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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

#211

Post by harimau777 »

sokoloff wrote: post #203
harimau777 wrote: post #192

Earlier quoted context omitted.

I think that argument actually supports their point. I believe that everyone has a human right to vote. However, retired people have generally already established themselves; therefore, the changes that government makes, particularly on social issues, has minimal effect on them. Therefore, I think its unfair for the generation who is still establishing themselves not to be held hostage to the previous generation's vi…

> Therefore, I think [it's] unfair for the generation who is still establishing themselves not to be held hostage to the previous generation's vision of society. I think you have one more negation than you intended in that sentence.

Good catch, my bad

Re: Hedge funds use satellite images to beat Wall Street

#212

Post by sokoloff »

gist wrote: post #168
est31 wrote: post #157

Hedge funds do a ton of crazy research like this. I remember reading about hedge funds buying new cars only to sell them immediately after. They were only interested in their serial numbers which they used to estimate the count of sold cars of a specific model using the german tanks method. Before the sales numbers are out, information like this is very valuable.

> about hedge funds buying new cars only to sell them immediately after To get this data you wouldn't need to buy the cars. So it sounds like they did something that sounded like that as opposed to what you remember. Even w/o social engineering you could quite easily get some dealer to give you that type of information (or someone working there or otherwise).

You could walk the lot and look at the corner of the windshields...

Re: Hedge funds use satellite images to beat Wall Street

#213

Post by Thrymr »

FanaHOVA wrote: post #16
nwah1 wrote: post #2

I remember seeing stories about programmers with access to credit card databases getting indicted for trading on the information. This is a legal version of the same thing, and also probably any attempt to make it illegal would be unenforceable.

I doubt that actually happened since Second Measure exists.

It did happen [0], and there was previously discussion on HN [1]. They were later ordered to pay a penalty of $13.5 million, 3x their gains [2].

[0] https://www.bloomberg.com/opinion/articles/2015-01-23/capita...

[1] https://news.ycombinator.com/item?id=8966817

[2] https://www.reuters.com/article/us-sec-capital-one-fin-insid...

Re: Hedge funds use satellite images to beat Wall Street

#214

Post by Thrymr »

knd775 wrote: post #146
floatrock wrote: post #31

Earlier quoted context omitted.

The reason your free weather app asks for your location data isn't for "local weather forecasts". Well, it is, but that's a cost for them. The income comes from keeping that location tracking on all the time and selling which stores and dentists you go to. Someone can link the NYT story from a few months ago when this came to mainstream attention. Hedge funds also fly cesnas over refinery fields to look at the levels…

Some employees of a credit card company got in trouble for this sort of thing a while ago. They were running queries against customer transactions to figure out sales ahead of earnings calls. For example, they figured out that Chipotle was going to beat expectations and bought a ton of stock just before the earnings call. (This very predictably got the attention of the SEC)

Previous discussion of that event on HN: https://news.ycombinator.com/item?id=8966817

Re: Hedge funds use satellite images to beat Wall Street

#215

Post by adamson »

logifail wrote: post #170
tryptophan wrote: post #160

Earlier quoted context omitted.

This is called front running and is super illegal.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

If you're a market maker or broker, it is illegal for you or any part of your firm that you have informed to front run client orders, plain and simple.

Re: Hedge funds use satellite images to beat Wall Street

#216

Post by adamson »

eeZah7Ux wrote: post #159
ISL wrote: post #25

As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. We should not aspire to drag hedge-fund research down to the Main Street level. If there is a place for government in this context, it is to fund the education necessary to help retail investors learn a) how to take ben…

> it doesn't bother me at all that other market participants are trying to be better informed You should stop trading now.

It shouldn't bother you if you have a long investment horizon, like the average retail trader.

Re: Hedge funds use satellite images to beat Wall Street

#217

Post by harryh »

dustingetz wrote: post #207
tryptophan wrote: post #160

Earlier quoted context omitted.

This is called front running and is super illegal.

Literally Robinhood’s business model

This is not correct.

Firms don't buy order flow from Robinhood in order to trade in front of those orders, they buy order flow from Robinhood to execute those orders for those customers which is a service that those customers pay for as purchasers of liquidity.

Re: Hedge funds use satellite images to beat Wall Street

#218

Post by minimax »

logifail wrote: post #158
ISL wrote: post #25

As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. We should not aspire to drag hedge-fund research down to the Main Street level. If there is a place for government in this context, it is to fund the education necessary to help retail investors learn a) how to take ben…

> As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. What about companies that find out about your retail trade before it's even executed , and are able to act on that information to profit from your very intent to trade?

You can't really "front run" a retail order. Front running means you (assuming you are an agency broker) get a big market moving order from a customer, do a trade in your own account first (in the same direction as the customer order), then execute the customer order which moves the market in your favor.

Retail orders are small and generally aren't capable of moving prices. Your order for 100 shares of whatever isn't going to move the price so you can't really make money ahead of it.

Re: Hedge funds use satellite images to beat Wall Street

#219

Post by shitgoose »

logifail wrote: post #191
tryptophan wrote: post #181

Earlier quoted context omitted.

That article points out that "front running"(which it isn't) by HF may cost .2% a year. Its probably less than that. Bid/ask spreads are often around that percentage. This is just a trading cost. Nothing nefarious is happening here. The spread may go up if a large fund is buying, but this is only natural due to supply and demand. These HFs are just providing liquidity and "charging" a small fee for doing so. If nobod…

> These HFs are just providing liquidity and "charging" a small fee for doing so HF traders provide liquidity and market-making when it suits them. Doesn't that stop when it doesn't?

People rarely do something that doesn't suite them:) What is the point?

Re: Hedge funds use satellite images to beat Wall Street

#220

Post by Phillipharryt »

logifail wrote: post #170
tryptophan wrote: post #160

Earlier quoted context omitted.

This is called front running and is super illegal.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

Funnily enough I've been involved in this argument a number of times on this forum. Front Running is not illegal, order flow can be purchased, and even institutional investors are unable to buy portions of millions of stock in one go. You can theoretically front-run part of that order if your algorithms analysing orders think that a big order is following current ones. People will argue front running is illegal because the first few results on google have misconstrued the idea with insider trading but if you dive into some financial books you'll find as a concept it's legal, but there are illegal ways of doing it.

edit: found the article quoted last time I discussed this.

https://blogs.cfainstitute.org/investor/2013/04/24/what-to-d...

Larry Harris, Professor of Finance as USC;LA says

"A few high-frequency traders front-run buy-side traders who are working orders, thereby making the latter’s trades more expensive. Such activities are legal if the high-frequency traders do not improperly obtain information about the orders they front-run."

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