Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

111–120 of 134 posts

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

#111

Post by SatvikBeri »

vec wrote: post #66
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/

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 t…

Yes, it was a sucker bet. The funds Protege picked were actually funds of funds that basically had a .6 correlation to the S&P 500. So Buffett was almost guaranteed to win if the markets went up over 10 years, and lose if they went down. And it's very rare for the market to be down over a 10-year period.

Honestly I have no idea what Protege was thinking.

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

#112

Post by pessimizer »

kolbe wrote: post #65
blake8086 wrote: post #26

Earlier quoted context omitted.

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).

CDOs

they literally turn bad debt good

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

#113

Post by thesausageking »

Alex3917 wrote: post #22
thesausageking wrote: post #17

Earlier quoted context omitted.

> Given his pedigree... Novogratz is a fun character and a good fundraiser, but he doesn't have a pedigree as an investor. He became famous (and a billionaire) by taking Fortress public. Under his watch, it then went from $35 to down below $2. After he was demoted, he ran a macro fund there which performed awfully and, in 2015, it was shutdown and he was forced into "retirement".

I was in his office chatting with him a year and a half ago, on the exact day of June or whenever the market hit its bottom, and he called that that day was the bottom. He does things that don't always make a lot of sense to me, but he wouldn't be a billionaire if he wasn't getting a lot of stuff right also. E.g. he also bought 500k worth of ETH and sold it for 250M. Paid his taxes, bought a new plane, and donated th…

Hard to verify what you're saying. June wasn't a bottom for ETH and the most he could've made with that trade was ~4x.

But even if you're right and he did make a great trade, that doesn't make him a genius. He's a gambler and sometimes gets a great hand.

He was super bullish on EOS before it tanked. He very publicly called a bottom[1] for BTC on Sept 13th when it was $6,300 and it's down by ~50% since.

[1] https://twitter.com/novogratz/status/1040288811643809798

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

#114

Post by Alex3917 »

thesausageking wrote: post #113
Alex3917 wrote: post #22

Earlier quoted context omitted.

I was in his office chatting with him a year and a half ago, on the exact day of June or whenever the market hit its bottom, and he called that that day was the bottom. He does things that don't always make a lot of sense to me, but he wouldn't be a billionaire if he wasn't getting a lot of stuff right also. E.g. he also bought 500k worth of ETH and sold it for 250M. Paid his taxes, bought a new plane, and donated th…

Hard to verify what you're saying. June wasn't a bottom for ETH and the most he could've made with that trade was ~4x. But even if you're right and he did make a great trade, that doesn't make him a genius. He's a gambler and sometimes gets a great hand. He was super bullish on EOS before it tanked. He very publicly called a bottom[1] for BTC on Sept 13th when it was $6,300 and it's down by ~50% since. [1] https://tw…

Ahh I was thinking of July 16th, 1017. ETH went from over $400 in June down to $133 in July.

https://coinmarketcap.com/currencies/ethereum/historical-dat...

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

#115

Post by thaumasiotes »

trevyn wrote: post #67
dragontamer wrote: post #39

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. $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)

Massachusetts?

> Q: Is the DIF a federal or state agency?

> A: No. The DIF is a private, industry-sponsored insurance company and is not backed by the federal government or the Commonwealth of Massachusetts.

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

#116

Post by Simon_says »

SatvikBeri wrote: post #111
vec wrote: post #66

Earlier quoted context omitted.

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 t…

Yes, it was a sucker bet. The funds Protege picked were actually funds of funds that basically had a .6 correlation to the S&P 500. So Buffett was almost guaranteed to win if the markets went up over 10 years, and lose if they went down. And it's very rare for the market to be down over a 10-year period. Honestly I have no idea what Protege was thinking.

Probably he was thinking that there was small chance that the hedge funds would outperform the S&P, and in that case, it'd be a hell of a PR move, which he could leverage to get more AUM. From a game-theoretic point of view, it's possible the bet had a positive expected value for him even if he knew he'd likely lose.

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

#117

Post by wmeredith »

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…

Sounds like you’ve invented coinrank. I dig it.

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

#118

Post by solveit »

nostrademons wrote: post #92
mortenjorck wrote: post #78

Earlier quoted context omitted.

I was pretty sure $6-7k was the floor for BTC, and it’s interesting to see a high-profile fund manager made effectively the same, expensive mistake. The biggest surprise for me, though, was ETH, which given its better fundamentals, I had thought would be where the market went after Bitcoin popped – and yet, it was not only dragged down, but crushed even harder than BTC.

It was interesting to watch the crypto subreddits and see so many people make the same mistake. I was surprised that $6K held for so long, because if $6K really was the bottom, it would've been a pretty shallow drop from a very steep bubble. That's only 2/3 down, and it was the point Bitcoin hit in Oct 2017. Bitcoin was The ETH drop is fairly easy to explain - it was the base asset for a very interesting double-pyram…

Re: your last paragraph

But if everyone thinks that (and most people who think crypto isn't all shit do think that), the bottom will be a lot softer than what you describe (modulo people going to jail, I think this is mostly independent of the value of crypto).

It's the efficient market hypothesis all over again.

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

#119

Post by chillacy »

paulie_a wrote: post #103
mikkom wrote: post #73

Earlier quoted context omitted.

> 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 bette…

The difference is professionals manage amounts that can buy more than chicken tendies.. some strategies don’t work at scale.

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

#120

Post by village-idiot »

tryptophan wrote: post #58
village-idiot wrote: post #32

Earlier quoted context omitted.

Lightning is never going to happen. They have absolutely no idea how to scale that network or handle the routing problem. The entire system is just rife with potentials for monopolies and abuse. No consumer in their right mind would ever commit their money to it.

Even if it does happen, I don't see the point of it. Why use centralized bitcoin based transactions vs centralized USD based transactions? Isn't the whole point of bitcoin that you get rid of centralization? But apparently people want to bring it right back with lightning.

I think you hit the nail on the head with regards to centralization.

I think there's a more important aspect here: there is very little demand for transacting in a second currency worldwide, and almost 0 demand within stable economies. As an American who does 100% of his transactions with other Americans in USD, why in the would should I introduce exchange rate risk into my daily transactions? The lightning network might be all the hotness, and I doubt that, but so long as its marked in a currency that I don't get paid in and my landlord doesn't take, I have no earthly incentive to tie up any of my hard earned money in a second currency in some lightning channel.

And that's not even starting on the absolute trainwreck that is general crypto UXD. Open a channel and tie up some of my money somewhere so I can eventually make a payment in the unspecified future? No thanks.

Post reply on HN