which employees can learn new leadership skills and competencies (Gallie et al.). This is because the employer distributes tasks on multi-functional basis, requiring different people with different skill sets. This system of work organization requires employees to work on a collaborative platform on

What goals has liberalism pursued and why have they proved so Essay

What goals has liberalism pursued and why have they proved so controversial - Essay Example The ideally competitive market in economic theory, where economic representatives are fully informed and ideally rational, is a fiction. It is not in existence, nor is it even compared to, in the real economic practice.Yet this fiction influences greatly upon modern political theory. The tempting power of the ideal market grounds on its capacity to create elegant and disarmingly easy solutions to difficult problems. We can come to see, for example, how the uncoordinated activity of economic representatives can cause socially desired states of affairs (Moore 1993, 97). In much the same manner, the ideal market gets into normative political philosophy partially because it can be showed as illuminating essential values. Defenders of the market maintain we can get to know much about individual liberty, the encouragement of mutual advantage, and efficiency in the distribution of goods by studying it (Guathier 1986, 119). However, this cardinal limitation of the market for many theorists s hows its supposed insensitivity to the demands of egalitarian justice (Ashley 2003, 112). This is partly because modern market societies demonstrate a great deal of social and economic inequality. However, egalitarians have also been inclined to suppose that there is an integral flaw in the ideal of a free market society (Berkowitz 1999, 140). In traditional left-wing critiques, the market has been showed as the opponent of equality on various grounds: it results exploitation; it causes alienation; it is an enemy of genuine freedom; and it is corrosive to the bonds of community (Kautz 1995, 32). It is necessary to notice then that the leading contemporary advocates of egalitarianism, for example Ronald Dworkin (1991), violently defend the use of the ideal market as a theoretical method for the articulation of egalitarian distributive justice and liberal political morality. On the same grounds Judith Shklar's "barebones liberalism" (Whiteside 1999, 501) actually fails to justify either values she proclaimed or liberal ideals of equality. In the end of her career, Shklar made her liberalism specific and took it in an egalitarian direction. She did so by launching skeptical issues at the certainties usually used to rationalize inequalities. While defending equality she ended up making empirical and ethical affirmations that her skepticism had expelled, providing strong proof for the conclusion that skepticism alone is insufficient for creating an egalitarian politics (Tomasi 2000, 46). In this direction of her thought, Shklar defined what Isaiah Berlin calls a "plurality of values." Like Berlin's, her way of thinking affirms "the permanent possibility of inescapable conflict between values" (Berlin 1990, 80) Although Shklar in some way agreed with the liberalism of Hobbes and Locke, she doubts the premises of their arguments (Dagger 1997, 98). The problem is that real consent - as opposed to the consent imagined in tales of the social contract - is elusive (Plaw 2002, 267). The fact of the matter, Shklar (1986) suggests, is that liberalism rests on moral intuitions that are plural, vague and controversial. All along liberal universalism was an illusion. "To a large extent," she concludes, "it was European ethnocentrism and indifference to historical variety and change that made discourse relevant to all' seem plausible in the first place" (Shklar 1967, 278). The difficulties befalling her "barebones liberalism" are the same as those that debilitate the "agonistic liberalism" of theorists like Joseph Raz and Isaiah Berlin (Gottfried 1999, 211). Like Shklar, these theorists propose a defense of liberty grounded in a "radical choice between incommensurables," to use John Gray's phrase (cited in Hardin 1999, 162). This is a choice that can only be settled in political competition - rather than in a putatively rational consensus. But Gray argues convincingly that accepting value pluralism does not entail privileging a liberal political

Selection Plan Essay Example | Topics and Well Written Essays - 1000 words

Selection Plan - Essay Example The letter gives a summary of the individual’s knowledge, skills and attributes. It is usually written by a previous employer or an education institution. Although the individual may be strongly recommended, the validity of the assessment is low. However, the company incurs low costs. In this test, the assessment is done on the personality types of the individual. In this case, the individual is tested on his or her ability to undertake appropriate interventions after patient assessment. The individual must be able to exhibit some characteristics that are necessary for the best interventions in the assessment of the patient. This category is important because, the individual and the patient must be able to relate well with each other in order to provide the required interventions. For example, an extrovert will associate well with the patient. Other vital characteristics are (a) agreeableness – this type of person is helpful and thus fits well in the position, (b) conscientiousness – the important characteristic is dependability, (c) emotional stability – calmness and security are very vital, and (d) openness to experience - cautious and broad minded are very essential. There are three things that must be looked at; faking, validity and appli cant reactions. This test is low in cost and its reliability is very high meaning it can provide the desired results. Its validity is medium and the reactions that accompany most of these tests are negative. However, the adverse impacts are low. In this test, the applicant is tested on the job knowledge, how well the applicant can execute the work given. The test is important in accomplishing the first two KSA statements; reports pertinent findings and acts accordingly, and administers the correct medications and treatments. Without the job knowledge, these two KSA statements cannot be accomplished. There

Philosophy Essay Example | Topics and Well Written Essays - 2500 words - 4

Philosophy - Essay Example This is due to change in the human behavior that has taken place. Crime is mostly committed by the youth. Youth is now very conscious of the different types of crimes that can be conducted and the way it can be executed. This information is easily accessible due to the technology that has advanced at a very fast pace. Thus to combat crimes and have a society where people can live without fear, where they can live with dignity, education has become important. Education refers to formal system that teaches them how to conduct their lives in a decent manner; how to interact and react with others in the society. It is found that youth has been deprived of formal education as there are numerous barriers. It is also recognized that education alone can bring about a harmonious society, a community that would think of the welfare of others before their own self. Thus it is essential to understand what these barriers are and how they can be overcome so that the youth is not deprived of educat ion. Youth is the period of transition from childhood to adulthood and they are tossed from one state to another either because of the compulsion to abide by the norms of the society or because they undergo a mental turmoil themselves. Youth has been defined by UNESCO (2004) as persons between the age of 15 and 25. They are consistently unstable and are undergoing the period of evolution. This is precisely the age when they need the right guidance and direction how to conduct their lives. They are full of vigor and energy but they reel under the agony of indecision. Youth is a period when they have to acquire new tools to become part of the workforce and assume responsibilities in the world (Soares, 2000). The transition into adult life is a process of complex socialization with multiple influences and transfers (Pais, 2000). Accrued experience of the past assist in transition to adulthood added to which are the aspirations and plans for the future. The youth’s

The five forces model is used for assessing the attractiveness of Essay

The five forces model is used for assessing the attractiveness of industry sector. Evaluate the key factors that need to be considered when making a assessment of the current industrial environment - Essay Example When the number of players in a market increases, revenues will be shared among competitors and hence profitability of individual firms will decrease. According to this concept, an industrial sector in which â€Å"entry barriers are high and exit barriers are low† is considered to be potential for investment (Kotler, 2009, p.226). Availability of substitutes increases the tendency of customers to switch their demand to alterative products or services. To illustrate, coffee is a close substitute for tea. While analysing the threat of substitutes in an industry, the marketer must also consider a number of factors such as buyer’s inclination to substitute, prices of substitutes, switching costs, and availability of substitutes. An industry having few close substitutes is recommended to be the most attractive segment. Buyer power indicates the customer ability to influence marketers and it mainly depends on buyer volume, availability of substitutes, and degree of market competition. An industry with low buyer power is potential for business operations. Likewise, supplier power reflects the ability of suppliers to put the organisation under pressure. When there are few substitute products/services and supplying firms, supplier power over the marketer is relatively high. Such an industrial environment would not be beneficial for a business. This factor plays a pivotal role in determining the competitiveness of an industry in majority of the cases. An industrial sector where the intensity of competitive rivalry is low is the most potential for making an investment. This model is widely used for micro-environment analysis of industries since its development. For instance, it can be effectively applied to assess the potentiality of airlines industry in order for making a decision regarding whether or not to

Phuket Beach Resort Essay Example for Free

Phuket Beach Resort Essay Case Report : Phuket Beach Hotel Executive Summary Phuket Beach Hotel has space located on second floor of the main building which was underutilized. Planet Karaoke pub was expanding in Thailand and looking for a venue in patong beach area for setting up another outlet. Planet Karaoke Pub found unused space of the hotel most suitable for their new venture. Beach Karaoke pub project does not considered salary as excess man power is available but if we considered cost of staff salary, Beach Karaoke pub becomes less attractive. There are many factors that cannot be quantified but they need to be addressed for the evaluation of the projects including Security issues. Additional security guards can be hired to maintain law and order but the costs of extra security is not provided for analysis. Recommendation Wanida should suggest an investment recommendation in favor of the Planet Karaoke Club (PKC) project. Reference : On-line segments Text Book – Financial management (Theory Practices) Phuket Beach Hotel report

