1/16/2025 at 12:40:53 AM
I've ironically lost more money the more closely I've paid attention to my investments because I was naively confident in the market's ability (or as I've come to suspect, willingness) to react to evidence of fraud.The amount of deceit put out into the world and gobbled up, on purpose, in business is obscene and seriously depressing. The magnitude of damage to psyches and thus economies that anyone acting in a fraudulent manner in finance creates is far-reaching and immeasurable. Punishment for financial crimes should be calculated based on the average lifetime earnings of a citizen -- if your victims are folks earning at or below the average wage, and you've scammed 100 lifetimes worth of average earnings, it's as if you've murdered 100 people.
Hindenburg's reports were a true pleasure to read, and their track record proves their positive contribution to society. Many self-important people online are quick to pounce on short sellers as being evil, and that will forever be a serious red flag to me thanks in no small part to Nate Anderson and the folks at Hindenburg Research.
by gmd63
1/16/2025 at 3:38:36 AM
> I've ironically lost more money the more closely I've paid attention to my investmentsMoney Magazine a few years ago compared various investment strategies in stocks. The #2 best performing one was investing in the S&P 500. The #1 best performing strategy was the "dead man strategy".
The dead man strategy comes into play when the investor dies, and his estate gets frozen until it winds its way through the courts. It turns out that doing nothing with your stock investments is (statistically) the best strategy.
I know for a fact that when I do nothing with my stocks, they also perform better.
by WalterBright
1/16/2025 at 5:03:27 AM
A few years ago cost structures for managing one's investment portfolios were also significantly higher than today!There's an even better alternative for someone willing to put in the leg work:
(1) Figure out your investment horizon. For many people, this is way shorter than suggested by generic advice, which makes some diversification beyond "stonks go up" meaningful.
(2) Figure out what costs you'll incur by rebalancing etc.
(3) Write a short script that optimises the amount of activity in portfolio management that improves performance over your investment horizon, given your costs.
Unsurprisingly, the result can vary a lot between people. The result is most likely going to involve a very low level of activity, but the process of finding it out is very informative.
What I've found out (and this is replicated also by more authoritative people like Carver) is that for almost everyone, mixing in some 10--20 % of a safer asset like 10 year bonds and rebalancing yearly outperforms a pure equity portfolio over most realistic investment horizons.
by kqr
1/16/2025 at 6:37:35 AM
Agree with you 100%, I did the same simulations and found the same result.I would suggest a step beyond though, because rebalancing your portfolio is fun year 1-5, but not so fun year 5-20: have a look at e.g. Vanguard retirement target funds.
Essentially, it's an ETF with a rebalancing rule included for a specific target date. For instance if you buy the target 2050 (your hypothetical retirement age), the ETF rebalances itself between bonds/monetary fund/stocks until it reaches that date, u til it's pretty much all cash in 2050.
Lowest hassle diversified retirement scheme I found.
by Galanwe
1/16/2025 at 1:33:42 PM
Nope not all cash, it goes down to around 50% stocks at the target date (and actually continues to get slightly more conservative after). Just look at the current portfolio of the Vanguard 2025 fund: https://investor.vanguard.com/investment-products/mutual-fun...by sgerenser
1/16/2025 at 10:58:46 AM
My target date 2050 funds have performed 50% less than my S&P 500 and like 30/40% less than my total stock market fund.by wil421
1/16/2025 at 12:26:07 PM
You mean VFIFX? What a disaster. My retirement plan put me in that until I realized investment advice for young people is a tax on the inexperienced and vulnerable. VFFSX (S&P 500) does 2x better returns every time. I feel guilty saying it on Hacker News. Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams. Without these heroes I'm not sure there'd be a startup economy. I just don't want to be the one who pays for it. I think the future Wall-E predicted with Buy N' Large is probably closer to the truth.by jart
1/16/2025 at 2:27:12 PM
> VFFSX (S&P 500) does 2x better returns every timeUS large cap has certainly recently outperformed the other parts of the target date fund (international stocks, bonds). But there is certainly no guarantee that it will happen "every time". In the last 10 years, US equity has been the best overall performing asset class for the past decade but 7 out of those 10 years at least one other category outperformed it: https://www.blackrock.com/corporate/insights/blackrock-inves...
> Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams.
You can look up the holdings of VFIFX or any other Vanguard fund. There is no private equity or private credit.
by ac29
1/16/2025 at 10:30:03 PM
And now GLD with its 1 year return at 40% is outperforming them both, which is a really scary thought. How bad do things have to be, that all our blood sweat and tears scurrying off to work each mourning earns less than a piece of metal dug out of the ground that sits around doing nothing? I thought inflation was supposed to be a tax on poors, but even rich private equity which gets ahead by sucking the blood out of Americans digging themselves out the grave can't save itself.by jart
1/16/2025 at 7:48:25 AM
This is one of those things where again, one will have to weigh the costs of both alternatives. A rebalancing ETF usually has higher costs (management fees, but possibly also internal trading costs that show up as performance beneath benchmark index), but of course, manually rebalancing also has a cost – the cost of one's time and effort!by kqr
1/16/2025 at 9:25:35 AM
Vanguard's ETFs are really cheap. The retirement funds in question are like 0.24%, which is in the cheaper range for ETFsby agos
1/16/2025 at 10:54:07 AM
There are scenarios where these target date funds are not good.Rebalancing into bonds and mmmfs is a form of insurance against catastrophic losses equities. But if you have a sufficiently large account then catastrophic losses that affect your life are extremely rare, if they do occur they will likely affect your bond portfolio as well, and the expected loss vs 100% equities over 15-20 years is significant, something like 10x the value of the insurance you are buying.
If you want insurance for a large account then long-dated put options 20% of the money are much cheaper.
by arpinum
1/16/2025 at 8:59:25 AM
You still need to be invested in equities at retirement otherwise inflation just eats away at the value of the cashby youngtaff
1/16/2025 at 2:17:48 PM
That’s why these target funds go down to ~50% stocks [edit: at the target date] not 0.by sgerenser
1/16/2025 at 2:30:08 PM
At least at Vanguard the final stage of target date funds is ~30% stocks: https://investor.vanguard.com/investment-products/mutual-fun...by ac29
1/16/2025 at 2:46:06 PM
That fund is currently at 50% stocks. It does get more conservative as you get past the target date, but I was mainly referring to the stock percentage at target date, which the parent poster implied was almost zero.by sgerenser
1/16/2025 at 6:51:20 AM
I want to learn more about how to rebalance my portfolio. I started with ETFs and MFs and then bought some good stocks when they were low. But I have never rebalanced it. Would you be able to share some resources about it? Also, if possible, some pointers about your script.by tminima
1/16/2025 at 7:01:15 AM
Rebalancing is just selling the high performers and buying the low performers. In his example, you'd keep your "safe asset" allocation at say 15% - if your other stocks did well one year, you'd sell some and buy more "safe assets" so they again constitute 15% of your total value. If stocks tanked, you'd instead sell some "safe assets" and buy more stocks, again until your "safe assets" are back at 15% of total value.by rokkamokka
1/16/2025 at 7:52:47 AM
> Rebalancing is just selling the high performers and buying the low performers.Guaranteeing mediocre performance. Not my cup a tea.
by WalterBright
1/16/2025 at 8:48:39 AM
Not at all -- it uses volatility in one's favour, by cashing out on temporary peaks and buying in on temporary lows.What you describe sounds like a kind of momentum/market cap investing, which is favourable in the short term, but suffers a lot when things go bad.
(This is assuming one cannot predict future returns better than the rest of the market. If you do that all the better!)
Seems like there's a lot of confusion on this. I'll see if I can get a fuller article up.
by kqr
1/16/2025 at 8:16:01 AM
Mediocre performance is better than your top performers dropping 30% or 60%.I can point couple companies that suddenly dropped from $90 a share to below $10 and then they never got up “Just eat takeaway.com” between 2018 and 2022 it was looking like they would go to the moon. In 2022 you can see hell of a drop and it is not going back.
