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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

#101

Post by dharma1 »

module0000 wrote: post #61
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.

I don't think CME is the reason prices have plummeted... My hypothesis is that there was no particular reason for the crash except simply lack of new buyers (everyone and their dog already heard about crypto), and lots of people selling. The drop looks steep but so did the rally before it. People can't agree on the value, it's all driven by sentiment and new blood (or lack of it).

You can't call the bottom on something you can't value, Novogratz thought it was at 6000 but made the wrong bet (for now, let's see what happens on a 1-2 year timeline). He's been doing the roadshow this year saying institutional money is coming in (I had a brief chat with him in London) but I don't see any pension funds touching something this volatile with a barge pole. Not until real value is starting to emerge

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

#103

Post by paulie_a »

mikkom wrote: post #73
paulie_a wrote: post #33

Earlier quoted context omitted.

It's always sad when I get my upwards of 10 percent by professionals. I personally get 500-1000 percent return year over year. I'm working with small amounts of money that if I lost entirely wouldn't be the end of the world. But some years they barely beat inflation.

> I personally get 500-1000 percent return year over year. Numbers like this are always quite funny to me. What does year over year mean in this context? 5 years? 10? If you would start with $1000 then in 10 years you would be at approx. 976 million with only lower part of your profits (500%).

Its personal investing so I pull profits to use for myself. And find something else to invest in. I usually keep around 500 invested. Not a lot of money but if I lost it all it wouldn't be the end of the world. It's been over the course of 15 years. Sometimes 10-15 trades in a year. But over a two year period with two trades it was 6800%. I'm not attempting to brag, I'm just saying the professionals are not any better than an ametuer. They are bad at their jobs.

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

#104

Post by _hardwaregeek »

wpietri wrote: post #53
bhaak wrote: post #25

Earlier quoted context omitted.

This interview[1] sounds like they called bottom at 6k and then the floor fell out: "We thought it was a bear market. I went into it thinking in the long run crypto is going to be a real structural shift in the world and I can just hedge my portfolio. And to be fair, we did a really great job not losing money the first 60 percent down. What you forget is that a market like Bitcoin that’s down 84 percent has dropped 6…

"Felt like". That's beautiful. The dude had a feel and lost the equivalent of 2300 years of labor (at the US median income). There's this bit in Taleb's first book, "Fooled by Randomness". This was before he made a shit-ton of money. He pointed out that a lot of the nominally successful traders he worked around would declare a strategy, make a few bets, make a lot of money, and then act like geniuses for thinking up…

Honestly the schadenfreude is real. What part of the crypto graph made him believe he could make assumptions about, well, anything?

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

#105

Post by wpietri »

dragontamer wrote: post #50
wpietri wrote: post #47

Earlier quoted context omitted.

> To be fair, when you have $100 Million, the goal of the game is not "growth", but holding onto that money. What's your evidence for that? Sure, they don't want to lose, but nobody does. And if anybody likes to get richer, it is pretty clearly rich people. Even the charity-focused ones want to keep increasing their resources, as that lets them have more impact.

> What's your evidence for that? The worldwide bond / debt market exceeds $100 Trillion. While the worldwide stock market is only $69 Trillion (sum of top 60 exchanges) https://www.visualcapitalist.com/all-of-the-worlds-stock-exc... It is clear that Bonds are more popular than Stocks, by a factor of ~50% or so. The rich are buying up debt in far greater numbers than stocks. And EVERYONE knows that Bonds make less mon…

Your evidence for what wealthy individuals do is... the total size of the global markets? What evidence do you have that their portfolio weighting matches that?

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

#106

Post by paulie_a »

module0000 wrote: post #60
robk wrote: post #46

Earlier quoted context omitted.

How??

He'e eluding(likely) to the commodities market. You can make double your money on a mediocre trade. You can also lose 100% of your money on a similar mediocre trade.

Nope just straight stock with my Scottrade account. In my younger years 77 dollars of stock ended up paying for a pretty decent copay for a surgery.

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

#107

Post by wpietri »

user5994461 wrote: post #82
wpietri wrote: post #45

Earlier quoted context omitted.

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/

And Warren Buffet was wrong. The hedge fund manager made more money than what the customer would have done in an index fund.

I'm not following. Buffett won the bet. The portfolio of hedge funds did worse.

If you're saying the hedge fund managers themselves make money, sure. That's Buffett's exact point: they pocket money, but that money isn't going to the customers, which is why the hedge fund portfolio's rate of return ends up lower than the index fund.

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

#108

Post by blackstrips »

nostrademons wrote: post #96
elhudy wrote: post #94

Earlier quoted context omitted.

Ok, but the whole idea behind fundamental analysis is that you generate a specific value of worth based on your analysis. So what formula are you using to calculate a price point for Eth based on "adoption and projects using it"? Are you tracking all projects using it, and assigning it a dollar value based on a per project usage and cross-checking that against the number of ways you can use it? Or are you just guessi…

I actually am, to most of those points. I'm indexing every forum & blog on the web, then cross-referencing it with a big long list of crypto projects, then using that to infer which projects have an active, involved, growing community and which are scams or dead. Sentiment, activity, and viral mentions aren't a perfect proxy for adoption, but it's pretty close, and a lot more robust data source than technical analysi…

What are the chances those projects will generate income and pay for ETH?

Can those projects work without a blockchain? Would it be cheaper to just handle stuff with (digital) signatures and old fashion contracts?

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

#109

Post by TuringNYC »

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. So what do you put it into?

Interestingly, there is a way to easily do that. The first project of my career (back in 2002, and still active!) was at a FinTech startup (https://www.promnetwork.com/solutions/depositors) with a product (https://www.cdars.com/) that does this transparently by opening up all the bank accounts and doing the map-reduce for you! Single statement, fully FDIC insured.

...and there are always t-bills

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

#110

Post by SatvikBeri »

user5994461 wrote: post #85
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.

I'd say the exact opposite. One of the best kept secrets in the industry is that people know exactly what they are doing. There are plenty of positions that are stable and low risk. Like running the exchange itself, all sort of middlemen and some form of arbitrage. A hedge fund is mostly about funneling as much of customer money as possible to the fund manager. It's a fairly straightforward and risk insensitive busin…

The strategies that tend to work are boring and low capacity, so they don't get much advertising, and people don't hear about them.

There's a massive saliency bias in that the strategies people are most likely to hear about are ones with some excitement behind them – that gives people a massively distorted view of hedge funds.

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