The Power of Love Essay Example for Free

The Power of Love Essay â€Å"The Lady with the Pet Dog† are both stories of two unhappy pair of people who find love through unexpected extra-marital affairs. In both stories, the lovers are not seeking to have an affair, but meet randomly while on vacation without their spouses. The characters all share a sense of unhappiness in their marriages, but find in their lovers’ eyes an acceptance leading to self-discovery and fulfillment. Because of the bond formed between the lovers each comes to the realization that life must include the other, for only in the relationship are they made whole and able to find their reason to live. Chekhov and Oates’ short stories share a common theme that true love is a random, transformative event which brings about a feeling of acceptance and completion that serves to give a purpose and meaning to life. Similarly, each story’s pair of characters meet based on chance and proximity. In Chekhov’s story, Dmitri first notices â€Å"a young woman†¦ walking along the embankment; behind her ran a white spitz† (266). In Oates’ story Anna relates the first sight of her lover: â€Å"A man †¦ approaching her†¦[a] small †¦ golden dog, bound[ing] near † (981). These brief introductions lead to the characters interacting; each couple aided by the dog found in the title, allowing an entry into conversation. In Chekhov’s story, â€Å"The lady sat down at the next table, three steps away from him†¦ [he] gently called the spitz, and when the dog came over, he shook his finger at it† (267). This was the opportunity for Dmitri to meet his lover, Anna S.. In Oates’ story, Anna finds â€Å"her soul strained to fly outward, to meet with another person,† so she, â€Å"tied her hair back†¦ and went down to the beach†¦[where] the man glanced around at her †¦ [and] smiled† (981). Unlike Chekhov, Oates does not allow her male character to be called by name, allowing the female narrator, Anna, to have her emotions and uncertainty dominant. In both stories the narrative relates how the principle characters, though opposite in gender, are intrigued by their chance encounters and pursue their new acquaintances. In Chekhov’s story, â€Å"after dinner they walked off together – and a light, bantering conversation began†¦ Afterwards, in his hotel room, he [Dmitri] thought about her, that tomorrow she would probably meet him again. † In Oates’ story, Anna â€Å"spent the rest of the day reading†¦She thought again of the man on the beach. She lay the book aside and thought of him: his eyes, his aloneness, his drawings of her. They began seeing each other after that. † Both stories consummate the relationships. In Chekhov’s story, Dmitri found his chance: â€Å"he looked at her intently and suddenly embraced her and kissed her on the lips†¦ Let’s go to your place †¦Ã¢â‚¬  he said softly. In Oates’ story, Anna takes the initiative: â€Å"she heard herself asking if he would like to come in. She allowed him to lead her inside, to close the door. † After they have made love, and after a period of silence and reflection, both female characters begin to feel the weight of their actions. For Chekhov’s Anna, ten years younger at age 20 than Oates’ Anna, she had â€Å"a feeling of awkwardness, and an impression of bewilderment, as if someone had suddenly knocked at the door†¦ the ‘lady with the little dog,’ somehow took a special, very serious attitude towards what had happened, as if it were her fall. † Oates’ older Anna, impulsively questions her lover, â€Å"Do you †¦ do you love me? † And her lover answers, â€Å"You’re so beautiful† (983). Having felt so alone before, so uncertain, Oates’ Anna absorbs this adoration and â€Å"this beauty, shy and glowing and centered in her eyes†¦Ã¢â‚¬  (983). Later, like Chekhov’s Anna, Oates’ Anna also â€Å"felt a strange, idle fear, a sense of the danger that would not recognize her as the lady in the drawing, the lady with the pet dog. There was nothing to say to this man, this stranger,† and, â€Å"[t]his is the end of one part of my life† (984). Chekhov’s Anna also tearfully felt: â€Å"I’m a bad, low woman, I despise myself and am not even thinking of any justification†¦ I swear to God that I couldn’t control myself any longer, something was happening to me, I couldn’t restrain myself† (269). Oates’ Anna was also scared but â€Å"it seemed to her necessary to give in; she had to leave Nantucket with that act completed, an act of adultery, an accomplishment she would take back to Ohio and to her marriage† (983). Though each pair did not look for an adulterous relationship, each pair found just that. After the initial romantic attraction and feelings of loneliness were satisfied through passion, each set of lovers still felt the relationships were temporary and meant to end. After hearing from her husband, Chekhov’s Anna declares â€Å"It’s good that I am leaving †¦ [it’s] fate itself† (270). Oates’ Anna believes: â€Å"Now something will happen. It will come to an end† (984). Even Dmitri thought â€Å"[a] month would pass and Anna †¦ [will] be covered by mist in his memory† (272). In contrast to Chekhov’s story, Oates’ lovers do not part easily. In their last drive together, Anna’s thoughts varied from believing her lover would be relieved when he left her to the thought that â€Å"this man was her savior, that he [has] come to her at a time in her life when her life demanded completion† (977). Oates’ Anna is undecided, clinging, yet pushing her lover away. She put a hand on his arm, a claim. He turned to her and smiled and she felt that she loved him,† but, â€Å"at the same time she understood †¦ she would leave him soon, safely, and within a few days he would have fallen into the past †¦Ã¢â‚¬  (977). No matter what their plans, the affairs’ end doesn’t come easily to any of the lovers. Their minds continue to be filled with memories of their love. Each male character travels to see their lovers again, going to a public theatre and concert respectively. Chekhov’s Dmitri realizes when he sees Anna S. hat she has changed him, â€Å"when [he] looked at her, his heart was wrung, and he realized more clearly that there was now no person closer, dearer, or more important for him in the whole world; this small woman†¦ now filled his whole life, was his grief, his joy, the only happiness he now wished for himself† (274). Chekhov’s Anna also confesses â€Å"I think only of you [Dmitri] all the time, I’ve lived by my thoughts of you† (275). Oates’ characters are not as verbally expressive, but their actions convey their inability to separate, â€Å"she went to him at his hotel. She wept, pressing against him, demanding of him, ‘What do you want? Why are you here? ’† (985). â€Å"I want to talk about last August,† he replied and â€Å"they became lovers again† (985). With these declarations and actions the lovers’ bonds of attraction begin to evolve into deeper, intimate unions forged by compatible needs which their respective spouses cannot understand or satisfy: the characters are finding true love for the first time. After realizing their love, the principle narrators also find within themselves a feeling of acceptance, and fulfillment with their new relationships. In â€Å"The Lady with the Little Dog,† Dmitri determined that â€Å"by some strange coincidence, perhaps an accidental one, everything that he found important, interesting, necessary, in which he was sincere and did not deceive himself, which constituted the core of his life, occurred in secret† (276). His relationship with Anna fulfilled him in a way that his overt life could not. â€Å"For him it was obvious that this love of theirs would not end soon †¦ at that moment he saw himself in the mirror† (276). The mirror functions in both stories as the catalyst for the narrator’s awareness of their fulfillment in the newly forged relationship. In the mirror Dmitri sees his gray hair but â€Å"only now, when his hair was gray, had he really fallen in love as one ought to—for the first time in his life† (277). For Oates’ Anna, as she again prepared to leave her lover, â€Å"she happened to catch sight of his reflection in the bureau mirror †¦ preparing also to leave†¦ and she realized that he existed in a dimension quite apart from her †¦ she felt a miraculous calm. This man was her husband truly †¦ they [have] been married haphazardly and accidentally for a long time†¦ she [loves him] above any other person in the world, above even her own self-pitying sorrow and her own life† (987). With the principle characters’ discovery that their love affair was now their primary relationship, giving them emotional security and a fulfilling sense of completion, they also realize that their lives have changed direction. Oates’ Anna concludes that her lover is â€Å"her destiny. And she does not hate him, she [does] not hate herself any longer; she [does] not wish to die; she [is] flooded with †¦ certainty. Anna realizes, a â€Å"gratitude, [and] pure selfless energy †¦ she [knows she has] been behaving correctly; out of instinct† (987). Oates’ Anna concludes love is her â€Å"triumph,† overcoming unhappiness with a new â€Å"beginning† (987). Chekhov’s Dmitri changes his goal from one of secrecy and stolen moments to thoughts of â€Å"how they could free themselves †¦ it seem[s] that †¦ the solution [will] be found, and then a new beautiful life [will] begin† (277). The short stories â€Å"The Lady with the Little Dog† by Anton Chekhov and â€Å"The Lady with the Pet Dog† by Joyce Carol Oates both tell of true love found despite the shame of marital infidelity. Though the stories unfold with opposing gender’s center of consciousness, differing chronological development, and unique expositive style and emphasis, the stories have a common theme of the redemptive and transformative power of true love.  Through similar plots, climactic scenes, and open endings, the stories reveal the two pair of lovers’ fulfillment in their first real love and their new sense of direction and desire for a fresh start with their love in the open.