If you would sell parts of it before 2022 you would lock at least some of the gains.
But I think you know better when to switch companies ;)
by ozim
1/16/2025 at 6:13:34 PM
Oh, I've had my portfolio drop 90% once. And drop 50% at other times, and 30% drops.It's not easy to suppress the panic.
by WalterBright
1/16/2025 at 2:30:09 PM
I'd be interested in reading more literature (e.g. from Carver) if you have any links!by sotix
1/16/2025 at 4:10:12 PM
I have only read half of Carver's Smart Portfolios yet but I find myself agreeing with much of it. I have started writing up a review of it sometime soon, although I might not publish it for free in a while!by kqr
1/16/2025 at 8:07:47 AM
Doing nothing saves trading costs which are a major drag.The standard advice for equities investors (at least in the UK) has been to invest in tracker funds for a very long time.
it is possible to beat the market. Many years ago I double my money in approx an year - but I invested heavily in I had been covering as a analyst (one of my previous careers) until immediately before. I am more cautious now.
by graemep
1/16/2025 at 8:54:38 AM
Trading fees are at or near zero in the US now unless you mean capital gains.by matwood
1/16/2025 at 9:15:23 AM
Not what I meant, but capital gains are another issue, but I am not in the US. In the UK we pay a 0.5% tax on ever transaction and often around £10 per transaction, so its quite substantial. I should probably have said costs, not fees.How much are total costs in the US?
If you trade frequently even low costs add up. If its 0.1% and you trade monthly it ends up being 1.2% over the course of an year.
by graemep
1/16/2025 at 10:09:29 AM
10+/trade is going back to the early 2000s for the US.Now it's effectively 0 for most common trades. Here is Schwab for example:
https://www.schwab.com/pricing
If someone is a big options trader they can probably find a better per contract price out there.
by matwood
1/16/2025 at 11:38:24 AM
How do they profit? There must be a cost somewhere? Another reply mentioned spreads - still a cost (you lose money when you trade).by graemep
1/16/2025 at 12:10:43 PM
AUM, managing high wealth clients, running their own funds with expense ratios (also some of the lowest in the industry), uninvested cash, etc... Retail trading is commoditized now.Anyone who really cares about spreads will be using limit orders. Otherwise you're talking about pennies on highly liquid shares.
The fact that we're even discussing the possible spread differences between market makers shows just how commoditized retail trading has become.
by matwood
1/16/2025 at 1:26:00 PM
the sell order flow to market makers who gobble up the other side of bad retail tradesby thefreeman
1/16/2025 at 4:15:09 PM
I highly doubt market makers are in the business of betting against retail traders.I suspect they're in the business of collecting the spread on lots of small trades that they can assume are largely random.
by xen0
1/16/2025 at 6:22:22 PM
What you described is how you bet against retail traders. The bet is that they have no edge so it’s safe to run tight spreads and nice pure market making algos that assume random behavior at volume.by kortilla
1/16/2025 at 6:48:26 PM
Feels weird to call it a 'bet against' when the other side can (potentially) benefit from the tighter spread you offer.But yes, the market maker doesn't run the risk of trading with someone with knowledge and a lot of capital to apply it.
by xen0
1/16/2025 at 2:05:10 PM
Which means that your cost is market maker's spreads instead of fees. Still a cost to you.by graemep
1/16/2025 at 6:20:28 PM
Nope, this is one of the counterintuitive things about people paying RH for order flow. Market makers can offer tighter spreads when they know it’s a pool of dumb money.by kortilla
1/16/2025 at 6:39:45 PM
tighter spreads are not zero spreadsby graemep
1/16/2025 at 12:38:40 PM
[dead]by varelse
1/16/2025 at 10:54:50 AM
All the major US brokers started doing free trades for stocks and etfs. For Vanguard, most of the index expense ratios are really low, like %.05 percent, but that’s not a trading fee.by wil421
1/16/2025 at 11:36:30 AM
Even for paid transactions that typically give better pricing (IBKR Pro), the prices are extremely cheap.by AdamN
1/16/2025 at 11:48:52 AM
How do they make money from you as a customer?by 4ndrewl
1/16/2025 at 12:33:51 PM
Quite a lot of customers either have cash sitting in the account which they make interest on, or have margin debt which they charge for.by tim333
1/16/2025 at 12:44:33 PM
Interesting, thanks. For a minute I was expecting someone to say "ads"by 4ndrewl
1/16/2025 at 12:20:22 PM
You can Google it, but AUM at scale means .03% is a significant amount of money. There's also uninvested cash that the broker can invest in t-bills and take the spread.by matwood
1/16/2025 at 12:48:59 PM
Thanks for the lmgtfy :)I bet the uninvested cash product drives some weird incentives - kpis around increasing ratio of sells to buys and increasing pain around removing cash.
by 4ndrewl
1/16/2025 at 4:04:44 PM
Front-running your trade.by jkolio
1/16/2025 at 6:23:01 PM
This is illegal and is absolutely the dumbest way to make money.by kortilla
1/16/2025 at 6:27:38 PM
nice try buddy, that’s ILLEGALby valkmit
1/17/2025 at 5:09:09 PM
Oh no, I guess someone will be going to jail!...No? Then, uh, a punitive judgment?
>Small fine that amounts to a cost-of-doing-business.
Ah. Hm.
by jkolio
1/16/2025 at 10:10:25 AM
You also pay a spread every time you trade, especially if you're using a retail brokerage like robin hood that sells order flow to market makers.It doesn't show up anywhere in your statement, but it's a real trading fee nonetheless, so it's still better not to trade too much
by ifwinterco
1/16/2025 at 6:24:00 PM
Retail is offered tighter spreads because it’s safe to assume they have no edge at scale.by kortilla
1/16/2025 at 6:08:10 PM
The explicit fees are near zero, but if you watch your trade you always get an adverse price.by WalterBright
1/17/2025 at 2:44:44 PM
what are you talking about. you're not going to fill worse than nbboby pxx
1/16/2025 at 12:36:47 PM
You pay the spread and you also have impact in the market.by maest
1/16/2025 at 12:49:30 PM
If you’re trading US large-cap stocks at low frequency these are not really material costs for even a wealthy retail investor. Certainly not next to taxes.by intuitionist
1/16/2025 at 3:18:40 PM
Just yesterday it was announced that Bitfinex will be returned the 95,000 bitcoin that were lost in a 2016 hack. These coins will be returned to the account holders which were affected by the hack.At the time the bitcoins were lost, they were worth ~$575 each.
Today those returned tokens are worth close to $100,0000 each.
I doubt anyone who was affected by that hack realized they just got involuntarily forced into the best investment of their lives.
by Workaccount2
1/16/2025 at 4:06:21 PM
> These coins will be returned to the account holders which were affected by the hack.I haven't seen any reporting on that. Bitfinex, the corporate entity, is receiving the coins recovered from the feds. It's up to Bitfinex how they device to dole out those funds, if at all.
When these things happen, often times exchanges will make their customers whole by giving back the monetary value of the coins at time of loss. It's very rare they repay them 1:1 in bitcoin.
by fckgw
1/16/2025 at 6:25:38 PM
IANAL but it seems like whoever is running Bitfinex should endeavour to make all the creditors whole in whatever medium their debt was denominated, according to seniority. So if they owe users X BTC and other creditors Y USD, and the BTC debts are senior, they should hand out the BTC to users regardless of its dollar value and, if there is any left, auction it off for the benefit of the (junior, in this scenario) USD creditors.by ElevenLathe
1/16/2025 at 9:17:58 PM
They could, but there's nothing requiring them to do so.AFAIK the only crypto company who have been hacked (and there are a lot) and returned funds as BTC and not in dollars is, ironically, Mt. Gox. Users got repaid in Bitcoin 10 years after the fact. FTX bagholders were compensated ~120% in "equivalent value" dollars. Lost crypto was not repaid.
by fckgw
1/16/2025 at 11:02:40 PM
https://support.bitfinex.com/hc/en-us/articles/115003282929-...Apparently they created a token that entitles you to the lost bitcoin should they be recovered.
by Workaccount2
1/16/2025 at 4:11:42 PM
Interesting part of the story is the hacker who stole them is a YC alumni, he founded mixrank. Kid only got 5 years in prison for stealing $1B.by chasebank
1/16/2025 at 4:45:05 AM
This doesn’t surprise me in the slightest.Most of my investing is just in passive S&P index funds, but I do occasionally buy individual shares.
