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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

#121

Post by roywiggins »

ryandrake wrote: post #48
roywiggins wrote: post #24

Earlier quoted context omitted.

It increases the information that makes its way into the markets and makes it more likely that the price reflects the what's happening in the real world. A world in which nobody bothered to check whether a company was actually producing anything would turn the stock market into a collective guessing game.

The stock market is a collective guessing game. These stories suffer from survivorship bias. For every investor A you hear about who did X and was successful, there are investors B, C, and D who also did X and were not successful, and don’t get articles written about them. There are also investors E, F, and G who don’t do X and may be successful or unsuccessful. Finding someone successful at stock picking and asking…

By that argument, there'd be no successful insider traders, but clearly you can beat make money if you're an insider. You know that the company is (doing well/doing bad) before everyone else does, you trade on that, you make money from the people who are in the dark.

The hard part is not regressing to the mean, and consistently beating the market, which sure, nobody can do. But if I learn today that a stock is going to rise tomorrow, and I buy as much as I can, the stock will rise a bit today. So the market has become a little bit more efficient.

That I happen to then base all my subsequent trades on overconfidence and tossing darts doesn't retroactively invalidate that trade. You can even make a market more efficient on losing trades- you short a stock, it goes down a bit, but you spend more maintaining the short than the stock goes down. Then, the stock crashes after your short expires. Oops! But your prediction was still partly right, and that information was integrated into the price a bit earlier than it would have been without you.

Re: Hedge funds use satellite images to beat Wall Street

#122

Post by squaresmile »

mochomocha wrote: post #97
piker wrote: post #50

Earlier quoted context omitted.

You're stealing value by profiting on information which you had some duty to protect. For example, a company executive who knows that one of the company's products is about to be recalled generally owes a duty of loyalty to the company not to profit off of that knowledge to the disadvantage of the company.

From whom is it stealing value from? Random other potential investors on the stock market? Since the parent comment is specifically mentioning semantics, this is the distinction "theft" vs "fairness" that I don't really understand. From an outsider perspective like me (I don't own stocks except through my 401k), Wall Street seems like a game of information asymmetry anyway where the only winners have an information e…

From the shareholders (owners) whom they have duty to.

Re: Hedge funds use satellite images to beat Wall Street

#123

Post by 50656E6973 »

lil-scamp wrote: post #119

This example of counting cars has been around the geo industry forever, and satellite imagery is pretty cost prohibitive to get on a regular basis. I'd be surprised if hedge funds haven't already moved on to purchasing location-based data (ie mobile phone data) to get even more accurate counts of people in box stores.

That seems to be the case:

https://news.ycombinator.com/item?id=17081684

Re: Hedge funds use satellite images to beat Wall Street

#124

Post by autokad »

wtvanhest wrote: post #61
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 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.

> "At best, retail investors are simply gambling."

that's just not true and is a gross over simplification. for one, not beating the market is NOOOOOT the same as losing money. For another, even if they do not beat the market, there are a lot of other benefits.

People gain an understanding of how things like bonds and equities work. I cant tell you how many people (masters degree included) think you can loose more money than you invest by buying a stock. I seen someone literally not participate in 401k matching because of that thought.

there is something to be said about having greater control over one's money. When someone says lets eat out at this expensive 150$ plate restaurant, I think gee I can buy X shares of Y stock instead.

I personally have already maxed out my 401k, and if I want to retire I need to contribute more. currently I am beating the market, and I have little care if 'the average investor' isn't. it gives me something to do, empowers me, and is not 'at best' gambling.

Re: Hedge funds use satellite images to beat Wall Street

#125

Post by ksdale »

JackFr wrote: post #67
ttobbaybbob wrote: post #47

Earlier quoted context omitted.

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.

Both of these things can be true. Every transaction certainly provides us with information, but also, if two people trade based on competing beliefs about the price, one of them is wrong. As for it being a game, well, when dollars are used to purchase stocks, they almost never go into the coffers of the company whose stock it is. They go into the pockets of someone else who is also trading stocks. As you said, it's a signal about where the economy should allocate capital, but to me it seems to be far closer to a game than to an actual useful allocation of that capital.

Re: Hedge funds use satellite images to beat Wall Street

#126

Post by tanderson92 »

grouseway wrote: post #55
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 wonder if stuff like this is ever a form of parallel construction for insider trading. It sounds cool - so maybe it passes the sniff test and avoids further scrutiny?

Parallel construction is only a thing that the government can get away with in prosecuting people, because the government has power and individuals do not.

Re: Hedge funds use satellite images to beat Wall Street

#127

Post by frakkingcylons »

65934 wrote: post #41
bluGill wrote: post #23

Nothing new here other than satellites. Years ago (1990s?) Peter Lynch - at the time manager of the largest mutual fund followed his daughters into a shopping mall for back to school - his daughters didn't go into GAP stores so he went back to the office and sold as his shared of GAP. His fund beat everyone else by a large margin because GAP stocks dropped a month latter when they announced the earnings drop. This is…

Where did you get this anecdote from? Googled it, couldn't find anything

His book, One Up On Wall Street, references this idea of using casual observations to find undervalued stocks. You might find that interesting to look through.

Re: Hedge funds use satellite images to beat Wall Street

#128

Post by bongobongo »

javert wrote: post #77
bongobongo wrote: post #69

Earlier quoted context omitted.

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.

Why is trying the interests of retirees to shareholders "kind of dumb and fucked up"? I'm not even sure there is a valid distinction between the two groups. The retirees are shareholders.

Gee, I dunno, maybe think about it for a second. What does a 65 year-old lower middle-class retiree with some money stashed in a 401(k) have in common with an ExxonMobil shareholder aside from the need to generate as much profit as possible? Do you really think this makes sense from a public policy perspective, to pit the retirement needs of the old against, e.g., the environmental health of the young? Please spare me the purely symbolic and utterly meaningless "but they are shareholders, too" argument. Sure. Me and Warren Buffet, we're just the same!

It is quite literally dumb and fucked up to tie comfortable retirement to things like releasing carbon into the atmosphere, or defense industry profits, or Wal-Mart's quarterly profits, or to the stability of Jeff Bezos' marriage.

Re: Hedge funds use satellite images to beat Wall Street

#129

Post by nightski »

gvhst wrote: post #109
mrosett wrote: post #60

Earlier quoted context omitted.

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

In this case there still is the discussion of which Vanguard fund to pick. Putting your money into the SP500 is not the “market portfolio” so to speak. In that case you are overweight large-cap and overweight US. In short, picking an index fund is different (and in many cases leas complex) than picking individual stocks, but it’s still not a trivial exercise.

If you want trivial just use a target date fund. Otherwise you are basically just going with a blend of 4-5 index funds and updating the allocation once a year. You can even copy the allocation used by their target date funds. It's not that complicated.

Re: Hedge funds use satellite images to beat Wall Street

#130

Post by arawde »

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?

https://www.etf.com/docs/IfYouCan.pdf
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