Stem Cell Research and Utilitarianism

Stem Cell Research and Utilitarianism Janelle Akomah What if there was an opportunity to develop a cure for diabetes, HIV, or cancer? However, in order to achieve such a task, research and manipulation of embryonic cells are required. One may question the viability of the cells and if the embryos or fetuses are regarded as human lives. Stem cell research advances the knowledge about how an organism develops from a single cell and how healthy cells replace damaged cells in adult organisms. This paper will focus on the support of stem cell research and its importance in the future of medicine. Stem cells are undifferentiated cells that and renew itself and differentiate to yield some or all major cell types of tissues or organs. The potential in regenerating or manipulating stem cells for future treatment of genetic conditions or chronic diseases is profound and is needed for treatment of medical conditions. Utilitarianism is the theory of justice that is supportive of stem cell research. The foundation of this theory is â€Å"the great est happiness† principle. The lives that can be saved are immeasurable. But what about the embryos and fetuses that are destroyed in the process? If embryos are considered lives, stem cell research can be essentially considered as murder. The primary objection that may apply is that utilitarianism makes no room for individual rights. Sacrificing the life of one to save millions may be worth it and this paper will state the major points of support for stem cell research. Stem Cell Research Controversy Stem cells are undifferentiated cells in tissue that serve as an internal repair system that divide to replenish other cells within the body. These cells are capable of renewing themselves through cell division and can divide and repair damaged or worn out tissue. Human embryonic stem cells are stem cells that are derived from human embryos. Stem cells are able to divide and renew themselves for a long period of time, unspecialized and can give rise to specialized cell types (US Department of Health and Human Services, 2009). Current research of stem cells includes controlling cell proliferation and differentiation through identification of how undifferentiated stem cells convert to differentiated cells that form the tissues and organs. Then controversy in stem cell research involves the creation, usage, and destruction of embryos. Creation of human embryo stem cell line requires destruction of the human embryo. At Harvard University, researchers attempted to transfer the nucleus of a somatic cell into an existing embryonic stem cell to create a new stem cell line. The ethical issue of manipulation and destruction of the human embryo and its stem cells center the debate on stem cell research. The pro-life movement is stemmed from the concern of the rights and status of the embryo as human life. Until recent years, stem cell research included removing tissue from an aborted embryo to get material to evaluate and study. Researchers are now reverting to obtain and manipulate pluripotent stem cells without th e use of embryos. In the past, ethical issues of scientific research on aborted fetuses did not justify medical benefits. Researchers began evaluating embryonic stem cells because they represent the earliest stage of later cell lineages and provide information on how development of tissues arise and treatments to cure or prevent chronic diseases (Robertson, 2010). Those against embryonic stem cell research believe that fertilized eggs used in the laboratory are human beings or individuals with rights, moral and legal statuses of fully born persons. These individuals view destruction of embryos as murder or a sacrifice of the weakest for the interest of others. Those that support stem cell research do not view embryos to have interests or rights and should not be protected at the cost of scientific research. They also do not believe that fetuses develop any neurological capacity to feel pain. Support of Stem Cell Research Stem cell research has the potential to save millions of lives and give a new start to those that may have been threatened by chronic and/or fatal conditions. The conditions considered for potential cures include spinal cord injuries, multiple sclerosis, diabetes, Parkinson’s disease, cancer and Alzheimer’s disease. The possibility of reversing the effects of aging and prolonging life is beneficial for those who are interested. It may also increase the quality of life among many individuals. It is difficult to determine if embryonic stem cells are considered human life. So why not research the early stages of human development to facilitate medical advances for mankind? If we can improve the quality of life for individuals with chronic conditions by exploring the use of embryonic stem cells, why not research them? There can be a comparison of stem cell research of embryonic stem cells to that of individuals in the military. People are recruited, trained, and deployed to protect the country from harm or terror. In the end, it is all done for the greater good and to save lives. In stem cell research, embryonic stem cells are researched by manipulation or destruction to develop a stem cell line or cure for many progressive and fatal chronic conditions. This research is done to provide a line of defense against diseases that are harmful to the human being. When we look at the two examples, although different approaches, the overall goal is to protect the human race. I look at stem cell research as a way to protect human life against many harmful invaders that decrease the overall quality of life and may cause death. Utilitarianism It is known as the â€Å"greatest happiness† principle and utilitarianism argues that justice is maximizing individuals’ happiness and minimizing pain. John Stuart Mill, an English philosopher, stated acts should be considered as morally right or wrong if the consequences are of significance that an individual would wish to act in a preferred manner (West, 2012). These actions support the greater good for the greatest number. Utilitarianism defines morality as the maximization of total net expectable utility for individuals affected by an action or decision. There were multiple philosophers of utilitarianism including John Stuart Mill and Jeremy Bentham. Both philosophers proposed this theory as a form of consequentialism which states that consequences are the ultimate basis for judgment about right or wrong conduct. Bentham stated that every moral argument should draw on the idea of maximizing happiness (Sandel, 2009, pg 32). He notes that the highest principle of mora lity is to maximize happiness and the overall balance of pleasure over pain. Bentham argued that every moral argument should draw on maximizing happiness (Sandel, 2009, pg 32). It is the foundation of moral and political life. When there is a choice to be made between actions, utilitarianism’s theory states that the choice with the greatest utility is the right choice. Utilitarianism can definitely be applied to the controversial issue of embryonic stem cell research. Research of embryonic stem cells is conducted to develop cures and treatments of chronic conditions for the greater good of the human race. When we look at the overall goal and purpose of stem cell research, we can determine it as a morally right consequence. This is determined because the research is conducted in search of a cure for diseases and a treatment course that will increase an individual’s quality of life thus increasing their overall happiness. The definition of justice can be considered as granting each person what they are morally due. Is it not fair to grant each individual a maximization of life and the most quality of life available? Stem cell research seeks to uphold that goal by looking for answers to a growing issue. Many people succumb to chronic conditions for various reasons. If cures or treatment plans that prolong the lifespan are developed, many lives will be saved and healthcare expenditures can decline. The costs for maintenance of diseases such as diabetes, heart failure, Alzheimer’s disease would decrease because if cured, there will be no need for maintenance. The Objection There is no room for individual rights when utilitarianism is in place. This theory explains justice as saving the most lives. If we look at stem cell research and utilitarianism, then this objection can apply. If embryos used in stem cell research are considered the beginning of human life, then we look at individual rights. There are none. The rights of the embryos that are manipulated and destroyed are not taken into account when looking at the overall purpose of stem cell research. The supporter of this objection states that everyone is created equally and no one individual is better or is worth more than another. There is question on how the individual is treated under the theory of utilitarianism. Non-supporters of utilitarianism state that each individual is counted as one on an equal basis; however, it fails to respect the integrity of each person (Seehy, 2002). The objection states that the overall function of the treatment of individuals contribute to the greater good which in turn reflects impartiality. How can the individual rights of embryos/fetuses be taken into account if they are manipulated and destroyed for the goal of researching a cure for a chronic condition? Is it fair to play God and pick and choose which embryo or fetus will be chosen for research purposes? Another example in comparison to stem cell research includes the controversial issue of abortion. If an embryo/fetus is considered the beginning of human life, could we not consider the destruction of them as murder? How are the individual rights of these embryos taken into account? With utilitarianism, they are not beca use the benefits of research outweigh the risks and harm of that individual cell. Is this a fair statement? Is the sacrifice of few worth the greater good of many? Response to Objection Rule – utilitarianism is a term that determines the right or wrongness by finding the best rule of conduct followed by the majority of society (Seehy, 2002). John Mill attempted to respond to the objection mentioned above by presenting a rule and stating that individual liberties should be respected. He mentions that there is room for personal commitments without having to give up everything to help others. Maximizing utility in the long run by respecting individual liberties will lead to the greatest human happiness (Sandel, 2009, pg 47). Is happiness the only thing that matters in response to the objection? In stem cell research, is the only thing that is important is the potential number of lives that will be saved? Happiness is not the only issue when evaluating utilitarianism and stem cell research. Healthcare costs of treatment plans for chronic conditions continue to increase. The potential for cures of chronic diseases from stem cell research can save millions. But why support stem cell research after stating the objection of individual rights? There has not been any research scientifically verifying human life beginning at the embryonic stage. So this research cannot be harming human life. Some individuals believe that morally stem cell research reflects the act of â€Å"playing God† and it is an act that destroys human life. To answer that statement, who is to judge that manipulation of cells is morally wrong? There is no evidence that human life is being harmed and individual rights are not being subjected to foul play. With this not only will happiness occur but the overall consequence reflects the stages it took to achieve an end. Basically, the ending is virtue. Supporters of stem cell research can see no wrongdoing in the act itself. The objection cannot really apply if human life has not been determined. Let’s look at rule-utilitarianism and apply it to stem cell research. Can we maximize utility over a longer period of time in stem cell research to make the topic acceptable? This means, is it possible to do research on limited number of cells over a period of time rather than all at once for the same ending result? Does this make the issue better and can maximum utility be achieved? Conclusion Stem cell research has been a topic of controversy for quite some time. Those who object the idea believe that there is manipulation and destruction of human life and murder is being committed. They believe that human life begins at the embryonic stage. In support of stem cell research, utilitarianism can be applied. Stem cell research seeks to achieve the greatest happiness and maximize utility by saving lives. The primary objection to this issue was the neglect of individual rights. However, if human life has not been determined, individual rights have not been compromised. In support of the greater good, stem cell research is needed in healthcare for medical advancement. References Robertson, J. (2010). Embryo Stem Cell Research: Ten Years of Controversy. Journal of Law, Medicine, and Ethics, 191-203. Sandel, M. (2009). Justice: Whats the right thing to do? New York: Farrar, Straus, and Giroux. Seehy, P. (2002). Doing the Right Thing (Part II): Challenges to Utilitarianism. Retrieved July 9, 2014, from The Richmond Journal of Philosophy: http://www.richmond-philosophy.net/rjp/rjp20_sheehy.php US Department of Health and Human Services. (2009, April 28). What are the unique properties of stem cells? Retrieved July 08, 2014, from Stem Cell Information: http://stemcells.nih.gov/info/basics/pages/basics2.aspx West, H. (2012). Utilitarianism. Retrieved July 4, 2014, from Encyclopedia Britannica: http://www.utilitarianism.com/utilitarianism.html

Pre-Revolution :: History

Pre-Revolution George Washington was promoted to lieutenant colonel by Governer Dinwiddie in 1754 with orders to attack the French fort Fort Duquesne. Washington was inexperienced in battle and inevitably blew his assignment. While marching towards Fort Duquesne, Washington and his men came upon a French reconnaissance party. Washington attacked with victory and fled the area to prepare for the French retaliation. Washington ordered his men to construct a fort as a meager means of defense from attack. This fort would be called Fort Necessity. Fort Necessity was poorly constructed and located in a terrible position. The surrounding forest made it possible for the French and Indian attackers to approach the fort without being seen. Washington and his men were forced to surrender. The French captured Washington and his men and forced Washington to sign an admission of attack. In this admission, which was written in French, Washington unknowingly admitted to assassinating the leader of the reconnaissance party. Although Washington could not read French, he signed the documents. All educated and sophisticated men could read French, and for Washington to admit to not being able to read French would be degrading to himself. The French let Washington and his men march out after the admission was signed. Washington returned to Virginia a hero and, while undeclared, the colonies knew that war had begun. This war would become known as the French and Indian War. In 1755 Britain sent General Edward Braddock to defend the colonies and capture Fort Duquesne. Braddock appointed Washington as second in command of his British troops. With over 1400 troops, Braddock marched against Fort Duquesne, only to be ambushed by a party of French and Indian soldiers totaling a mere fraction of his troops. Braddock was killed in combat along with 900 of his troops, leaving Washington in charge and responsible for marching the men back to Virginia. The British followed this defeat by more and more. Although the British outnumbered the French and Indians, they were poorly organized and failed to use the resources that surrounded them. Indians would attack the British troops while they were marching, by hiding in trees and attacking from all sides. In 1756, the conflict spread to Europe. Britain still was incapable of winning battles even home their home front. It wasn’t until 1758 when King George II appointed William Pitt as Prime Minister did the war efforts take a turn for the better.

