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How a Doctor beat Wall Street

vanityfair.com

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Re: How a Doctor beat Wall Street

#71
post #66

I reread the article, it is that good. However, one moment does seem extremely unusual. How does one go from being active on investment forums to securing a few million from very experienced investors. It is one of those one in billion occurences. I am sure Mike Burry would have done alright even without it, but still there must be more to the story. Hopefully, full book goes into more detail.

Maybe I can help fill the gap a bit.

There is an online forum for value investors called value investors club.

In order to become a member, you have to submit an investment idea which is then evaluated. If it is good enough, you get in and become a member.

The forum was started by Joel Greenblatt, of Gotham Partners. What Greenblatt does is monitor the users on the site and gauge their abilities based on ideas... if their ideas are good enough he usually contacts them to make a seed investment so that they can start a hedge fund.

Pretty much any fund connected to Gotham gets the attention of other investors and it is usually pretty easy for them to scale up afterwards. e.g.: going from 0M --> 200M in just a few years. Its sort of akin to how companies funded by YC can sometimes have it easier when attracting VC funding.

Re: How a Doctor beat Wall Street

#72
post #9

Earlier quoted context omitted.

Those pension funds and states should not have invested in dangerous securities. Let's face it: the money seemed easy and these guys took very dangerous investments, with money that was not safe to play with.

That doesn't justify what he did. The right thing to do would have been to let people know of what was happening. Just because the financial system rewards greed/selfishness does not mean people shouldn't act ethically when the consequences of their actions could mean the loss of hard earned money by honest hard working people with families, medical expenses, college loans, etc. Then again the guy has Asperger's synd…

There was another hedge fund guy in Dallas who made billions betting against mortgage securities, just like this guy. But before he invested, he spent years explaining to everyone that the mortgage market was doomed. People laughed at him. He finally placed his bets and ended up being right.

From your comments, you have a fundamental misunderstanding about how these markets work. Investors in CDSes don't cause anything to happen. It's like betting on a horse race. Your money has no impact on how fast the horses run. If you want to be mad at someone, why don't pension fund managers hire analysts to do their own research rather than blindly trust the sharks on Wall St.? Ultimately, it's their fault for losing everyone's money. Wall St. merely sells the products that people want.

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