Sometimes I make decent money, sometimes I lose money…turns out I consistently do worse than the S&P long term.
I treat buying individual shares as yuppie gambling at this point. It can be fun, but it’s usually a bad strategy.
by tombert
1/16/2025 at 6:14:28 AM
> I treat buying individual shares as yuppie gambling at this point. It can be fun, but it’s usually a bad strategy.Naw, that's boomer gambling.
Options are yuppie gambling.
by Scoundreller
1/16/2025 at 7:01:38 AM
I thought that was shorting biotech stock days before clinical trial results get announced?by tonetegeatinst
1/16/2025 at 7:26:08 AM
For extra flavour, also invest solely using loaned money, preferably a student loan that never goes away!by Koffiepoeder
1/16/2025 at 6:46:27 AM
> I treat buying individual shares as yuppie gambling at this point. It can be fun, but it’s usually a bad strategy.I would actually recommend the opposite - buy shares of a few companies that you know exceptionally well. That is, not just the companies, but also the market, the industry trends, etc. Charlie Munger recommends holding 5 stocks at max, while Peter Lynch suggests industries that are tangential to your work and daily life. Both solid advice. Revisit the list every year, and you'll already do better than most of the blind duds investing in the S&P500 (which arguably contains a lot of duds).
The problem with most ETFs is that you'll still be investing in a bunch of dud companies, whose only reason for staying in the market is by virtue of being big (think HPs and IBMs, for example).
by fakedang
1/16/2025 at 3:23:13 PM
The problem with ETFs is that many of them have crazy management fees.Don't just blindly buy an ETF that fits your investment goals. Many of those bespoke ETFs have 1%+ management fees.
You can look up how even a 1% fee can gobble up piles of money over years.
by Workaccount2
1/16/2025 at 3:38:30 PM
That's why I am partial to the Vanguard funds. If you look at VUG and VTI and VOO, the fees are on the order of ~0.03-0.04%.I know that passively-managed ETFs aren't necessarily "optimal" (as your parent comment mentioned, there's a risk of them having a few duds there for legacy reasons), but I think the value that they provide come down to the fact that they're automatically rebalanced and diversified, and 0.04% seems like a pretty reasonable cut for them doing that for me.
by tombert
1/16/2025 at 4:05:08 PM
I didn't mean buy any ETFs either. I was making the case for individual stock holding, as a response to my parent comment.by fakedang
1/16/2025 at 4:58:52 PM
To your point though, even Berkshire Hathaway invests in VOO and SPY: https://www.morningstar.com/funds/spy-vs-voo-which-warren-bu...I think there's value in having things diversified and rebalanced automatically, especially if you don't have any confidence in your own ability to do so. Yes, you sometimes get stuff that's overvalued and thus over-represented, but in theory if the stock tanks the portfolio will be rebalanced and thus become a smaller percentage of the total holdings.
by tombert
1/16/2025 at 3:53:07 AM
The conventional wisdom is to sell your profitable stocks, to "lock in your gains", and sell your losers to "cut your losses."I call that "minimizing your gains" and "locking in your losses", and just hold instead. If I "locked in the gains" I would have missed out on 10x returns.
Of course, I did ride Enron all the way to zero (!), but it didn't matter. Think of it this way - buy 10 stocks. 3 go to zero. 6 have modest returns. 1 is a 10x winner, that more than makes up for the failures, and becomes the tentpole for your assets.
by WalterBright
1/16/2025 at 4:07:56 AM
I have a friend who retired, and decided to go into day trading. He spent hours each day glued to the trading portal, making trades. After a year, he ruefully admitted that he'd have made significantly more money if he'd simply done nothing.by WalterBright
1/16/2025 at 4:39:03 AM
Sometimes I ask GPT to run Bayesian analyses on varying hypotheses. I just did that for the several parent comments to see if we could get some reasons as to "why day trading doesn't work." Perhaps this will amuse you as well: https://chatgpt.com/share/67888cf4-1aa4-8011-b46b-77e5e9da12...by jpcom
1/16/2025 at 5:16:28 AM
Is there any reason to believe the probabilities involved in those computations are not just coming straight out of rand()?by semi-extrinsic
1/16/2025 at 4:45:10 AM
Yes, thanks for posting it!by WalterBright
1/16/2025 at 4:11:36 AM
> 1 is a 10x winnerout of 10 stocks, 1 being a 10x winner is an absolutely rarity and the fact that you would manage to pick it is pure luck tbh.
by chii
1/16/2025 at 5:14:07 AM
Oh there's more luck required than that. You have to get lucky many times to win at a 10x stock.- You have to be lucky enough to find it when it's cheap.
- You have to be lucky enough to hold on to it even if it loses money
- You have to be lucky enough to not sell it when it's at only 5x and hold off for the top
- you have to be lucky enough to have bought enough initially that the return is meaningful to you
These are the thoughts that made me clean up how I invest and stop thinking I'll get lucky at some point just rolling the dice. It's way more luck required than just buying in early.
by chrismarlow9
1/16/2025 at 2:13:23 PM
The 4th point (bought enough that the return is meaningful) is the killer one. There’s always “that guy” that brags about buying TSLA or NVDA in 2015 and having 100x his money. Then it turns out he only bought like $500 worth. Sure, $50K isn’t nothing, but it’s not going to be meaningful to the retirement of someone making tech worker wages.Of course, the reason he didn’t buy more was because he knew it was a lottery ticket and putting most of his money in the S&P500 in his 401k was obviously more prudent.
by sgerenser
1/16/2025 at 4:26:44 AM
QQQ is up 5x in 10 years. Being an ETF, that means many of its components must be 10x.I suppose it's dependent on your time horizon. MSFT is up around 10x since Nadella took over. It's more common over 20 years, obviously.
by WalterBright
1/16/2025 at 3:31:44 PM
Are 'many of its components up 10x'??Isn't it the case that a few large cap stocks have the vast majority of the growth? If you didn't like Tesla, didn't like Nvidia, didn't like big 5 tech, you might have had very mediocre returns.
by biminb
1/16/2025 at 4:30:41 AM
The other neat thing about ETFs is that there are so many similar, you can effectively use them for TLH to help offset future gains.by silisili
1/16/2025 at 4:37:47 AM
The IRS disallows wash sale deductions if you reinvest in a substantially similar investment within 30 days.I'm not an IRS agent and have no idea what they mean by substantially similar. You might want to talk to your tax accountant.
by WalterBright
1/16/2025 at 4:48:14 AM
> substantially similar investmentThey actually use the word 'identical' instead of 'similar', if that matters. It seems to be a grey area with ETFs, and I'm not a financial advisor, so won't make any further claims.
> You might want to talk to your tax accountant.