Identifying Lesbian and Mother :: Argumentative Persuasive Papers

Identifying Lesbian and Mother In her 1995 book, "On the Outside Looking In: The Politics of Lesbian Motherhood", Ellen Lewin presents the phenomenon of lesbian women who, through childbirth, gain access to the heterosexual community as an in-group member. At first glance, Lewin's observations seem to subvert traditional inside/outside ideology, portraying the boundaries of the hetero- and homosexual worlds as permeable rather than rigidly, relationally exclusive. A more exhaustive analysis, namely of the accounts of the women Lewin interviews, serves instead to reinforce inside/outside construction in relation to self and perceived identity. While the women are 'allowed' into the selective sphere of heteronormality, they do not cross these categorical lines as both 'lesbian' and 'mother'. This paper will argue that the terms 'lesbian' and 'mother' are mutually exclusive, perhaps not in reality, but in the capacities of identity, performance, and location within an inside/outside dynamic. Lewin prefaces her analysis with a glance at the classic Western representation of the lesbian. This depiction focuses on the exclusion of lesbians from typical female roles of "motherhood" and "nurturing"; being a mother carried an implied notion of heterosexuality, therefore, lesbianism and motherhood "cancelled each other out in the popular imagination" (107). Indeed, many of the women surveyed shared the sentiment of motherhood as "overwhelming and engulfing other dimensions of their lives—including what they considered the lesbian component" (109). While this may be ascribed to the daunting tasks of mothering and childcare, the women pointed to a more self-appropriated explanation as they echoed one another in their tendencies to "downplay the significance of their lesbianism in giving accounts of themselves [as mothers]" (110). Simultaneously, these women were rooting themselves more deeply in the heterosexual world and losing ties with the homosexual world. Many of the reports quote the lesbian mothers as feeling stronger ties to the world they share with straight women than with other lesbians. Many felt the lesbian community to be unfriendly to lesbian mothers. One woman was even asked to leave her all-lesbian rap group after her child was born, as her fellow group members believed she was no loner "attuned to lesbian issues" (124). The question remains as to why straight mothers, as a representation of the larger heterosexual community, would be so quick to ally themselves with lesbians, even lesbian mothers. For a scholar of feminist theorist Diana Fuss, this coalition seems to threaten the inside (read: dominant) status of heterosexual society.

Alejandro Quiroz Essay

1. What were two major influences on German Baroque music? How did these factors influence the music? The German Baroque bow and Baroque organ. They both gave the music a new kind of sound that is still represented in the music today. 2. How did music differ before and after Bach? Almost everyone in the piano-playing world would agree that his compositions are light-years ahead of his time, harmonically speaking. He introduced unexpected chord changes of which some were considered blasphemous because it was written for a formal choir. 3. How have the performances of Baroque music changed (in terms of tempo, balance and timbre) from the Baroque period to today? When compared to â€Å"classical† performances, modern performances of Baroque music typically use a slower tempi, a similar balance (although recording studios can disrupt the natural balance sometimes, by pushing the harpsichord into the background) and a flatter timbre due to the instruments used in modern times 4. What is a Baroque spirit when playing music? Baroque spirit expresses enthusiasm. 5. At the bottom of the page that discusses Baroque music performance, there are some examples of music that you can listen to. These examples often use different instruments than we are used to hearing today. What are some of these instruments? How is the sound of the music different than what we might hear today? They use instruments such as harpsichords, lots of violins, and clavichord. People today still sometimes use violins but the beats and instruments sound very different then what we hear today. 6. Who was Arcangelo Corelli? What are some of his contributions to classical music? Corelli was an Italian violinist and composer, Corelli initially he started studying music under a priest in the nearby town of Faenza, and then in Lugo. The style of execution was introduced by Corelli, which is important for violin playing. As the time passed Corelli became a â€Å"iconic point of reference† for other violinist. 7. Who was Gottfried Silbermann? Silbermann and Bach were contemporaries and both of them worked together as colleagues and friends, both of them shared an interest and advanced knowledge of acoustics as applied to the voicing and location of organs. In their later years they would work again on the escapement mechanism for first fortepianos, Silbermann would receive the title of honorary court and state organ builder to the king of Poland and the duke of Saxony at Dresden, probably the most famous aspect of Silbermann’s instruments is their distinctive sound. 8. After listening to some of the music samples, how would you describe Baroque music to someone who had not heard it before? Choose at least one piece of music to discuss in detail. What instruments do you think the work uses? Who composed the work? What does the work sound like?

