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Hedge funds use satellite images to beat Wall Street

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Re: Hedge funds use satellite images to beat Wall Street

#61

Post by wtvanhest »

davidw wrote: post #49
vostok wrote: post #29

Earlier quoted context omitted.

This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

They absolutely shouldn't play unless they like losing money. It is extremely hard for professional investors to beat the market who spend all day every day working on it. It is basically impossible for a collection of retail investors to beat the market. At best, retail investors are simply gambling.

Re: Hedge funds use satellite images to beat Wall Street

#62

Post by mrlala »

harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos.

Err, no he is not wrong to confuse it.

Is satellite imagery public information? Is that something a person in the normal public could acquire even if they wanted to?

If it's not public and the results of the imagery are material... then it's material non-public information and it's illegal to use it for trading purposes.

>All sorts of people work very hard and spend a lot of money to develop proprietary information in the pursuit of stronger

But they should be doing it under the umbrella of PUBLIC information. If not, then yes it is completely "unfair". Your bullshit about there should be "no expectation of fairness in the stock market" is just silly.

Re: Hedge funds use satellite images to beat Wall Street

#63

Post by Nelson69 »

lolc wrote: post #15

I find it somewhat interesting to what lengths traders go for profits. Cue people who explain how this makes the markets more efficient. Something I'm wondering about though: The article makes it sound like this is some new unfair advantage of the big traders. But isn't this an old game? If you can afford to acquire and process the data you're likely going to beat the other participants. That was always true. I don't…

It's as old as time...

Eamon Javers' book Broker, Trader, Lawyer, Spy covers some cases of this sort of thing. One I can easily remember is a hedge fund flew private planes around taking areal photos near power plants. Coal fire power plants store their fuel out in the open and they buy it by the train-load, so they were able to time the market based upon when power plants were going to make large coal purchases, as they do it when their piles of coal reach a certain size. I don't remember the numbers quoted in the book but they made money doing this, it was a couple percent.

It's only unfair if you think your 401k or personal trading account is/can/will grow anything like what hedge funds do. This coal market manipulating fund, they put money in, flying planes around and taking pictures isn't free, then they did analysis on the pictures which wasn't free, then they put real money in to the market to bet on it moving a certain way... which they are really only allowed to do because there is a counter-party that is willing to take that bet on. If it were really egregious, you could argue that the folks buying energy at incrementally higher rates are getting the shaft and that's not really fair but their energy provider could be smarter about when it orders up fuel. Once it goes public, the players and market tend to react to it

Re: Hedge funds use satellite images to beat Wall Street

#64

Post by yellowstuff »

davidw wrote: post #49
vostok wrote: post #29

Earlier quoted context omitted.

This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

I can't think of any reason we'd want to encourage retail investors to buy single name stocks. In days of yore you could argue that it was a good way for them to share in the bounties of economic growth, but with the rise of low-cost passive index funds that's obviously no longer true.

Re: Hedge funds use satellite images to beat Wall Street

#65

Post by davidw »

mrosett wrote: post #60
davidw wrote: post #49

Earlier quoted context omitted.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

They shouldn’t. Pick a Vanfuard fund, put your money in it, and check back in a couple decades.

That's what I've done, but I still idly (this is not really in the top 100 things I'm concerned about right now) wonder where this ends up if things sort themselves out so much.

Re: Hedge funds use satellite images to beat Wall Street

#66

Post by ThrustVectoring »

mochomocha wrote: post #40
harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit. I must be dumb, but I don't understand this statement... How is that a "theft"? You knowing that I eat 2 eggs in the morning when I don't want people to know is not you "stealing" information from me.

Some information has material amounts of actual dollar value. Whoever knows that your employer has an acquisition in the works that will be announced tomorrow has an extraordinarily easy way to monetize that. This information rightfully belongs to your employer, who is keeping it under wraps for financially important business reasons. Sharing it or acting on it means enriching yourself at the expense of those business reasons (or more directly, through influencing stock prices).

Re: Hedge funds use satellite images to beat Wall Street

#67

Post by JackFr »

ttobbaybbob wrote: post #47
harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

I'm more than a little surprised that Haas would publish an article that seems to indicate a complete lack of understanding of the purpose of the markets. Better data yields more efficient markets which is what we actually want. “Technology was supposed to level the playing field, but what I see is the fence separating sophisticated and unsophisticated investors growing higher,” says Patatoukas As if that's a bad thi…

Indeed. The stock market isn't a game where one person's win is another's loss. The price is an information conduit which signals where the economy should allocate capital.

Re: Hedge funds use satellite images to beat Wall Street

#68

Post by buzzdenver »

isoskeles wrote: post #46
harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> There is nothing at all wrong wit this, especially because it means that in the end we all get more accurately priced securities. I believe the counter argument is only people with enough wealth to afford an account at one of these hedge funds gains an immediate advantage here. So it's yet another way "the rich get richer." Doesn't bother me, but I can see why other people would have a problem with it. And I severe…

There are plenty of publicly traded hedge funds that any investor can buy into. BlackRock, Blackstone, Berkshire Hathaway..

Re: Hedge funds use satellite images to beat Wall Street

#69

Post by bongobongo »

davidw wrote: post #49
vostok wrote: post #29

Earlier quoted context omitted.

This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

They should not. All that's left to retail investors are mutual funds and index funds, which can be a decent deal but which also tie the interests of retirees to the interests of shareholders, which is kind of dumb and fucked up.

Re: Hedge funds use satellite images to beat Wall Street

#70

Post by JackFr »

reggieband wrote: post #59
harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> it means that in the end we all get more accurately priced securities. I am genuinely curious how that benefits me (or the average joe).

By giving you an an economy that puts capital where it is most efficiently used.
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