Friday, November 30, 2012
"The Pit": A look at culture shock in the world of commodities trading
“The Pit” is a relatively obscure 62-minute (barely a “feature”) documentary by Johanna Lee about commodities trading, particularly the lives of people who work at the New York Board of Trade.
Unlike other financial trading jobs, this “career” used to be very physical, with (mostly) men shouting and trading slips of paper on a crowded trading floor, where B.O . can really matter. Like gamblers, the men worked long enough to make their money, typically a few hours a day. Men don't need college degrees to become traders. But every day, they put their personal savings on the line. Trading is a zero-sum game, and some people must lose. There is enormous short term focus. “Nobody is bigger than the market”.
The NYBOT was taken over in 2007 by the Intercontinental Exchange (link), which implemented electronic trading and totally changed the culture and workplace experience for commodities traders.
Much of the film deals specifically with coffee futures, and explains how futures trading makes retail prices for consumers seem more stable. But speculation can drive up prices quickly, was we know from the crude oil market.
The film showed the personal lives of some traders, including at least one gay male couple.