Traders- Risk, Decisions and Management

70+ DVD’s FOR SALE & EXCHANGE www. traders-software. com www. forex-warez. com www. trading-software-collection. com www. tradestation-download-free. com Contacts [email  protected] com [email  protected] ru Skype: andreybbrv TRADERS This page intentionally left blank TRADERS Risks, Decisions, and Management in Financial Markets Mark Fenton-O’Creevy Nigel Nicholson Emma Soane Paul Willman 1 Great Clarendon Street, Oxford ox2 6dp Oxford University Press is a department of the University of Oxford.It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan South Korea Poland Portugal Singapore Switzerland Thailand Turkey Ukraine Vietnam Oxford is a r egistered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc. New York  © Oxford University Press 2005 The moral rights of the author have been asserted Database right Oxford University Press (maker) First published 2005 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization.Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this book in any other binding or cover and you must impose this same condition on any acquirer. British Library Cataloguing in Publication Data Data available Library of Congress Catalo ging in Publication Data Data available ISBN 0–19–926948–3 3 5 7 9 10 8 6 4 2 Typeset by Newgen Imaging Systems (P) Ltd. , Chennai, India Printed in Great Britain on acid-free paper by Biddles Ltd. King’s Lynn, Norfolk Acknowledgements We gratefully acknowledge the help of the investment banks which cooperated in this research and provided ? nancial support, and the Economic and Social Research Council which provided funding as part of the Risk and Human Behaviour Programme (grant number L211252056). We are especially grateful to the traders and managers who gave us their time and shared their understanding. This page intentionally left blank Contents List of Figures List of Tables viii ix 1INTRODUCTION Traders, Markets, and Social Science 1 10 2 THE GROWTH OF FINANCIAL MARKETS AND THE ROLE OF TRADERS 3 ECONOMIC, PSYCHOLOGICAL, AND SOCIAL EXPLANATIONS OF MARKET BEHAVIOUR 4 TRADERS AND THEIR THEORIES 5 A FRAMEWORK FOR UNDERSTANDING TRADER PSYCHOLOGY 6 RISK TAKERS Pro? ling Traders 28 51 74 110 145 178 197 212 221 237 7 8 9 10 BECOMING A TRADER MANAGING TRADERS CONCLUSIONS APPENDIX The Study References Index List of Figures 2. 1 2. 2 2. 3 3. 1 3. 2 4. 1 4. 2 5. 1 5. 2 6. 1 6. 2 6. 3 6. 4Post-war UK equity market growth Post-war US equity market growth Global growth in OTC derivatives Expected utility theory Prospect theory The relationship between risk and return Idealized trader risk pro? les RAT Screenshot Distribution of traders’ illusion of control scores A model of individual risk behaviour Comparisons of personality scores by occupational group Risk propensity, risks taken—now and past Comparisons of risk propensity scores by occupational group 7. 1 Career mobility to date 7. 2 Likelihood of a career change in the next 5 years 8. Introducing incentive and monitoring effects to prospect theory description of risk behaviour 14 15 16 40 41 55 63 104 106 117 132 136 138 174 175 194 List of Tables 6. 1 Risk taking index 6. 2 Personality facets—signi? cant differences between occupational groups 6. 3 Relationships between RTI and Big Five personality factors 6. 4 Relationships between RTI and Big Five personality subscales 6. 5 Regression on total remuneration 8. 1 Controls and incentives associated with framing effects—empirical ? ndings 10. A1 Investment bank sample pro? le 10.A2 Personality and risk propensity sample pro? le 10. A3 Frequencies of self-ratings of performance 131 133 138 140 143 193 214 215 218 This page intentionally left blank Chapter 1 INTRODUCTION Traders, Markets, and Social Science I grew up in a small town in Florida and none of this stuff really exists like stocks and bonds and things like that. No one I ever knew growing up did this sort of thing and to me it all seems like a fantasy world sometimes and it’s very abstract. You know, I explain to my mother what I do and I can’t, you can’t put it into words, it just doesn’t make any sense. You can read also Portfolio Management QuizzesI am so removed from the daily life of the average person that I think at some point this has got to come to an end. Whether I really believe that or not I don’t know but in my head I kind of think this is all fantasy land and one day I’m going to wake up and I’m going to say I had the most amazing dream, I’ve been working on some place called Wall Street, that paid me lots of money and I just sat around and looked at computers all day and put these pieces together and everything worked out and it was all a lot of fun. So in my mind that’s kind of what I think.Derivatives Trader, ? rm B We live in a world that is shaped by ? nancial markets and we are all profoundly affected by their operation. Our employment prospects, Introduction our ? nancial security, our pensions, the stability of political systems and nature of the society we live in are all greatly in? uenced by the operation of these markets. Th e role and importance of international ?nancial markets and the traders who inhabit them has grown dramatically in the past few decades. The level of ? nancial ? ows in these markets can rise to quite staggering levels.For example, in the day before the setting of entry exchange rates to the Euro, trades in currencies entering the Euro totalled about ten times World gross domestic product (GDP). At any one time, outstanding derivatives contracts have a total value of around four times World GDP. Professional traders ? gure prominently in media accounts of the workings of ? nancial markets and the economy. Television news bulletins on the economy or stock market frequently include interviews with senior traders, or footage of a trading ? oor. Stories about ‘rogue’ traders are big news.The decisions of individual traders are often seen as having the potential to move markets and affect national economies. Yet, the role of the professional trader is largely absent from mai nstream ? nancial economic accounts of markets. Professional traders, we argue, inhabit a borderland in markets where some of the orthodox assumptions of ef? cient, instantaneously adjusting prices break-down. They are often well placed to exploit market imperfections, by virtue of lower transaction costs, access to privileged information, critical mass, or proprietary knowledge and models.However, at the same time, they work in a fast-moving landscape of noise, rumour, unreliable information, and uncertainty. Thus, it is often dif? cult to tell whether an opportunity is real or illusory. This is a book about professional traders in this noisy borderland: what they do, the kind of people they are, how they perceive the world they inhabit, how they make decisions and take risks. This is also a book about how traders are managed and the institutions they inhabit: ? rms, markets, cultures, and theories of how the world works. Our approach to writing this book is explicitly interdiscipl inary.We draw on psychology, sociology, and economics in order to illuminate the work of traders and their world. Our focus is traders and the ? rms they work in. It is not the purpose of this book to mount an extensive critique of the dominant rational–economic account of ? nancial markets, nor 2 Introduction is ‘markets’ our central focus. We are concerned principally with understanding the world of the professional trader. However, we do believe our work is relevant to an understanding of ? nancial markets. First, in order to understand the role and work of the trader, it is important to understand that the neoclassical paradigm of ef? ient markets and rational pricing breaks down at the margins and that professional traders both bene? t from and contribute to this departure from orthodox ? nancial economic theory. Second, the ef? cient markets paradigm rests on the assumption that in the absence of uniformly rational investors, there is a suf? cient group of rational investors who are able to drive out pricing anomalies through arbitrage. 1 Professional traders in investment banks seem good candidates to play this role. Hence, the evidence that we present on the ways in which traders can deviate signi? antly from rational– economic norms of behaviour may be fruitful in helping to explain market phenomena. 1. 1 Our Work and How It Informs the Book This book is based on a study of traders in ? nancial instruments in four large investment banks operating in the City of London. Over the course of 1997 and 1998, we carried out interviews with 118 traders and trader managers in four large City of London investment banks and collected qualitative and quantitative data on their roles, behaviour, performance, and psychological pro? les. We carried out followup interviews in 2002. We use detailed quotations from the interviews throughout the book. Where we use these quotes they are presented verbatim. We had three main concerns. First, we came to the study with a strong interest in decisionmaking and risk. While all business is concerned to some extent with risk, investment banks and ? nancial traders are almost unique in the extent to which their work is founded on the management of risk and the extent to which they must make decisions about risk. Second, in the vast literature on ? nancial markets relatively little attention has been paid to the role of ? ance professionals in these markets and we wanted to redress this. 3 Introduction Third, we observed that the large literature on markets and the (somewhat slimmer) literature on traders are marked by very different approaches and paradigms in three branches of the social sciences: economics, sociology, and cognitive and social psychology. We wanted to bring together the insights of these different disciplines. Throughout the book we draw both on the data we gathered in this study and on the insights of prior research and literature in ? nancial economics, psychol ogy, and the sociology of markets.We turn now to those literatures. 1. 2 Traders in the Social Science Literature Neoclassical Financial Economics Financial economics is a relatively young discipline. The origins of modern (neoclassical) ? nancial economics are often located in the early 1950s in the work by Markowitz (1952) on portfolio theory. During this period, ? nance moved from a concern with describing the activities of actors in ? nancial markets to the construction of parsimonious models of markets founded on assumptions of rational investor behaviour. The central organizing idea of neoclassical ? nancial economics is the ef? ient markets hypothesis, which holds that price changes are essentially a random walk. All new information relevant to prices is incorporated into prices instantaneously (Fama, 1970). This central proposition and much of the theory which springs from it is founded on the idea that any asset which is not ‘rationally priced’ provides opportu nities for pro? t, which will be instantly taken up and cause prices to converge to the ‘rational’ level (i. e. arbitrage). This assumption is both illustrated and lampooned in the ? nance joke about two ef? cient market theorists who pass a $50 bill lying in the street.They leave it untouched and congratulate each other on realizing that if it presented an opportunity for pro? t someone else would have picked it up already. Even the strongest proponents of the ef? cient markets hypothesis do not claim that it represents a good description of the behaviour of individuals in markets. Rather it is claimed to be a good enough description, which should be judged on its predictions rather than its assumptions. 4 Introduction Fama (1970), who set out an early comprehensive account of the ef? cient markets paradigm, has more recently suggested that: Like all models, market ef? iency (the hypothesis that prices fully re? ect available information) is a faulty description of pri ce formation. Following the standard scienti? c rule, however, market ef? ciency can only be replaced by a better speci? c model of price formation, itself potentially rejectable by empirical tests. (Fama, 1998: 284) The ? nance professional is largely absent from orthodox ? nancial economic accounts of markets. The assumption of ef? cient markets, with no privileged information held by any investor, leaves little room for an account of how professional investors might make better than market returns.However, more recently, there has been an increasing interest within ? nancial economics in explaining empirically observed departures from the predictions of the ef? cient markets hypothesis and rational–economic pricing theories. Many of these fall in the emerging ? eld of behavioural ? nance. What has allowed consideration of the role different types of investor might play in markets is the growing recognition that perfectly ef? cient markets are not an automatic consequence o f the existence of arbitragers: an idea that has been captured eloquently by Lee (2001: 284).I submit that moving from the mechanics of arbitrage to the [ef? cient markets hypothesis] involves an enormous leap of faith. It is akin to believing that the ocean is ? at, simply because we have observed the forces of gravity at work on a glass of water. No one questions the effect of gravity, or the fact that water is always seeking its own level. But it is a stretch to infer from this observation that oceans should look like millponds on a still summer night. If oceans were ? at, how do we explain predictable patterns, such as tides and currents? How can we account for the existence of waves, and of surfers?More to the point, if we are in the business of training surfers, does it make sense to begin by assuming that waves, in theory, do not exist? A more measured, and more descriptive, statement is that the ocean is constantly trying to become ? at. In reality, market prices are buffete d by a continuous ? ow of information, or rumours and innuendos disguised as information. Individuals reacting to these signals, or pseudo-signals, cannot fully calibrate the extent to which their own signal is already 5 Introduction re? ected in price. Prices move as they trade on the basis of their imperfect informational endowments.Eventually, through trial and error, the aggregation process is completed and prices adjust to fully reveal the impact of a particular signal. But by that time, many new signals have arrived, causing new turbulence. As a result, the ocean is in a constant state of restlessness. The market is in a continuous state of adjustment. Lee argues that the relationship between inef? cient pricing and arbitragers may be like predator–prey dynamics. In equilibrium there must be both predator and prey. Similarly, in equilibrium there will be both arbitragers and arbitrage opportunities in the market place.There is another important way in which ? nancial ma rkets are widely accepted as departing from the ef? cient markets paradigm. Investors trade much more often than the theory suggests they should. More recent ? nancial economics accounts often distinguish two types of investors: ‘noise traders’ and ‘smart traders’ (a recent example is Daniel, Hirshleifer, and Teoh, 2002). Noise trading is trading on the basis of information that is either irrelevant to price or has already been discounted by the market. ‘Smart’ traders are those who act rationally, trading only on the basis of genuinely new and relevant information.This distinction is sometimes taken to map on to the difference between naive investors and trained professional investors (e. g. Ross, 1999; Shapira and Venezia, 2001). Behavioural Finance There has been increasing interest within the ? eld of ? nancial economics in using what is known about persistent biases in human cognition to explain departures of market behaviour from the pred ictions of ef? cient markets theory. Collectively known as behavioural ? nance, these models and empirical studies generally seek to explain market behaviour that departs from the predictions of orthodox ? ancial economics by reference to systematic cognitive bias among investors or important subgroups of investors. 