And a bunch of other people lost exactly the same amount, because none of them are creating anything.
A Tiny Hedge Fund Made 8,600% on a Vix Bet
31–40 of 122 posts
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#32Earlier quoted context omitted.
Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…
Everything that has risk associated with it could be considered "gambling" by your logic.
It's not so much "logic" as it is "definition".
From Google Dictionary: (2) take risky action in the hope of a desired result.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#33An obvious question: how often did they place this bet before it came off? If they did it ten months in a row it would still be impressive. But the return wouldn’t be quite as good.
This is true, looking at the chart for XIV if the placed this bet every month for the last couple of years they may actually be down.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#34And a bunch of other people lost exactly the same amount, because none of them are creating anything.
Technically, these people are hedging their portfolios. Just like insurance premiums don't create anything during periods of zero losses (they may actually seem like a loss themselves), holding these leveraged VIX ETFs can be used to protect one's portfolio.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#35This isn't news. It happens all the time. During earnings season, whenever there is a news break about pharma,tech,commodity, etc, whenever there is a big political/environment/etc news, and when the market moves.
And 8600% isn't that impressive ( depending on the size of the bet ). Leveraged bets can turn $1K into $1M or $10M overnight.
If you want impressive, go look into the returns in currency trading when the swiss unpegged their franc a few years ago. If you had insider information, you could have turned a few thousands into tens of millions easily.
This is really only news if this tiny hedge fund had insider knowledge. There's nothing really newsworthy about this.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#36The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc". The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-…
The real gem of that WSJ article was that 10% of daily trades on E*Trade were either pot or cryptocurrency related
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#37In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…
Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…
> ... I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term.
That's a smart conclusion that's correct in the vast majority of cases. Day trading, especially as a retail investor, is mostly gambling.
If you have funds to invest medium-to-long term, index investing using low cost, well-diversified funds really is the best thing you can do. Is it gambling? Year-over-year, an equity fund will certainly have wide swings up and down. However, since your horizon is long term, most people think that the market will be going up, averaged over the long term (a decade +). That is what the past has showed us.
While past results are not a guarantee of future performance, it would be highly surprising for the market as a whole to do down, or even stagnate, for a period of 10+ years. Yes, people often cite Japan, that's exactly why I stated well-diversified funds above: limiting yourself to a single country can be risky.
What is certain, is that if you are sitting on large sums of cash, inflation is eating away at it. You are actively losing money.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#38Earlier quoted context omitted.
Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…
Check out the The Simple Path to Wealth. It really made everything click for me, in terms of personal finance.
Note: the author also has a freely-available blog post series that summarize most of the material.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#39In trading and the markets, you can beat the drums of war for as long as you want. At some point you will be vindicated. Then everyone will look back at you and think "genius!". Ultimately, timing is everything. I can tell you markets will be X in Y time. Within reason, there's a good chance it will happen. Question is just "when?" The problem with strong views is whether they can be maintained. Being short in a risi…
Do you write software? I don't get trading and I want to. I get programming. If you understand both that's great. I even took one masters course (as part of my bachelors degree) in financial mathematics about options, future, derivatives etc. but it didn't click at the time. I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambl…
Benjamin Graham's The Intelligent Investor elucidates the principles of value investing as opposed to risky gambling. This is a book recommended by Warren Buffett too.
Re: A Tiny Hedge Fund Made 8,600% on a Vix Bet
#40The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc". The stock market engine has been hot for 5 - 6 years now and we just threw a can of nitro into the engine by way of massive tax cuts and deregulation. And then pundits and our President brag about how awesome this ride is as if managed growth is somehow anti-…
> The scariest WSJ headline the week prior to when volatility started was the following: "New account creation hits all time high at E-Trade, TD Ameritrade, etc".
The WSJ, marketwatch, cnbc, etc writes this every year. # of accounts, margin/debt exposure, etc. They also write how retail investors are missing out.
"As Dow Tops 25000, Individual Investors Sit It Out"
https://www.wsj.com/articles/as-dow-tops-25000-individual-in...
I wouldn't put too much stock in finance newspapers' headlines. They aren't there to give you advice. They exist to sell you ads.
> Historically they have been a catalyst of instability and trade solely based on the chart and trends.
This is not true. Retail investors don't move markets. Pension funds, hedge Funds, large investors do. And they do so when the FED decides to moves markets ( aka raise or lower interest rates ).