Absolutely agreed. You can also just let a reputable robo do it for you if you don't have the time or energy for it, there are multiple. It is what I ended up doing. It's modest but every bit helps.
by silisili
1/16/2025 at 2:22:15 PM
Indeed, the wording is “substantially identical”, which is important. 2 different ETFs that track similar, but not identical indices (e.g. S&P500 vs Russell 1000 large cap, for example) are clearly not substantially identical, and make great tax-loss harvesting pairs. There’s tons of case law, opinions from tax experts, and automated tax-loss harvesting tools from a variety of brokers that agree with this viewpoint.by sgerenser
1/16/2025 at 6:02:56 AM
Robo advisors are intricately familiar with tax law? That's new to me.by tenuousemphasis
1/16/2025 at 6:17:14 AM
US lets you claim $3k of capital losses each against income, so a robo advisor can optimize for thisby Scoundreller
1/16/2025 at 12:57:52 PM
IIRC they have never defined "substantially similar" and they don't actually go after people who sell etf X and immediately buy etf Y with an identical price graphby voldacar
1/16/2025 at 5:35:43 AM
I've done it repeatedly over the past ten years while DCA'ing. I basically made my own custom funds with 5-10 stocks, set daily purchases for a specific amount, and didn't think about it. Unfortunately I didn't invest enough each time for the amount to be significant, and I also stopped DCA'ing as soon as I couldn't resist checking, saw that I had reached or was approaching a 10% loss in my overall DCA portfolio, and stopped the auto-buys because I felt like I was starting to burn money, when this was actually the best time to continue investing. I haven't sold anything either though. Overall I'm up 80%, which is only $50k.I think DCA is the most effective investment strategy. Unfortunately I don't have the discipline to keep it up during a downturn. Next time I try it again with picked stocks will be my 4th time, but for now, I'm doing it with index funds. I'm not going to feel as inclined to pause my purchases during an index fund downturn.
by xenihn
1/16/2025 at 10:09:00 AM
I'm guessing "DCA" means "dollar-cost averaging": https://www.investopedia.com/terms/d/dollarcostaveraging.aspby kragen
1/16/2025 at 5:53:01 AM
Well, also the market has done almost nothing but go up over the last 10 years, correct?by lazide
1/16/2025 at 9:56:04 AM
Exactly. I started buying NVDA in 2020 and I still hold almost all of it.If you do rebalancing then you might as well hold an ETF that does it for you at the lowest cost. If you hold individual equities, keep your winners.
by davedx
1/16/2025 at 12:26:18 PM
This reminds me of that Mythbusters episode in which they test what is the fastest strategy in a traffic jam or congestion - switching lanes or keeping your lane. IIRC the result was that it's the same, but zigzagging makes you feel it's fasterby yard2010
1/16/2025 at 9:55:03 AM
So invest in s&p 500 and do nothing, right? That's a good strategy for someone young, because it makes sense to be risk tolerant then. As you age you want more and more of your portfolio in bonds/cash, because you want the reduced fluctuation in purchasing power (i.e. comfort) that that brings you. These are the bare fundamentals of portfolio management.by dmos62
1/17/2025 at 5:01:38 AM
How can I use the 'dead man strategy' if I've just started investing and don't own any stocks?Because if I already need to have some stocks, than this being the #1 strategy feels like those advice that you get on the internet where if you want to be rich just get born into a wealthy family.
Statistically probably true, but not really doable. :/
I feel like you can only do the 'dead man strategy' when your already dead, since before that it's probably better to keep adding money into the portfolio.
by LoveMortuus
1/16/2025 at 11:10:25 AM
Did they include the Monkeys?"Most successful chimpanzee on Wall Street" - https://www.guinnessworldrecords.com/world-records/most-succ...
by belter
1/16/2025 at 9:31:23 AM
This is the same for cryptocurrency. The people who lost accessa and subsequently regained it usually made more than those with ready access who sold earlier or played the market.by celticninja
1/16/2025 at 4:28:11 AM
> turns out that doing nothing with your stock investments is (statistically) the best strategyThe only thing a small investor can control are fees. Minimising transactions minimises fees.
by JumpCrisscross
1/16/2025 at 4:34:16 AM
You also get heavily taxed for the short term gains.by WalterBright
1/16/2025 at 7:49:37 AM
I can think of at least one situation, like expiring options, that you wouldn't want to have happening during your "court frozen" period...by WtfRuSerious
1/16/2025 at 10:11:42 AM
I assume that in-the-money options are automatically exercised at expiration in the dead-man situation?by kragen
1/17/2025 at 2:13:30 AM
Yes, they will automatically exercise if your dead, the same way they auto execute when you are alive. I have sold many options over the years, with many of them exercising. If they expire ITM, you don't have a choice (whether dead or alive) past expiration.by Shocka1
1/17/2025 at 10:42:39 AM
Thank you for the confirmation!by kragen
1/16/2025 at 4:10:30 AM
P.S. I'm not a financial advisor. Make your own decisions.by WalterBright
1/16/2025 at 3:52:36 AM
Do you have a link to that article?by safeimp
1/16/2025 at 4:02:03 AM
I wish I had clipped and saved it. I can't even tell you what year it was. Sorry. But what I wrote is all one needs to know about it.Here's a similar article:
https://www.businessinsider.com/forgetful-investors-performe...
by WalterBright
1/16/2025 at 4:45:52 AM
Thanks anyway, this is still interesting.by safeimp
1/16/2025 at 1:43:24 PM
That's worked for me, for well over 30 years.by ChrisMarshallNY
1/16/2025 at 1:53:12 AM
Keep in mind, fraud isn't necessarily a big deal for the shareholder, not all fraud is Enron-tier. For example, I fully believe they were right about Adani, but it was basically just skimming money off the top. If Adani is an embezzler, but also good and funneling bribes to get gov't contracts, then the overall effect on profits may just be breakeven or even positive. The losers would be the Indian citizenry. The company isn't doing so well now possibly due to a culture of corruption, but that kind of long-term culture analysis is hard for traders. But generally, fraud isn't severe enough to enough to endanger the company, it's just taking some money out of shareholders' pockets, but dispassionate traders don't usually sell out of retaliation.by barnabyjones
1/16/2025 at 2:40:26 AM
True. Small frauds are common. I know people that have gotten away with pump-dumps. I know people that have raised obscene money for terrible ideas. I even helped close one customer while at one company, and then when I moved to another company, I had to meet the same buyer and he chewed me out in front of my rep because of the shady deal from my last company. And I even had a customer that kinda defrauded us! And when I was younger, I saw a lot of tiny behaviors that might be considered fraudulent if looked at from the angle of a transaction. I had to stop working for a while because it was destroying my soul. Nate says there was no danger or specific reason to close, but I very much doubt this.by yowayb
1/16/2025 at 2:55:51 AM
zombie companies suck all the oxygen out of the room and away from productive companies, the victim is society and civilization at large and the damage is measured in lost exponential progress of unbound time axis, potentially millennia. Medical technology, longevity, scientific advances that we could have had but will not for another 10^N years - all retarded by malinvestment and misallocation. Theworldif.jpgby dustingetz
1/16/2025 at 2:56:13 AM
Some shareholders seek fraud as it has the potential for the highest short term returns. The sooner we exile those folks the better.by gmd63
1/16/2025 at 7:48:56 AM
Some "investors" did "invest" in Ponzicoin after all.by rockskon
1/16/2025 at 3:59:32 PM
> The amount of deceit put out into the world and gobbled up, on purpose, in business is obscene and seriously depressing.In business, politics, everything. It almost seems like everyone is quietly agreeing that "if we pretend the pesky truth doesn't exist for long enough, we can literally change reality to be what we want".
I feel like I'm going crazy. There's no way that's how things can work for long, right?
by crayboff
1/16/2025 at 4:48:39 PM
You're not going crazy, they are. But even once things start falling apart, inertia alone can give the appearance of productive movement for years to come.This is probably why when somebody looks to try to find the cause for e.g. the collapse of the Roman Empire there were a surprisingly large number of potentially serious issues all happening simultaneously.