3 Behavioural ? nance draws heavily on work from behavioural decision-making, a branch of psychology concerned with modelling human decision-making processes. While, in the main, this literature does not distinguish between professional traders and other investors, there have been 6 Introduction some attempts to compare the susceptibility to biases of ? nance professionals to that of the wider population.For example, Shapira and Venezia (2001) found professional brokers less susceptible than independent investors to one common bias, the disposition effect (a bias towards selling stocks more readily to realize gains than to realize losses), although they were not immune t o the bias. In an experimental study Anderson and Sunder (1995) compared the behaviour of laboratory markets populated by experienced commodity and stock traders with the behaviour of markets populated by MBA student traders. They found the amount of trading experience to be an important determinant of how well market outcomes approximated (ef? ient market) equilibrium predictions. Student traders’ markets exhibited departures from rational prices founded in common cognitive biases while bias levels in markets with experienced traders were substantially lower. However, as we explore in Chapter 5, our own research offers evidence that professional traders are just as susceptible as other groups to some forms of bias, with important consequences for their behaviour and performance. Sociology of Markets Sociologists interested in markets have paid rather more attention to the role of professionals than have ? ancial economists. Unlike ? nancial economists who take markets to be naturally occurring, sociologists tend to stress the ‘social embeddedness’ of markets and the ways in which they are sustained as social institutions through active intervention and regulation. One important strand of work is concerned with the social networks that operate within markets and in particular the ways in which professionals within markets act through these social networks and exercise informal sanctions over participants departing from accepted norms of behaviour (e. g.Baker, 1984a; Abola? a, 1996). Research by ? nancial economists also demonstrates the signi? cant effect the detailed structure and organisation of markets4 can have on the ? ow of information, liquidity, and prices (e. g. Amihud, Mendelson, and Lauterback, 1997; Lipson, 2003). Others have been concerned with the nature and consequences of ? nancial economic theory. Traders, from this perspective, do not simply inhabit markets; they enact them. That is, the beliefs they hold 7 Introduction ab out the nature of markets affect those markets in non-trivial ways.MacKenzie (2002), for example, describes how the adoption of the Black–Scholes equation for option pricing by traders did not simply enable more effective pricing of options, but helped to bring about conditions that better ? tted the assumptions on which it was based. The close empirical ? t between the predictions of the equation and options prices was bought about, at least in part, by the use of the equation to identify arbitrage opportunities. The empirical ? t has deteriorated subsequently as beliefs have changed to incorporate, inter alia, changed beliefs about the likelihood of market crashes.We pick up this theme of the re? exive relationship between beliefs and markets in Chapter 4. 1. 3 Overview of Book Chapters 2 and 3 set the context for our study and exploration of the role of traders. Chapter 2, ‘The Growth of Financial Markets and The Role of Traders’, considers the growth of inter national ? nancial markets in a historical context and outlines the role investment banks and professional traders have come to play. In Chapter 3, ‘Economic, Psychological, and Social Explanations of Market Behaviour’, we take a more detailed look at differing economic, psychological, and social explanations of market behaviour.Chapter 4, ‘Traders and Their Theories’, considers the nature of traders’ knowledge and the interplay between their subscriptions to theories of the ‘way the world works’ founded in neoclassical ? nancial economics and their more particularist and idiosyncratic theories of ‘how to work the world’. Chapter 5, ‘A Framework for Understanding Trader Psychology’, starts by outlining a psychological model of the trader founded in a selfregulation framework. It draws on the qualitative and quantitative evidence that we have about trader decision-making and bias. It challenges the ? ancial econo mics dichotomy between rational and non-rational and explains the different rationalities that arise as a consequence of internal goal states. We also present evidence on the vulnerability of traders to control illusions and the consequences for their performance. 8 Introduction Chapter 6, ‘Risk Takers: Pro? ling Traders’ presents a new model of risk taking that shows how trader behaviour emerges from a web of circumstantial and individual causes. The remainder of the chapter explores these individual differences in greater depth, especially how personality impacts different kinds of risk taking and decision-making.The chapter explores what kinds of people traders are, focusing particularly on personality and risk propensity, but also drawing on what we know about their demographics and background. Chapter 7, ‘Becoming a Trader’, uses a career transitions framework and a model of social learning to frame trader development and entry into a community of trad ing practice. We examine the ways in which they both learn and construct knowledge about the process of trading. In Chapter 8, ‘Managing Traders’, we explore the ways in which traders are monitored and managed within investment banks.We highlight the fact that traders are often not ‘managed’ at all, so much as monitored. Our concluding chapter (Chapter 9) draws together the implications of our ? ndings for traders, their management and regulation, and for further research. Notes 1. Arbitrage: purchasing currencies, securities, or commodities in one market for resale in others in order to pro? t from price differences. The effect of arbitrage is to act as a mechanism to bring about convergence of prices in different locations and markets or between equivalent securities. . A more detailed account of the sample and methods is given in the appendix. 3. We give a more detailed treatment of behavioural ? nance arguments in Chapter 3. 4. Often referred to as the institutional microstructure. 9 Chapter 2 THE GROWTH OF FINANCIAL MARKETS AND THE ROLE OF TRADERS Hardly a day passes without newspapers and television carrying a story about ? nancial markets and their impact on our lives. Even a casual perusal of these news stories makes it apparent that the activities of ? ancial institutions and markets have come to play a central role in our economic well-being and security: whether through their direct impact on individual investments and pensions or through their pervasive impact on the level of economic activity within nations and across the globe. The last decade of the twentieth century was marked by a series of international ? nancial crises. These underlined both the interdependence of national economies and ? nancial markets and the global scope of those markets. Financial crises in Latin America, the Asian Tiger economies, and Russia highlighted the speed at which capital can ? e Growth of Financial Markets countries in which investors have lost con? dence and the impotence of national governments to control such out? ows. The impact around the world of these crises on economies and ? nancial institutions demonstrated the highly interconnected nature of ? nancial markets. In the same period a number of ? nancial institutions suffered very signi? cant ? nancial losses as a consequence of the actions of single traders. One of the best publicized of these was Nick Leeson’s role in bringing about the collapse of Barings Brothers, in 1995.The collapse of Barings caused Alan Greenspan of the US Federal Reserve to comment that It is probably fair to say that the very ef? ciency of global ? nancial markets, engendered by the rapid proliferation of ? nancial products, also has the capability of transmitting mistakes at a far faster pace throughout the ? nancial system in ways that were unknown a generation ago . . . Certainly, the recent Barings Brothers episode shows that large losses can be created quite ef? cien tly. Today’s technology enables single individuals to initiate massive transactions with very rapid execution.Clearly, not only has the productivity of global ? nance increased markedly, but so, obviously, has the ability to generate losses at a previously inconceivable rate. Moreover, increasing global ? nancial ef? ciency, by creating the mechanisms for mistakes to ricochet throughout the global ? nancial system, has patently increased the potential for systemic risk. (Greenspan, 1995) While the behaviour of individual traders has at times seriously damaged the ? rms they work for, individual ? nancial institutions have also shown the capacity to endanger the stability and operation of ? nancial markets around the world.In 1998, the collapse of Long Term Capital Management, a hedge fund holding positions in ? nancial derivatives with a notional value of $1,250 billion seriously endangered the stability of the world’s ? nancial systems. How could a single trader bring down a bank? How could a single hedge fund threaten the stability of the world’s ? nancial systems? The answer lies in the way in which ‘derivatives’ allow for the multiplication of market risks (and returns). The very features that make derivatives1 so useful as a tool for managing risk provide for the possibility of massively increasing risks.In this chapter, we argue that the role of ? nancial markets, in both world and national economies, has increased dramatically. 11 Growth of Financial Markets The potential, and sometimes actual, impact of individual traders on ? rms, markets, and economies is enormous. In the following chapters we show that ? nancial markets are neither as rational nor as natural as ? nancial economists paint them and that we need to bring a wider range of social science theory to bear on understanding traders, their ? rms, and the markets they operate in.As we show below, the current globalization of ? nancial markets is not new but sim ply the latest of several cycles of international ? nancial integration over two millennia. In particular, the recent growth in international ? nancial markets could be seen as a return to levels of international ? nancial integration seen at the end of the nineteenth century and interrupted by a period, which included two world wars and the Great Depression. However, the depth and scale of these markets does seem to be different this time and the emergence of new forms of ? ancial instruments, derivatives, capable of massively multiplying possible risks and returns has led to a qualitative difference in the potential impact of individual actions on institutions, markets, and economies. 2. 1 A Brief History of Financial Markets International ? nancial markets are not a purely modern phenomenon. Basic forms of ? nancial exchange can be found throughout recorded history and international ? nancial systems are known to have existed two millennia ago. Historical evidence suggests that t here have been a series of cycles of international ? nancial integration (Lothian, 2002).In the three centuries following the collapse of the Roman Empire, currencies were very unstable and constantly debased. However, in the fourth-century AD, the Emperor Constantine introduced a stable gold coinage, the bezant (also known as the nomisa or solidus). This became widely used throughout the Mediterranean region. It was produced in Byzantium till the thirteenth century and kept more or less the same gold content through till the eleventh century. Until the introduction of the dinar in the Muslim world in the seventh century, it had no competitors as an international medium of exchange.While records are patchy, it is clear that the existence of a stable medium of international 12 Growth of Financial Markets exchange during the period between the fourth and eleventh centuries allowed quite sophisticated ? nancial transactions to take place (Lopez, 1986; Lothian, 2002). The thirteenth cen tury was another period of growth in international trade, both within Europe and between Europe and other parts of the world. Much of this was organized around regular international trade fairs (most notably at Champagne and Brie).This period was marked by the growth of an extensive and sophisticated banking system and by the development of ? nancial instruments such as bills of exchange (which acted jointly as a credit and foreign exchange transaction). It is clear from the records of the dominant northern Italian banks of the time that not only were there quite sophisticated foreign exchange markets, but also that arbitrage was a common activity (Lothian, 2002). During the fourteenth century the importance of these trade fairs and the Italian banks declined. By the ? fteenth century, Amsterdam was the more important centre of ? ancial activity. The sixteenth century saw the development, in Amsterdam, of negotiable ? nancial instruments such as discounting commercial paper and, by the seventeenth century, the development of perpetual bonds, futures contracts, selling short, and other such ? nancial instruments and techniques that would be easily recognized in modern ? nancial markets (Homer and Sylla, 1996; Lothian, 2002). By the start of the eighteenth century, the Amsterdam Exchange, the centre of Dutch trading, had become a world market in which a wide range of commodities and securities were traded.During this period, London took on increasing importance as a centre for international ? nancial trade. With the establishment of the Bank of England and the London Stock Exchange and the intervention of the Napoleonic wars, London came to eclipse Amsterdam as a ? nancial centre by the start of the nineteenth century. The nineteenth century saw a marked expansion of international trade and further development of ? nancial markets. The growth of the US economy drove much of this expansion. The New York Stock Exchange was established in 1817 and by the end of 188 6 it hit its ? st day on which more than a million shares were traded. By the late 1920s New York had overtaken London as a world ? nancial centre. However, the early twentieth century, a period that included two world wars and the Great Depression, saw the collapse of international 13 Growth of Financial Markets trade and the rise of national regulation and controls on international ? ows of capital, which effectively unwound the integration of international ? nancial markets. Rajan and Zingales (2003) show that on a range of indicators of ? nancial development including stock market capitalization as a proportion of GDP, world ? ancial markets did not regain their pre-war (1913) levels until the late 1980s. The second half of the twentieth century once again saw a very substantial increase in international ? nancial integration. As we have seen, there is historical evidence that the current period of globalization of ? nancial markets is not a new phenomenon. Rather there have bee n cycles of high international integration of markets interspersed with periods of low integration throughout the last two millennia. However, it is also clear that with each new cycle the nature and depth of those markets has been changing. Changes in the sophistication of ? ancial instruments and technologies, and changes in communications and information technologies have all been important factors in? uencing the scale and complexity of ? nancial markets. The period since the 1970s has seen a very substantial increase in the size of ? nancial markets. Figure 2. 