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Novogratz's Crypto Trading Desk Lost $136M in Nine Months

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Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#61

Post by module0000 »

kilo_bravo_3 wrote: post #13

I like how cryptocurrencies were launched as an alternative to central banking, wresting control of money away from the government and big banks. An open and level playing field that would democratize how people transact financially with each other. And then the first thing the early adopters did was recreate the flawed financial institutions that surround "real" money so that they could pretend to be Gordon Gekko an…

The CME started trading futures contracts for BTC in December of last year. Since then, it's been a downward spiral in terms of price. With the CME involved, it means banks(let that sink in) are trading against you. Their pain threshold exceeds yours(and all of ours), and you will lose every time betting against them.

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#62

Post by quickthrower2 »

blake8086 wrote: post #26
owenversteeg wrote: post #11

“Remember, bubbles happen around things that fundamentally change the way we live,” he said. Ah yes, I remember how beanie babies changed the way we all lived. And tulips, of course. And rhodium? Hmm.

And dot-coms! And real estate! Hmm.

Real estate is as old as humanity

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#63

Post by goalieca »

Filligree wrote: post #18
kilo_bravo_3 wrote: post #13

I like how cryptocurrencies were launched as an alternative to central banking, wresting control of money away from the government and big banks. An open and level playing field that would democratize how people transact financially with each other. And then the first thing the early adopters did was recreate the flawed financial institutions that surround "real" money so that they could pretend to be Gordon Gekko an…

All you have to do is look at the buy/sell curves. Crypto is 80% market manipulation, 19% traders and maybe 1% genuine use.

and 100% a threat towards worsening global warming.

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#64

Post by module0000 »

orbifold wrote: post #54
JumpCrisscross wrote: post #27

Earlier quoted context omitted.

> All you have to do is look at the buy/sell curves What the hell are buy/sell curves?

How the orders are distributed in the order book.

This is incorrect. Orders and their distribution in the order book is called liquidity. Alone, they have very little meaning, and are often manipulated in the securities and commodities market(ie: you see a 5,000 bid, and place your own 5,000 ask - suddenly the bid is gone, and your ask gets rolled by huge buy orders). "Buy/sell curve" has no meaning, the closest term would be "yield curve", such as US interest rates. As the rate climbs and falls, there are inverse effects on financial instruments.

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#65

Post by kolbe »

blake8086 wrote: post #26
owenversteeg wrote: post #11

“Remember, bubbles happen around things that fundamentally change the way we live,” he said. Ah yes, I remember how beanie babies changed the way we all lived. And tulips, of course. And rhodium? Hmm.

And dot-coms! And real estate! Hmm.

I don't remember any innovation around real estate that changed our lives within the past few decades (or millennia even).

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#66

Post by vec »

wpietri wrote: post #45
AznHisoka wrote: post #9

Earlier quoted context omitted.

One of the best kept secrets in the hedge fund/financial industry is that most people really dont have a clue what they are doing. Sure they make bold predictions, appear on CNBC and use industry jargon. But at the end of the day, they arent much better than you or me at managing large amounts of money.

An opinion shared by Warren Buffett. He bet a hedge fund guy $1m that an index fund would beat a portfolio of hedge funds. Buffett won handily: http://longbets.org/362/

I'm a complete layman whose only knowledge of the financial system is derived from podcasts and magazine articles, and hindsight is always 20/20, but wasn't this always an obvious sucker bet?

As I understand it, a hedge fund is supposed to be, well, a hedge. It's not supposed to make more money than the market when the market's doing well. It's supposed to be uncorrelated from the rest of the market, with the hope that it can maintains or even gain value in the event that the rest of the market tanks. An asset class that could reasonably be expected to substantially outperform both a bull market and a bear market isn't a hedge against anything, it's just a strictly superior asset class and we're pretty good at arbitraging those out of existence in relatively short order.

With that in mind, doesn't this basically devolve to a bet that at least a whole decade's worth of economic growth was going to be consumed entirely by a massive recession? That's not wholly unprecedented, admittedly, but it is a lot rarer than I'd be comfortable putting any money on at flat odds.

What am I missing?

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#67

Post by trevyn »

dragontamer wrote: post #39
misiti3780 wrote: post #16

Earlier quoted context omitted.

to back this up, read the expose in the economist this week about family offices and how they all divesting from hedgefunds because the fees are ridiculous and they are doing no better than the S&P, usually worse when you take into account the onerous fees those mgrs are charging.

To be fair, when you have $100 Million, the goal of the game is not "growth", but holding onto that money. $100 million isn't much different from $108 Million (8% gains over the year)... or even $500 Million. In both cases, its still more than enough money to live on for the rest of your life. The S&P 500 has dropped 50% in the past (ie: 2008), and it doesn't make sense to risk that much money on that. You can't use…

>You can't use bank accounts: FDIC insurance only covers $200k per bank. You'd literally need 5000 different bank accounts to hold $100 Million safely.

Not that it’s a good idea, but there are other ways to insure cash than the FDIC.

One example, apparently Massachusetts offers unlimited insurance for banks: https://en.m.wikipedia.org/wiki/Depositors_Insurance_Fund

(Also, 100M / 200k = 500, not 5000)

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#68

Post by carbocation »

bduerst wrote: post #34
blake8086 wrote: post #26

Earlier quoted context omitted.

And dot-coms! And real estate! Hmm.

Ships can't ever sink when all you look at are the ones that are still floating.

This is a beautiful description of immortal time bias.

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#69

Post by dragontamer »

quickthrower2 wrote: post #62
blake8086 wrote: post #26

Earlier quoted context omitted.

And dot-coms! And real estate! Hmm.

Real estate is as old as humanity

No. Its only as old as modern society.

The idea of a private citizen owning land was not generally accepted in the medieval age of kings. Only lords and other nobility could own land back then. Technically, the king owned the land, and the Lords were simply stewards of the King... probably indirectly (King -> Count -> Lords)

Eventually, real estate could be owned by the common peasants and merchants, but that starts to get into modern capitalist style society.

For some details, see this article: https://en.wikipedia.org/wiki/Quia_Emptores

Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months

#70

Post by mancerayder »

Filligree wrote: post #18
kilo_bravo_3 wrote: post #13

I like how cryptocurrencies were launched as an alternative to central banking, wresting control of money away from the government and big banks. An open and level playing field that would democratize how people transact financially with each other. And then the first thing the early adopters did was recreate the flawed financial institutions that surround "real" money so that they could pretend to be Gordon Gekko an…

All you have to do is look at the buy/sell curves. Crypto is 80% market manipulation, 19% traders and maybe 1% genuine use.

This isn't Reddit, do you have something to back any of that up with?

Manipulation can be 100% or 10%, who the hell knows?

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