The reason is that the empire probably collapsed decades before its fall and so the stupid decisions and actions all continued to pile up, seemingly without consequence. All until the inertia finally ran out and suddenly the entire house of cards came crashing down.
by ANewFormation
1/16/2025 at 5:08:44 PM
By all accounts it was like this at the end in the USSR too: infinite nepotism, no accountability, crashing standard of living near the median, deaths of despair attached to crazy levels of dangerous substance use.This is what happens when bad people capture the levers of power.
by benreesman
1/16/2025 at 6:34:18 PM
I didn't watch this talk but I read the article it's based on.When an Iraq War supporting Tory like Niall Ferguson criticizes the US military for being both bloated and stretched thin by underfunding, it gives away that the critique is just disingenuous contrarianism.
by eltondegeneres
1/16/2025 at 7:20:09 PM
... and look how well that has turned out for the average Russian citizen (or journalist, or competing business-person who stands too close to a window anywhere but the first floor)...by jjkaczor
1/16/2025 at 7:55:38 PM
There has never been a time in the history of the greater Russian Empire when good people captured the levers of power.by nradov
1/16/2025 at 6:29:51 PM
It's not about pretending. Truth is the first casualty of war. If someone is trying to deceive you, they are actively exposing you to some kind of risk, usually for their own benefit, which is a hostile act.by Herring
1/16/2025 at 4:18:42 PM
We've kicked the can down the road for a while, but no worries, we will pick it up soon and recycle it ;)by roymurdock
1/16/2025 at 1:08:10 AM
The market can remain irrational longer than you can remain solvent. The market will tolerate infinite BS for arbitrary periods of time.Which also means being careful of short selling. It can put you at unlimited risk even if you are absolutely right.
by jfengel
1/16/2025 at 2:31:15 AM
> Which also means being careful of short selling.There are a number of businesses I know are badly run and will eventually fail, but I cannot find a way to monetize that safely without knowing the timeline for failure.
by UniverseHacker
1/16/2025 at 3:17:01 AM
If you are the only person who thinks that it might fail, one cent put options will be free and you can buy them until the price hits zero, and then you can make a cent.For example, the opportunity to sell $TSLA for $180 in one month costs about thirty cents right now. Keeping this up for ten years would cost $36.
by whatshisface
1/16/2025 at 3:42:24 AM
That'd work well for a catastrophic Eron-style collapse, but many companies die a slow death, like Sears.by patwolf
1/16/2025 at 2:47:21 PM
With Sears like companies you can take a very small short position and then reinvest the money from the sale going long S&P500 type stuff. That's roughly what Chanos did. It has to be small position as a percent of your portfolio in case it decides to go up 10x when you are not looking. I think Chanos's results over a decade were something like 0% on the shorts, 50% on the longs the money was reinvested into.by tim333
1/16/2025 at 4:20:03 AM
Put options are worthless once the price of a stock hits $0. At that point, the stock will be frozen and/or de-listed and your ability to exercise your put will be gone.by pclmulqdq
1/16/2025 at 10:06:30 AM
Per grok it's not true and per me it's not a problem in practice.A put option is a contract between buyer (me) and a seller of the option. The contract guarantees me a right to sell stock at a strike price to the seller of the option.
If current stock price is lower than put contract strike price, I can exercise the contract and make money: I buy the stock from market at e.g. $78 (current price) and sell at e.g. $128 (strike price).
If stock is delisted the contract is still valid and enforced by the clearing house. They'll just assume that current price is $0 and force the option seller to just fork me cash without receiving the (unavailable) shares.
But it doesn't happen in practice because stocks are not just delisted without warning.
For example, Bed Bath & Beyond announced bankruptcy in April 23, Nasdaq announced delisting in April 25 and trading stopped in May 3.
So there was a week for option holders to settle their trades.
by kjksf
1/16/2025 at 1:00:17 PM
Grok is not a reliable source. What will happen is that if you are lucky, some institution with worthless shares will buy them from you at a very big discount OTC. If you are not lucky and your broker sleeps on you (since that deal comes from your broker calling someone on the phone, it's not automated), you will lose the options.by pclmulqdq
1/16/2025 at 7:26:28 AM
There are otc buyers for these, but they probably won’t look at $36by baq
1/16/2025 at 5:58:58 AM
It doesn't work like this. The stock might fall around $10-$20 every month in the worst case scenario. In which case the premium of $180 will keep rising every week, 90% of which will expire worthless.You have to buy really farther out or really far off strike both of which have nearly zero probability ( delta is nearly zero and less than 1)
by ganeshkrishnan
1/16/2025 at 2:08:22 AM
> It can put you at unlimited risk even if you are absolutely right.The risk is in borrowing, not short selling. How many momo jockies out there think about the "unlimited risk" from buying Tesla on margin? In that case, you're shorting USD, but no one talks about that because it always will be fashionable to short USD.
Just like it always will be fashionable to short JPY, for carry and more. Until it's not.
by unyttigfjelltol
1/16/2025 at 3:21:41 AM
Short selling a stock means borrowing shares and selling them.by jpk
1/16/2025 at 10:36:11 AM
Short selling has unbounded downside. If you borrow $1,000 to short sell TSLA and then it soars you might end up losing $100,000.If you borrow $1,000 to buy TSLA your downside is limited—you can’t possibly lose more than $1,000.
by CrazyStat
1/16/2025 at 7:17:07 PM
In either case, your broker will liquidate you around $0. Not guaranteed, but very likely. This is the key risk.Tether provides a good illustration of the principle I mentioned-- which I concede is a bit theoretical in the case of USD:
Tether is supposed to trade at $1 and gets press when it trades below. But, sometimes it also trades above, at $1.01, $1.02 and even perhaps $1.03. So, if you sold a lot of it thinking trading higher was impossible, you can be surprised.
by unyttigfjelltol
1/16/2025 at 2:20:51 AM
You can short USD by buying Bitcoin or a similar non-correlated asset but how could buying a usd correlated asset (TSLA) be shorting?by encoderer
1/16/2025 at 2:35:36 AM
Stocks are generally not considered tied to currency- if the company has some fundamental value, that should be inflation proof.So technically buying almost any stock can be a way of shorting the USD in that you are selling it now and will buy it back later.
The risk - besides that of the company itself- I suppose is that if you have massive deflation you will end up with less USD. I don’t think anyone is worried about massive deflation of the USD, since the Fed can and would prevent that.
by UniverseHacker
1/16/2025 at 7:28:48 AM
Stocks have been a great inflation hedge in the long term since they’re usually backed by hard assets and people, not numbers in computers. Short term obviously some businesses are hurt by inflation and some benefit.by baq
1/16/2025 at 9:02:06 AM
You can also short the USD by buying a different currency. BTC would be more like shorting all currencies.by matwood
1/16/2025 at 10:25:01 AM
Buying BTC is shorting money printing by your government.Today the only government (that I know of) committed to not printing money is Argentina but they have other issues affecting their economy and therefore inflating their currency.
Given that governments don't seem to have desire stop money printing any time soon, buying BTC is sound.
by kjksf
1/16/2025 at 12:20:50 PM
The 2010s called, they want their talking points back. The Fed has been doing quantitative tightening for the last couple of years while raising rates. Only towards the end of last year did they start lowering the rates again, but they are still doing QT. So, there is no, what you call, "money printing", which in itself is a complete misnomer as it ignores the complexities and actual transmission mechanisms of "quantitative easing". In either case, Bitcoin has proven that it offers no hedge against anything; it is merely a risk asset with no intrinsic value that tends to rally with all the other rubbish like meme stocks.by this_user
1/16/2025 at 7:24:05 AM
This sort of thing is part of my personal motivation for getting into business. Lying is so rampant, so universal, so quietly accepted by everyone in a position of even mild power in business that it's easy to take for granted that you simply cannot succeed without it. I wanted to know if that was actually true - so far, it doesn't seem to be. But I don't blame people for worrying that it might be. People in positions of high power almost universally suck, and "just copy whatever really successful people do" is far from the worst strategy one can use in life.(As always, you should trust what a founder says publicly about their company approximately not at all. If you want the answer for yourself, you gotta do it yourself, because you only know if you're lying or not. But I have my answer, I think.)
by rachofsunshine
1/16/2025 at 9:09:57 AM
I hear what you’re saying, but it feels a bit too cynical to expand it to all business. Did you tell your boss you’d finish some task today? If something comes up, as often does at work, and you don’t finish, did you lie? Predicting the future is hard even as soon as what will happen today, now do that for the next quarter or 4 quarters. Of course there are fraudsters out there, but I view most founders as rampant optimists instead of liars. And you kind of have to be an over top optimist to be founder.by matwood
1/17/2025 at 6:19:27 AM
> Did you tell your boss you’d finish some task today? If something comes up, as often does at work, and you don’t finish, did you lie?No. A good-faith failure is different from a lie.