12 shows the increase in annual 2500 Value of annual turnover (? billion) 2000 30 1500 25 20 1000 15 10 5 0 1965 0 1970 1975 1980 1985 Year 1990 1995 2000 40 Number of bargains (million) 35 Value Reported trades 500 Fig. 2. 1 Post-war UK equity market growth—UK equity turnover 1965–2002 Source: London Stock Exchange. 4 Growth of Financial Markets Value of annual turnover ($ billion) 12000 10000 8000 6000 400 0 2000 0 1967 Value Reported trades 600 500 400 300 200 100 0 2002 Number of bargains (million) 1972 1977 1982 1987 Year 1992 1997 Fig. 2. 2 Post-war US equity market growth—New York Stock Exchange equity turnover 1967–2002 Source: New York Stock Exchange. value of shares traded on the London Stock Exchange between 1965 and 2002. Figure 2. 2 shows the change in annual number of shares traded on the New York Stock Exchange between 1960 and 2002 and the annual value of shares traded from 1985.Both markets show exponential growth over the period, but the real story over the last decade is the growth in derivatives trading. By 2002, outstanding over-the-counter derivatives3 (OTC) contracts had a notional value of $128 trillion, around four times greater than total world GDP. Figure 2. 3 shows the growth in number of active contracts between 1992 and 2002. Much of the recent concern about systemic risks in markets has centred on the role of derivatives. All ? nancial invest ments carry risk. However, there is a difference of degree with derivative trading.They involve contracts which are contingent on the price of underlying assets and because of the way in which trades are regulated, derivatives4 enable investors to speculate on the price of an asset while only depositing a small proportion of the underlying asset price (margin requirements) (Zhang, 1995). In other words, the ? nancial risk borne in an options trade may be many times the money actually deposited to make the trade. Financial ? rms which do not have sophisticated control mechanisms to manage their exposure to derivatives risk may 15 Growth of Financial Markets 000 Gross market value ($ billion) Gross market value 6000 5000 4000 3000 2000 1000 0 92 93 94 95 96 97 98 99 00 01 19 19 19 19 19 19 19 19 20 20 20 02 160 000 Notional amounts 120 000 100 000 80 000 60 000 40 000 20 000 0 Notional amounts ($ billion) 140 000 Fig. 2. 3 Global growth in OTC derivatives—global value of outsta nding contracts Source: 2000–2, Bank for International Settlements; 1994–9, Swaps Monitor publications Inc. unwittingly ? nd themselves exposed to potential losses greater than the total ? rm assets. Such risks can emerge very rapidly in the course of trading and require analysis of the whole ? m’s current portfolio of trading assets in real time to identify potential overexposure to market risk. Of course, the leveraging effect of derivatives does not only affect market risk but also ampli? es risk in the other categories. For example, since derivatives typically have greater volatility than the underlying asset, even a short period in which a ? rm is unable to trade (say due to computer failure) could result in signi? cant risk exposure. The complexity of some derivatives may mean that managers are ill-equipped to understand the trades dealers are engaging in, increasing behavioural risk (Chorafas, 1995: 16).In evidence given to the US House of Representatives , George Soros, a highly successful ? nancial speculator, said of derivative instruments: There are many of them, and some of them are so esoteric, that the risks involved may not be properly understood by even the most sophisticated of investors. Some of these instruments appear to be 16 Growth of Financial Markets speci? cally designed to enable institutional investors to take gambles which they would otherwise not be permitted to take. For example, some bond funds have invested in synthetic bond issues that carry a 10 or 20-fold multiple of the risk within de? ed limits. And some other instruments offer exceptional returns because they carry the seeds of a total wipe out. (Soros, 1995: 312) 2. 2 The Role of Investment Banks in Financial Markets To understand the role of modern investment banks it is necessary to understand how world ? nancial markets have come to be dominated by an American model of ? nance. Much as Byzantium, Lombardy, Amsterdam, and London have been the dominan t centres of ? nancial innovation and power in previous eras, US ? nancial markets and institutions are today.The central feature of the US model that emerged in the post-war years was the decline of relationship banking and the increasing commoditization of ? nancial products and services. The roots of this system lie in the unintended consequences of anti-trust and banking legislation passed in the United States during the 1930s. The segregation of commercial and investment banking in the United States laid the foundation for the development of a strong investmentbanking sector. The fragmentation of the banking industry, imposed by legislation, created conditions in which ? ancial transactions were more readily managed through markets than within large banks. The elimination of ? xed commissions for broking ? nancial instruments in 1975 provided a further impetus for competition. More and more, ? rms seeking to raise ? nance looked to impersonal markets rather than relationships w ith banking institutions. Progressively more transparent and liquid markets in both corporate debt and equity and the corresponding increased competition in these markets served as a signi? cant stimulus to ? nancial innovation.As these markets developed it became apparent to market participants and to the government that effective market operation could only be maintained through active intervention and regulation. A series of waves of external and self-regulation, often in response to market crises, led to the development of regulations and supervisory arrangements designed to contain insider manipulation of markets and ensure free 17 Growth of Financial Markets ? ow of information. On the demand side, the expansion of institutional investment (insurance, pensions, and mutual funds) stimulated and was stimulated by the growth of these ? ancial markets. The slower growth of ? nancial markets and institutions in other parts of the world meant that, as other countries began to follow the United States in opening up competition, US ? nancial institutions were well placed to play a major role. In the wake of the major changes in market regulation in 1986, the long-established London merchant banks were swept away by the US-based investment banks and non-US owned European investment banks have increasingly adopted US approaches. The principal competitive advantage of American ? rms lay in their expertise in managing risk (Steinherr, 2000: 49).Investment banks manage risk in four main ways: they absorb risk for clients, they act as intermediaries for the diversi? cation of risk, they advise on the management of risk and they engage in proprietary trading—taking risk on their own account in the pursuit of returns (Casserley, 1991). Absorbing Risk Investment banks absorb risk for clients in a number of different ways. For example, when they act on behalf of a client they absorb credit risk (the risk the client will default on payment for the transaction and th ey are unable to unwind the transaction at a favourable price).They underwrite issues of securities (e. g. commercial paper5 to cover shortterm ? nancing needs), guaranteeing to buy from the client at a ? xed price should the security fail to achieve its expected price in the open market. They also play an important risk absorption role in trading markets. In some of these the bank will act as a market-maker,6 providing liquidity in a particular ? nancial instrument. The bank ? xes prices at which it will buy or sell a ? nancial instrument and stands ready to buy or sell at those prices even if there is no party to pass the transaction on to immediately.In return for the spread between these prices the bank absorbs the risk of the market moving against them. Risk Intermediation In other cases the bank will act as an intermediary for the diversi? cation of clients’ risk. This may be by acting as an intermediary in trading 18 Growth of Financial Markets markets or by putting to gether complex OTC deals that rely on aggregating (or disaggregating) ? nancial instruments provided by third parties. The banks bene? t from this intermediation work in two principal ways. First, they charge commission and second, they have access via their customers to information about order ? ws in the markets in which they operate. Such ? ow information provides opportunities to exploit temporary market imperfections and pro? t through trading on their own account. Risk Advice The risk advice role overlays risk absorption and risk intermediation. For example, the bank may play an important advisory role related to underwriting activities or in putting together a complex OTC deal. The role of the bank in providing risk advice to clients rests not just on technical skills and experience in managing risk, but also in a (sometimes) greater overview of the markets in which they operate.An important issue here is the tension between the bank’s desire to make pro? ts on its own account and to earn a return through providing effective advice and services to customers. This tension is re? ected to some extent in tensions which emerge in most banks between trading and sales desks. As we will see later in the book, banks vary in the priority they give to serving customer needs versus seeking opportunities for returns through trading on their own account. 7 Proprietary Trading In providing services to customers, investment banks build up information on order ? ws, they develop expertise in valuing particular securities or in economic fundamentals in particular sectors or countries, they build proprietary models of price behaviour and they build up data on historic behaviour of prices and relationships between them. This can place them in a better position to judge risks and returns than other market participants and opens up the possibility of earning good returns on their own account. This activity typically takes two forms: short-term (often intra-day) trade s designed to exploit knowledge of temporary price ? ctuations linked to ? ows of orders in the market and longerterm trades, often based on arbitrage (exploiting pricing inconsistencies between different securities, markets, or time periods). 19 Growth of Financial Markets 2. 3 The Role Played by Traders The work of traders can be divided into three broad categories: trading on behalf of customers, market-making, and proprietary trading. 8 Traders acting on behalf of customers take the least risk on behalf of the bank, while proprietary trading potentially involves the greatest risk.However, in practice, the three spheres of activity often overlap. For example, a trading desk acting on behalf of clients may also have authority to take intra-day positions to bene? t from short-term price movements in the markets they operate in. Alternatively, in some circumstances, while not strictly acting as a market-maker, they may stand ready to create liquidity for important clients by buying or selling to those clients when they cannot ? nd a counterparty for their trades. As one senior trader told us: We are paid to be on the wrong side of the market for our customers.If we have an institution that pays us thirty million dollars a year in commissions, we will, on occasion at their request, be a buyer for them when there are only sellers on the market or be a seller for them when there are only buyers. When they’re in a more normal market environment where there is plenty of liquidity and good two-way ? ow, they don’t necessarily need our capital. In fact they prefer not to use our capital because all that does then is create another buyer or another seller in the market with them.But when the market is heavily tilted in one direction than the other, even the market’s selling off, there are much more sellers than buyers or a very strong market where there are much more buyers than sellers. That’s when they need us to step in and serve as that intermediary to facilitate the execution of their order. 9 Alternatively, a trading desk operating as a market-maker may combine this with some proprietary trading. One trader described the activity of his desk: We have a P&L [pro? t and loss], budget of about $20m a year through plain vanilla market making with customers.However, we make about half the money in proprietary trading using the ? ow and information from customers—putting it on our book instead of putting it back into the market. For the ? rst half of this year we were number one for turnover in our niche with between 10% and 15% of the market. The 20 Growth of Financial Markets more that number increases, the better information we would have for proprietary trading, but we would probably start losing money from the market making function because prices would have to be so keen, so there is a balance.Equally, traders mostly engaged in proprietary trading will seek opportunities to generate customer business: I d o proprietary business and I’m supposed to be doing proprietary but I interface with the ? ow desk so I would be looking at customer business trying to generate customer business. My slant is proprietary but I’m always trying to emphasise customer business using my positions. 2. 