Susquehanna

Beat the Racetrack attracted a lot of attention as it was purely based on mispricings. Because of this work, Jeff Yass, the main partner of Susquehanna in Philadelphia contacted me in 1987. Jeff was one of five partners, all about 28 years old who were friends at The State University of New York at Binghamton. They were betting racetrack pick 6’s, etc., successfully and moved to Philadelphia to start a firm market making on the Philadelphia stock exchange. This exchange is known as the home of bandits who nickel and dime on trades to generate fortunes. Jeff’s group were clever and hired young smart non-finance students from elite schools in the northeast and trained them to be market makers. They preferred students from philosophy, political science, etc., rather than finance graduates who might be corrupted by efficient market theory. The idea was to make those nickels and dimes and quarters by selling high at the offer and buying low at the bid in various markets. This was a good business…