The rule of thumb I use to handle ambiguous situations is "if my incentives were different, would I be saying something else right now?"
> Of course there are fraudsters out there, but I view most founders as rampant optimists instead of liars.
Most founders are both.
They're rampant optimists in the sense that they believe in their thing so much that it overrides all other concerns. But that often makes them liars via an argument of the form "my thing is so important and will change the world so much that I have to lie now to make sure it can be so great".
I'm not saying founders are ogres. The kind of lying they do derives from fairly ordinary human failures. But it's still lying, it's still normalized, and it still has terrible consequences all the time.
by rachofsunshine
1/16/2025 at 1:29:14 AM
This is a common thing among investment professionals especially in areas where you need strong domain knowledge such as biotech. Your conviction can become stronger the more you learn and collect supporting data. Conviction is a dangerous thing. This also extends to what’s broadly happening today in increasingly data-rich environment because we make data-dependent decisions.by lvl155
1/16/2025 at 8:17:24 PM
Buffet has this saying: "the stock market in the short term is a voting machine and in the long-term it's a weighing machine." I think a modern version of that is, in the short term the price is narrative and in the long-term it's accounting.With Berkshire, Buffet figured out early, and firms like Hindenburg capitalized on the strategy of showing both sides of the story.
by nipponese
1/16/2025 at 3:59:05 AM
In basically every other era of investing since 1930, you would probably have benefitted from that approach. While I think you're right to set aside the prudence you were targeting in favor of a passive investment approach, I also think that once the Fed ZIRP era ends, the knowledge you amassed will again become useful.by sfblah
1/16/2025 at 12:08:05 PM
> Punishment for financial crimes should be calculated based on the average lifetime earnings of a citizen -- if your victims are folks earning at or below the average wage, and you've scammed 100 lifetimes worth of average earnings, it's as if you've murdered 100 people.This seems like utilitarian ethics. I don't subscribe to these. I'd say most people don't either. So why "should" we calculate punishments for crimes this way if we don't use the same ethical framework as you?
by throw10920
1/16/2025 at 2:58:22 PM
Money grants you the power to influence others' lives. You take that from people illegally, and give it to yourself, you're creating an extreme negative effect on economic efficiency that should not be taken lightly and should be heavily discouraged.Bill Hwang had settled insider trading charges a decade or so before he caused 30 billion dollars of liquidations after engaging in multiple forms of financial fraud. His insider trading punishment was likely lax and he committed crimes again, causing even more economic damage.
18 years in prison is nowhere near the amount of economic damage he caused. He amassed a net worth of 10-15 billion dollars. That's ten thousand average lifetimes worth of average American work. The punishment should reflect that. The expected value of fraud should be negative so that not even a degenerate gambler would consider it.
Can you explain your views as to why incentives to harm the economy massively via fraud to benefit yourself need to exist?
by gmd63
1/16/2025 at 3:09:29 PM
> Can you explain your views as to why incentives to harm the economy massively via fraud to benefit yourself need to exist?I never said that I hold that view nor do I believe it.
Between you falsely ascribing views to me I do not hold and/or lying about my words, avoiding answering my question, and your emotional manipulation, it's clear that you're a troll and I don't have any need to respond to you beyond pointing out your logical fallacies.
by throw10920
1/16/2025 at 3:14:48 PM
If you don't support the current punishments, which evidently don't deter the crime, what's your idea of how they should be strengthened to adequately deter financial crime? I'm not trolling.by gmd63
1/16/2025 at 8:20:51 PM
I'm not OP, but the obvious question here is whether tougher punishments would be more of a deterrent given that this is something that hasn't been true in many other cases going way back.In particular, there seems to be substantial evidence that, at least past a certain point (and we can argue whether we are at that point or not, but it's not something self-evident either), what matters more is how likely the punishment is to be applied than how harsh it is, so increasing it further doesn't really do anything productive, just provides a public spectacle.
by int_19h
1/17/2025 at 12:37:46 AM
I disagree. Trevor Milton, the Nikola Motors fraudster CEO will be out after a laughable four years. That's a complete joke.by gmd63
1/17/2025 at 3:49:52 AM
Do you think he wouldn't do what he had done if the punishment for getting caught would've been worse?by int_19h
1/17/2025 at 5:15:54 PM
When people see Milton getting locked up for four years, it's in no way proportional to the upside of making out with thousands of lifetimes worth of average honest work. If others who had done similar crimes before him had received more severe punishments he may have chosen not to.That's not to mention the court's complete lack of concern for recidivism. Look at Bill Hwang. Slapped on the wrist for insider trading -> billions of dollars of later economic damage. Likely chance we'll see the same pattern of behavior from Milton. I'm generally for forgiveness and second chances, but not in the realm of steering thousands of lifetimes worth of honest economic influence.
by gmd63
1/16/2025 at 12:12:34 PM
Some people think it’s just a number but the reality on the ground is that money is literally lifetime.by hotstickyballs
1/16/2025 at 2:59:24 AM
Even without fraud, the markets seem incredibly forgiving. For example, one would think that what Crowdstrike outage did to the airlines and businesses worldwide (and the levels of incompetence displayed) in 2024, would have destroyed the company. Instead, the stock has recovered nicely and it's business as usual. Or the massive security breaches - same outcome, it's as though nobody cares.by mv4
1/16/2025 at 3:26:16 AM
People don't invest because they think a company is competent. They invest because they are looking for a return.The mistake CrowdStrike made will likely have little to no effect on their revenue. Since the stock dropped a bit (emotional investors getting out) it became a good value proposition, so people bought it cheap.
The reasons companies use CrowdStrike haven't gone away. Existing contracts can't just be terminated. By the time it comes up for renewal few will remember the incident, fewer still will care.
What you see as "levels of incompetence" others see as "made a mistake". You don't fire suppliers for a mistake- that's experience to them, and they're unlikely to make that mistake again anytime soon.
Plus of course, replacing anything like that at scale is a lot of work, expensive, and career-risky. Who, in the enterprise, is taking on that task? Who is advocating for it?
The market is forgiving because the outlook remains strong. The outlook remains strong because the business fundamentals remain strong.
by bruce511
1/16/2025 at 4:12:26 AM
There are consequences, with significant financial impact, not necessarily world ending for them.There are already lawsuits filed around this incident. If a court sides with the customers or if CrowdStrike settles them, it will not be cheap.
Even if they don't end up loosing or settling, the lawyers will not be cheap with so many suits , I don't think there is a major class action, every contract is unique after all, customers can easily afford their own lawyers and don't need to share.
Beyond that, in next renewal cycle, customers are likely to demand much stronger penalty clauses in the contract, they won't let the mistake of not putting strong financial penalties slide while they may not change the vendor. This will make insurance for CrowdStrike much more expensive, another mistake would be far more financially expensive even if this one doesn't turn out to be.
The insurer will also want a stronger internal process controls and paperwork which also won't be cheap.
Consequences in B2B are never immediate but over time they do happen, larger an org longer it takes, but eventually it does catches up, look at Intel or Boeing today.
by manquer
1/16/2025 at 4:34:57 AM
There will absolutely be consequences. And that'll cost real money.But that is just a 'cost of doing business'. And ultimately will just work it's way into the price.
Intel and Boeing are not "one off mistakes". The root problems there are structural, cultural and fundamental.
If CrowdStrike have more issues this year, then that'll have an impact because it suggests there's a root problem. But a single bad rollout is just a bad rollout.
by bruce511
1/16/2025 at 7:59:14 AM
CrowdStrike problems are also structural the incident timeline hardly seemed like a fat finger mistake, but series of fundamental poor practices a org in their position should not have. We only get to see the one newsworthy incident like the door blowing off the airplane.The "cost of business" will catchup to them is the point, Unlike Intel or Boeing it is not duopoly business with little to no options for CrowdStrike's product. It is notoriously brutal for large organizations in tech to stay competitive over 20-30 years time horizon.