4 How do Traders Make Pro? ts? If, in ef? cient markets, price changes are essentially a random walk and all new information relevant to prices is incorporated into prices instantaneously (Fama, 1970), then how do traders make money? The ? st answer is that they charge commission for their intermediation and advisory role. By aggregating customer orders they can reduce transaction costs. However, as we will explore in Chapter 3, in practice, markets are not completely ef? cient and information asymmetries exist. Traders essentially earn economic rents10 by exploiting information advantages. These may come from a number of sources, including information on asset ? ows within markets (e. g. from having a large customer base); privileged information on the economic basis for an asset price; proprietary databases allowing more accurate calculation of probabilities (e. . historical asset volatility for pricing options); models of the relationship between prices and economic fundamentals; models for extracting the information inherent in historical price changes of an asset and other related assets; and effective understanding of the ‘sentiment’ and likely behaviour of other market actors. All of these information advantages are potentially short-lived. The very act of trading may reveal information to other parties. Others may emulate models. Others may access the same sources of information.New information may wipe out the utility of earlier information. At the same time markets are in practice very ‘noisy’. That is to say, there is a lot of trading going on that is not based on information 21 Growth of Financial Markets genuinely relevant to the und erlying value of an asset. Black (1986) noted in his presidential address to the American Finance Association that Traders can never be sure that they are trading on information rather than noise. What if the information they have is already re? ected in prices? Trading on that kind of information will be just like trading on noise.Traders can only earn above market returns, on average, over time, if they are genuinely trading on new and relevant information. However, on any individual trade it will be dif? cult to tell whether a positive outcome is the result of trading on information or of essentially unpredictable market movements (as a result of noise trading in the market, changes in sentiment, or new unexpected events). Similarly, for any individual trade it is dif? cult to determine whether a negative outcome is the result of trading on noise rather than information or the result of unforeseeable market movements.So it will often be the case that trading outcomes are not cont ingent on the trader’s strategy or information. Further, it will often be dif? cult to determine once an outcome is achieved whether the outcome was indeed contingent on a trader’s information and skill. While trading is a skilful activity, many trading outcomes are not contingent on skill. At the same time traders are highly motivated to establish causal relationships between information they hold and prices, since a signi? cant source of rent for any trader is the capacity to establish contingent relationships before others observe them.This problem of determining the links between behaviour and outcome for traders is one we will return to repeatedly in the book. While the detail of different trading strategies is not our principal focus, we describe some common trading approaches to set the stage for our later discussions. In order for traders to achieve better than average market returns, it is not suf? cient that markets are imperfect; it is also necessary they ha ve some competitive advantage relative to others who seek to exploit those imperfections.Within this fast-moving and uncertain world, traders adopt a variety of strategies to exploit the information and expertise to which they have access. These can be divided into four main categories: insider strategies, technical strategies, fundamental strategies, and ? ow strategies. 22 Growth of Financial Markets Insider Strategies Insider strategies involve achieving advantage by exploiting privileged access to information (Casserley, 1991). Of course, some such strategies are illegal. It is, for example, illegal to exploit privileged access to advanced knowledge of company earnings news or potential takeovers.However, most of these strategies are concerned with perfectly legitimate attempts to build an information advantage over rivals. The extent to which it is possible to achieve such information advantages varies signi? cantly from market to market. For example, in relatively undeveloped markets such as the ‘emerging markets’ there may be frequent and persistent information asymmetries. In these circumstances, traders who are able to establish good personal networks may build an advantage, which enables them to anticipate price movements. However, in mainstream equities markets, the speed and ef? iency of information dissemination may make such advantages dif? cult to achieve. Insider strategies can improve a trader’s ability to anticipate market movements. However, as we noted earlier, it is often dif? cult or impossible for a trader to determine whether they have a genuine information advantage or whether their information is simply noise, already discounted by the market. Technical Strategies If markets are perfectly ef? cient, then historic prices contain no information that can be used to infer future price movements. However, many traders claim to do just that.They seek to exploit market imperfections through the analysis of past price info rmation. One form of technical trade concerns using patterns in price data to identify likely turning points in price trends (charting). Traders seek to identify trends early, buy into those trends and exit before the trend breaks. Many traders consider these patterns and trends in market prices to be driven by underlying investor sentiment. While there is some evidence that supports the existence of exploitable patterns in market prices (e. g. Kwon and Kish, 2002), many ? ancial economists are sceptical of their existence. Fama (1970) dismissed technical analysis as a futile undertaking on the grounds that historical prices have no predictive validity. However, more recent arguments against technical 23 Growth of Financial Markets trading strategies take a weaker position: that while there is some predictability in market movements, exploiting these does not, on average, make returns in excess of transaction costs (e. g. Allen and Karjalainen, 1999). A second important technical st rategy requires the analysis of historical price relationships between different ? ancial instruments. Traders scan markets looking for discrepancies in pricing relative to these relationships on the assumption that they will move back to the historical pattern. Often the gains on technical trades will be small and over short time periods, thus these trades often depend on an ability to identify opportunities rapidly and frequently. This allows the trader to make large numbers of such trades each making a small pro? t. To bene? t from such trading strategies requires the ability to trade at low transaction costs, frequently, with considerable IT support.Many traders use technical strategies to supplement other approaches. For example, a trader having established a trade on the basis of customer ? ow information may use technical information on trend behaviour to determine the precise point at which to take pro? ts or cut losses. Others, while fundamentally sceptical about strategies relying on historical trend data, assume prices will be driven to some extent by investors using such models. For example, one trader told us: A lot of traders are chartists and a lot of people here don’t like you looking at charts, they don’t believe in them.However, I look at a chart if I am putting on a large position, or looking for something to trade because if there are people out there who use charts as a model to trade, this will affect how things trade in the markets whether I believe in it or not. Fundamental Strategies Technical strategies are purely concerned with anticipating trends and pay no attention to the underlying economic basis for evaluation of the security being traded. By contrast, fundamental strategies are concerned with the fundamental relationship between economic value of the underlying asset and market price.Traders following these strategies essentially seek to use expertise and information in the accurate valuation of securities, on the assumption that market values will 24 Growth of Financial Markets converge to theoretical values. To the extent that traders can establish an advantage in valuation of securities, they may be able to earn pro? ts from identifying securities that are undervalued or overvalued by the market. One highly successful trader told us: I tend to take positions that depend a lot on central bank decisions e. g. nterest rates, so depend on macro economic position of the country, the judgement about how the Bank of England is going to behave and how the market is going to proceed. I try to put myself in Eddie George’s11 feet and try to understand. We have been building a model of Bank of England reactions to economic events. I have lunches with people who decide our interest rates and try to understand how they think . . . It all comes down to focus and completely immersing myself in an area. However, as with insider strategies it can be genuinely dif? cult for a trader to understand whe ther they have a genuine advantage in valuation.Further, as we will see in Chapter 3, trading on valuation advantage depends on the market converging to a value in a time scale over which you can ? nance a trade. Flow Strategies This strategy predicts prices as a function of demand and supply for securities in the market. Particularly for securities in which there is not much liquidity,12 large trades can shift prices signi? cantly. Where a bank has a large customer base in a particular niche, this can give them access to valuable market information, in particular, information on trading ? ows.These kinds of advantage are more readily achieved in OTC markets, which lack the transparency of trades organized through exchanges. However, in any given market niche, there will be a very limited number of ? rms that can capture suf? cient order ? ow information to give them a genuine advantage. Feldman and Stephenson (1988) studied the use of ? ow information in the US treasury bonds marke t. They suggest that through the use of informal information trading with customers, a ? rm with a 3–4 per cent share in trading may have a good sense of what is going on in 30 per cent or more of the market.However, they also show that medium sized players in these markets are often unable to exploit their customer relationships effectively. They argue that large players systematically 25 Growth of Financial Markets shut medium sized players out of information networks while providing good market information to smaller players who they mostly relate to as customers rather than competitors. As we have seen, ? nancial markets have a long history and have been through multiple cycles of global ? nancial integration over the last two millennia, but their development into domains of such immense complexity and global in? ence has occurred only within the last 50 years. The volume of trading and of traders has no historical precedent, nor has the complexity and variety of the inst ruments traded. Within this context, the activities of traders within investment banks are important not just to their customers, but also at the level of national and international economies. Naturally, these phenomena have attracted the attention of academics and commentators, from a variety of disciplines, who have, as we shall show in the next chapter, different and sometimes competing explanations of what in? uences and explains behaviour within global ? ancial markets. Notes 1. Derivatives are ? nancial products, which depend on or derive from other assets. 2. Values in all ? gures are nominal (non-in? ation-adjusted). 3. OTC derivatives are not traded in an exchange but are contracted directly between the two contracting parties. 4. Exchange requirements generally only require traders selling options to deposit a proportion of the potential claim. Further, speculation using derivatives is often highly leveraged (funded through borrowed funds). 5. Market traded short-term corp orate debt. 6. Market-makers stand ready to buy or sell an asset or class of assets.Typically a market-maker quotes a buy (bid) and sell (offer) price to a client before the client declares whether they wish to buy or sell. The spread between bid and offer both provides a return and some protection against market movements in the time taken for the marketmaker to readjust their holdings after a trade. 7. There are also important differences between the United States and the United Kingdom in how this tension is regulated. UK banks face fewer constraints on the relationship between customer business and proprietary trading. 26 Growth of Financial Markets 8. The types of ? ancial instruments dealt in by traders cut across these categories. Some traders specialize by a particular type of instrument (e. g. equities or bonds in a particular sector), others deal in a range of instruments related to a particular geographical region or sector. 9. See also Abola? a (1996) for a description o f such market stabilizing behaviour by market-makers. 10. Returns in excess of the market risk premium. 11. Eddie George was Governor of the Bank of England at the time of interview. 12. Liquidity: the availability of parties willing to buy or sell a security at any given time. 27 Chapter 3ECONOMIC, PSYCHOLOGICAL, AND SOCIAL EXPLANATIONS OF MARKET BEHAVIOUR For at least forty years psychologists have amassed evidence that economic man is very unlike a real man and that reason—for now, de? ned by the principles that underlie expected utility theory, Bayesian learning and rational expectations—is not an adequate basis for a descriptive theory of decision making. De Bondt, 1998 I am in fundamental disagreement with the prevailing wisdom. The generally accepted theory is that ? nancial markets tend towards equilibrium and, on the whole, discount the future correctly. I operate using a different theory, according to which ? ancial markets Market Behaviour cannot possibly di scount the future correctly because they do not merely discount the future; they help to shape it. Soros, 1995: 111 If we are to understand traders, we have to ? rst understand the markets they inhabit. Neoclassical economics has been extraordinarily successful in explaining most market behaviour in the aggregate. However, it has two principal weaknesses for our purposes. The ? rst concerns what it does not address and the second concerns some important failures at the margins. Neoclassical ? nancial economics treats markets as a given, or naturally arising.Investor preferences and risk appetites are treated as external to the model but predictably ordered and distributed. Markets are modelled as adjusting instantaneously with little attention to the detail of how such adjustments come about. While neoclassical ? nancial economic models effectively explain a great deal of market behaviour, there are some important failures at the margins. There is a wide range of anomalies which are dif? cult to explain within this paradigm. If markets instantaneously adjust and are perfectly ef? cient, then the only role for professional traders is as intermediaries who cannot earn above market returns, but ssentially earn commission as intermediaries. There is nothing to be earned by arbitrage activities or speculation. Indeed, it is not even clear within neoclassical accounts of markets that there is a role for intermediation. However, if we assume markets to be only nearly perfect and ‘sticky’, the trader’s role as someone with privileged expertise, tacit knowledge, and access to private information (within limits) makes more sense. Here, traders are the oil in the market machine; they are on