Most likely trajectory for a company in their position, their growth slows - this incident being a key contributor to that slow down, then stock starts to fall, it will eventually become attractive for a company to acquire them, perhaps rebrand the product and keep the customers and cash flows.
by manquer
1/16/2025 at 7:32:41 AM
Lawsuits will take years by which time the company will either be gone or swimming in cash.by baq
1/16/2025 at 7:46:56 AM
Lawyers have to paid now till then.Companies settle much faster typically to reduce some of this costs, it ends up being cheaper.
Also many of these will be resolved through their arbitration clauses that would be present in the contracts. Arbitration is much faster and usually appeal proof
by manquer
1/16/2025 at 8:02:31 AM
Delta sued for what, $500M? These would have to be some expensive lawyers, even for lawyers.by baq
1/16/2025 at 8:22:26 AM
That is just one customer, and also it is not just lawyers, Contingent liabilities(potential amount for settlement) when it escalates from possible to probable, in GAAP that means it changes from mere footnote to a line item in P&L which needs to be financed and managed and affecting their margins well before the actual settlement is decided.by manquer
1/16/2025 at 8:44:18 AM
Looks to me the market priced this in.by baq
1/16/2025 at 8:26:57 AM
Meh- Delta sues for 500 million is just the headline. They'll end up settling for nothing like that.by bruce511
1/16/2025 at 8:46:52 AM
So either way a non-issue for today.by baq
1/16/2025 at 4:17:44 AM
There was a case of food contamination in a fast food joint (can't remember which, let's say it was burger king). The stock fell as a result, but recovered relatively quick afterwards - you would've made bank buying it low.The thing is, individual, one off events usually don't break a company, but the stock falls temporarially as a result of some people expecting it to. Of course, it's possible that one event breaks a company, and this is the risk you do take buying it low after the event.
by chii
1/16/2025 at 4:27:24 AM
Exactly. There's news every day. It takes a lot of bad news to break a company.And frankly unless it's criminal (Enron, Theranos etc) it's not a big deal. An oil spill here, a data leak there, these are not things that affect customer behavior.
The market is only interested in results. It doesn't care about the news. Those stock dips you see are uneducated emotional investors making bad decisions for the wrong reasons.
by bruce511
1/16/2025 at 6:58:59 AM
> There was a case of food contamination in a fast food joint (can't remember which, let's say it was burger king). The stock fell as a result, but recovered relatively quick afterwards - you would've made bank buying it low.I think this was some years ago and it was Chipotle. They had to remove some menu items altogether IIRC.
by fakedang
1/16/2025 at 8:24:15 PM
It's a recurring thing. Back in the 90s it was Jack in the Box (https://en.wikipedia.org/wiki/1992%E2%80%931993_Jack_in_the_...)by int_19h
1/16/2025 at 3:25:00 AM
Equifax should not be in business anymoreby rcpt
1/16/2025 at 5:11:23 AM
We work closely with them and I've been impressed with how broad their product reach is. Whether they should be in business or not is a question for regulators, but the market rewards their unique position. If you to own something valuable that everyone else needs or wants, they will pay you for it.There's a bigger question about how to properly price and penalize negative externalities. From a business perspective there isn't much difference between an oil spill and a mass data breach — "Whoopsie, we'll try not to do that again. In the meantime don't you need gas for your car?"
by sebmellen
1/16/2025 at 3:46:07 AM
Has anyone actually fired Crowdstrike over the incident? Heck, did Delta fire Crowdstrike?I think the stock market is accurately realizing that it takes a lot of effort to fire a company embedded in your security infrastructure and that the incident probably won't change sales.
by MattGaiser
1/17/2025 at 10:53:34 AM
even if they were a beacon of truth, they were active market participant and would stand to benefit if the markets do react to their report.how large businesses get away with things is true across markets and the precedence set let them be more fearless to keep committing them.
the reporting through the publication has an important place, but playing the market at the same time personally gets rid of any credibility.
by rldjbpin
1/16/2025 at 6:37:04 AM
Here I was thinking Hindenberg was part of the problem and you seem to think the opposite?To me they seemed like partners of shorting hedge funds (similar to CNBC) who just spit out bs articles so their hedgie friends can trade on it.
DOJ seems to agree with me?
https://www.forbes.com/sites/sergeiklebnikov/2022/02/16/doj-...
There are more and better sources.
by bboygravity
1/16/2025 at 2:53:08 PM
Not to take a position on those particular accusations but a problem with activist shorting in general is the people running the companies in question are often pissed of and aggressive and will try to take legal and PR action against the shorters.by tim333
1/16/2025 at 3:23:08 PM
That article says nothing that suggests Hindenburg is "part of the problem", only that they had received requests for information in line with an investigation.by gmd63
1/16/2025 at 12:13:28 PM
> Punishment for financial crimes should be calculated based on the average lifetime earnings of a citizen -- if your victims are folks earning at or below the average wage, and you've scammed 100 lifetimes worth of average earnings, it's as if you've murdered 100 people.Can this precedent be extended to the money wasted with failed government projects? But maybe on lifetime taxes rather than lifetime earnings, to be fair.
by robertlagrant
1/16/2025 at 3:02:39 PM
That's not even close to comparable. You vote for elected officials to pass bills that are attempted and sometimes failed. And often failed projects produce things of value to society so I'm not sure how you would factor that in, for example if you'd like a refund on the Challenger explosion. You don't vote for criminals to take your money.by gmd63
1/17/2025 at 9:17:52 AM
> And often failed projects produce things of value to societyTrue, although also, criminals buy things and pay VAT.
> You don't vote for criminals to take your money.
I vote for elected officials who pass bills (if I were American) that allow/disallow criminal activity.
by robertlagrant
1/16/2025 at 2:52:53 PM
> anyone acting in a fraudulent manner in financethe system incentivises this behavior, no one is punishing the rich guys playing with our livelyhood
by bugtodiffer
1/16/2025 at 2:11:44 AM
I won't name names but a very popular so called "app growth king" launched recently and it's just full of dark patterns. Even going so far as giving out a "free month", when it's just a way for the user to lock into a yearly plan after a one month trial.by sergiotapia
1/16/2025 at 2:33:34 AM
Isn’t that virtually every (mobile) subscription app in existence…?by npinsker
1/16/2025 at 11:32:46 AM
> I've ironically lost more money the more closely I've paid attention to my investmentsWithout insider knowlege market investments are pure gamble. The best you can do is to bet randomly. Once you deviate from random bets because you are mistakenly think you know something then your investments will underperform.
by scotty79
1/16/2025 at 6:08:53 PM
That isn't guaranteed, because if so you can always do the opposite of what you think and you will overperform. Even if you think you know something, you are, at best, still being random. Anything perceived decrease in return from taking actions is itself just chance (and confirmation bias), because otherwise you could inverse it.by SkyBelow
1/16/2025 at 11:42:24 PM
> Even if you think you know something, you are, at best, still being randomTechnically true. But somehow in practice you are random in worse ways. Psychology of most people makes them generate very bad randomness.
But you are right. What I said is just good first approximation. Sometimes you can do better. For example listening to most popular financial influencers and doing exactly opposite of what they recommend gives slightly better returns (it was researched). I don't quite remember if better than fully random though or just better than following their advice.
by scotty79
1/16/2025 at 2:52:07 AM
> Hindenburg's reports were a true pleasure to read, and their track record proves their positive contribution to society. Many self-important people online are quick to pounce on short sellers as being evil, and that will forever be a serious red flag to me thanks in no small part to Nate Anderson and the folks at Hindenburg Research.Short sellers taking positions and then putting out report and marketing to bring a company’s price down can also be perceived as market manipulation. It’s not about people being “self important” but conflict of interest and the incentive to lie or exaggerate for those short sellers.
For example months after Hindenburg’s report on Supermicro, the independent committee investigating alleged issues found nothing wrong (https://www.morningstar.com/news/marketwatch/2024120275/why-...). The company ultimately confirmed that no prior or current financial reporting would need to be stated. So that makes the allegations false, or at least exaggerated, right? And doesn’t that mean profiteering through short positions and allegations of bad accounting would be market manipulation?
by blackeyeblitzar
1/16/2025 at 3:03:43 AM
The first line of that article is"New financial and accounting executives will be appointed, as recommended by the investigation committee"
I agree that harm is possible when short selling and lying about it.
by gmd63
1/16/2025 at 3:05:59 AM
That’s because several people (and also EY, their auditor at the time) resigned in the wake of that report. Probably under pressure and lots of stress but also because of all the things that the initial independent investigation suggested needed to be reviewed. But now multiple investigations have completed those reviews and found nothing. And Supermicro has to fill vacant positions.EDIT: since I am rate limited, here’s my reply to the child comment by gmd63
> Why would an investigation committee need to recommend that a company fill vacant financial and accounting executive positions? What you're saying makes no sense.
There are many reasons this can make sense. In this case, the most likely reason is that the allegations called into question the integrity of the executives and the board. New executives would be hired and approved by the same group, and it would look strange for them to do that while under investigation. The most important finding from the investigation is neither management (executives) nor the board acted improperly, which led to them making the recommendation.
by blackeyeblitzar
1/16/2025 at 3:20:09 AM
Why would an investigation committee need to recommend that a company fill vacant financial and accounting executive positions? What you're saying makes no sense.by gmd63
1/16/2025 at 4:44:58 AM
> Short sellers taking positions and then putting out report and marketing to bring a company’s price down can also be perceived as market manipulation.Sure, in the same sense that releasing a 10-K can be perceived as market manipulation. In fact, if we define "market manipulation" to mean anything that might affect the market, many things can be perceived as market manipulation!
The question I think is more important is, is it bad? Sharing investment information you believe to be true and material to investors seems good to me.
by ImPostingOnHN
1/16/2025 at 1:33:59 AM
> Many self-important people online are quick to pounce on short sellers as being evil, and that will forever be a serious red flag to me thanks in no small part to Nate Anderson and the folks at Hindenburg Research.Credible arguments can be made however that short-selling itself, especially naked short selling, is an unethical thing to do as the pure possibility of short-selling makes some forms of crime possible in the first place, such as a criminal shooting up the road bus of a German soccer team to profit from falling stock prices [1]. Especially in the era of anything being credibly fake-able with widely available AI tools, short-selling can look to criminals as a very profitable way to make money.
Also, short-selling incentivizes large stock holders to be lazy and not do their jobs. Imagine a huge ass pension fund - they can (and do) make money as the counterparty in short-selling deals. Some see this as a necessary part of stocktrading life (because it provides liquidity), but personally I think that it removes incentives for the pension fund managers to do their job and audit the stock they hold for their shareholders in turn themselves.
Besides: enforcing securities code and auditing companies should not be the job of vigilantes. I applaud the efforts of ethical short sellers, but in an ideal world, that job would be done by the authorities.
[1] https://de.wikipedia.org/wiki/Anschlag_auf_den_Mannschaftsbu...
by mschuster91
1/16/2025 at 1:47:37 AM
1. Naked short selling basically doesn't happen anymore. To the extent that it does happen it's a mere technicality and the borrow is found after a couple of days.2. There is very little money in shorting. Pumping and dumping by making up positive news is much more lucrative. "to the moon" has been a trope for years, and there is no equivalent on the short side. Even the world's most successful short seller Jim Chanos was successful because the short portfolio functioned as a hedge that enabled a leveraged long position on broad indices. It's pretty hard make money net short when the market goes up for two straight decades.
3. The authorities don't have the resources nor the dogged inclination to hunt down fraudsters. The authorities can't and shouldn't base an exhaustive investigation on vaguely shifty CEO behavior. Short sellers can and do start their investigation based on gut feeling.
by gizmo
1/16/2025 at 9:19:47 AM
> The authorities can't and shouldn't base an exhaustive investigation on vaguely shifty CEO behavior.Moral hazard. We are in this thread, where many people complain about the irrationality of the market, of bad choices having no ill effects, and at the same time it is argued that authorities should prioritize and only investigate and prosecute large cases where the ROI is good.
I think the ethical landscape created by this "selective investigation and prosecution based on ROI" is part of the problem. We officially abandon the concept that wrong-doing will get caught and punished as a rule and then we marvel that the markets are irrational and that bad actors profit and keep profiting over large time horizons. Who could have expected such?
I think over a longer time period these effects will compound and there will be larger and larger problems. You can't just abandon the rules because enforcing them is not cost-efficient and hope everything will be alright. But it does take time to see the effects so who knows when the larger problems will show up.
by lucianbr
1/16/2025 at 11:53:55 AM
I broadly agree, except I think the greater moral hazard is in failing to prosecute the plain-as-day cases of fraud (regardless of size). I'm not arguing in favor of abandoning rules but given limited resources you have to prioritize somehow, and every prosecution strategy has significant externalities like those you touched on.by gizmo
1/16/2025 at 3:22:42 AM
1. FTDs are at an all time high. Naked short selling is an epidemic. This is provably false.2. Operational shorting as a part of market making and derivatives strategies is an enormous part of the market. This is also demonstrably false.
3. The DOJ has the resources, not the jurisdiction. Self regulation will always be underfunded. Trying to argue that short selling is an effective form of privatized self regulation is laughable.
by weard_beard
1/16/2025 at 3:40:19 AM
An increase in failures to deliver does not imply an increase in naked shorting.by gmd63
1/16/2025 at 1:19:59 PM
They are highly correlated. Most other causes are static processes which would not increase or decrease.by weard_beard
1/16/2025 at 4:23:14 AM
The few firms (market makers) that are allowed to short naked pretty much always deliver.by pclmulqdq
1/16/2025 at 1:21:57 PM
By “cheque kiting”. Trading back and forth perpetually with colluding firms to perpetually “deliver”, eventually landing these phantom shares in offshore swap agreements where reporting has conveniently been perpetually delayed.by weard_beard
1/16/2025 at 2:33:00 AM
As for 3. Looking at the HR targets they don't look like hunch targets to me.They seem to be going after egregious high flyers with a pattern of grift who are vulnerable to a short.
Of course I could be wrong
by PoppinFreshDo
1/16/2025 at 1:44:28 AM
Truly perverse incentives such as one the one you linked aside I think it's mostly fine. Naked short selling is already illegal and the deck is heavily stacked against short sellers to begin with. A position betting on growth is by far and away the safest investment, the market directly incentivizes "irrationality" on the side of prices not going down, and it's infeasible to hold a short position for very long making it (mostly) noise to long term investors which are the ones we typically care about.by Spivak
1/16/2025 at 7:04:29 PM
> Truly perverse incentives such as one the one you linked aside I think it's mostly fine.Well, the thing is, with AI being widely available the threat model explodes as the difficulty goes down drastically - imagine someone deepfaking a video of a C-level executive being involved in illegal or "extreme" sexual acts; we already have "nudifier" apps, the steps to cross for the mentioned scenario aren't that large. The number of potential threat actors explodes as the group is now "everyone with a smartphone", and it also explodes as the likelihood of getting caught (and sentenced to decades in jail, if not death) for shooting someone in public is significantly higher than getting caught "leaking" a faked video which at worst risks you a year or two for defamation.
by mschuster91
1/16/2025 at 2:12:16 AM
I completely agree about the dangers and am disgusted by the story you shared and others like it.In an ideal world nobody would commit a crime. Sadly we're far from an ideal world, and the US authorities in my experience are not well funded enough to adequately cover the ground they're responsible for. We also have a populace that voted for a felon who hates the IRS and has cronies who have floated dismantling the Consumer Financial Protection Bureau, so short sellers will have to do.
And the betting markets like Polymarket are worse. They had bets as to whether the fires in LA would be contained by certain dates. You can imagine the perverse incentives that creates.
by gmd63
1/16/2025 at 11:51:23 AM
no amount of funding can compensate for inappropriately aligned incentives.the ability to spend other people's money will always be the breeding ground of corruption (which includes not doing your job while accepting the salary).
by attila-lendvai