Statement of SEC Regarding Recent Market Volatility • Hacker News Board

Re: Statement of SEC Regarding Recent Market Volatility

#871

Post by Erlich_Bachman » Sat, Jan 30, 2021, 8:44 AM UTC

kypro wrote: post #781

numair wrote: post #107

Okay kids, story time. After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honor…

Can someone explain why my perspective is wrong on hedgefunds please? My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford the…

> seem to blame hedgefunds for every inequality problem in society.

Ah, if that is your core question, that one is easy. Because most people can't think about so complex questions properly (or are unwilling, lazy, or haven't been taught), and they simplify the world into emotional picture, for example blame someone. Then it's just a question of finding who to blame, today a popular answer is "rich hedge funds".

Re: Statement of SEC Regarding Recent Market Volatility

#872

Post by sanderjd » Sat, Jan 30, 2021, 8:48 AM UTC

khawkins wrote: post #783

sanderjd wrote: post #691

Earlier quoted context omitted.

What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people…

Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone. The problem is that hedge funds constantly benefit from a much lower risk due…

> Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed.

This is in fact exactly who most people care about, in this situation. It may not be who the extremely-online people that this board is mostly comprised of care about, but they are not most people.

> Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them.

This is directly at odds with how markets are regulated, because there is a long history of this thinking leading to widespread scams and cons.

Re: Statement of SEC Regarding Recent Market Volatility

#873

Post by shawticus » Sat, Jan 30, 2021, 9:01 AM UTC

Erlich_Bachman wrote: post #871

kypro wrote: post #781

Earlier quoted context omitted.

Can someone explain why my perspective is wrong on hedgefunds please? My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford the…

> seem to blame hedgefunds for every inequality problem in society. Ah, if that is your core question, that one is easy. Because most people can't think about so complex questions properly (or are unwilling, lazy, or haven't been taught), and they simplify the world into emotional picture, for example blame someone. Then it's just a question of finding who to blame, today a popular answer is "rich hedge funds".

Riiiiiiiiiiiiiiiiiiiiiiiiiiiightttttt

https://www.politico.com/magazine/story/2019/08/02/joe-biden...

TL;DR Biden is literally bought, paid for and supported by hedge funds (as is every other politician).

This whole "you people are crazy this is fine" mentality has got to end, we are in WAY corrupt times.

Re: Statement of SEC Regarding Recent Market Volatility

#874

Post by kchr » Sat, Jan 30, 2021, 10:03 AM UTC

gnfargbl wrote: post #102

jeffbee wrote: post #71

Earlier quoted context omitted.

Maybe one or two specific individuals, but you're right in general. That's the part that frightens me the most here. The tactics that are being used are equivalent to the ones used by sideshow street racers and political riots: if we get thousands of individuals to break the law at the same time and place then law enforcement will be ineffective.

It certainly _feels_ like an organized riot, but I'm not 100% sure that it is. In a riot, there are organizers and instigators, and then there is a mob who follows them. Here, I'm not really sure that the organizers exist: the closest thing I can see is the Reddit user DeepFuckingValue, and all they do is post screenshots of their position in GME without futher comment. And have been doing so for the best part of a y…

Have you heard of sock puppet accounts? Rogue agents? :-)

Re: Statement of SEC Regarding Recent Market Volatility

#875

Post by natmaka » Sat, Jan 30, 2021, 11:38 AM UTC

kypro wrote: post #781

numair wrote: post #107

Okay kids, story time. After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honor…

Can someone explain why my perspective is wrong on hedgefunds please? My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford the…

In our society many domains (finance being one) are now too massive, complex and quickly 'working' and evolving for anybody (even a group) to understand enough to predict more-or-less accurately, let's say to do better than random picks in a set of possible outcomes descriptions for the next 5 years.

One of the effects is that there is no real pilot onboard anymore. Some people are dressed and talking as pilots and some of them may believe they (and their teams) understand and control, but I think most feign.

The huge 'kinetic energy' of all those systems let them roll forward more and more out-of-control, until some mishap reveals our lack of knowledge.

Re: Statement of SEC Regarding Recent Market Volatility

#876

Post by nemo44x » Sat, Jan 30, 2021, 12:11 PM UTC

DennisP wrote: post #633

nemo44x wrote: post #392

Earlier quoted context omitted.

"Right kind of people" have no accountability to their advice. A doctor can't really just hazard a guess without actual facts to base them in or risk losing their ability to practice and/or reputation. "Right kind of people" can be and are often plenty wrong about things but it fades into obscurity and they are never held accountable. Of course they are right sometimes but on many issues with a binary choice (should…

Last spring I was briefly lectured by a maskless doctor who said I shouldn't bother with the mask I was wearing at an appointment. I shrugged and kept my mask on. A month or two later I saw him again. He was wearing a mask that time and didn't complain about mine. That doctor didn't just avoid guessing. He gave unsolicited advice, on limited information, that turned out to be exactly wrong and somewhat dangerous.

It sounds like that doctor has lost some reputation to you now. It’s hard for people to say “I don’t know” for some reason.

Re: Statement of SEC Regarding Recent Market Volatility

#877

Post by zaptheimpaler » Sat, Jan 30, 2021, 12:17 PM UTC

Aunche wrote: post #726

snarf21 wrote: post #566

Earlier quoted context omitted.

And what about all the people who watch MSNBC and CNBC and Cramer, do they need to stop pushing stops as good or bad too? They tell lots of people "who don't care about hedge funds or any of that, but just got the impression from the news that hey this stock is going way up and that must mean it is a way to make a quick buck" too. None of this could have happened if they weren't shorting GME at 143%+ of float. They w…

We let big players partake in risky things like shorting GME above 100% float because we don't care if they lose. It's the same reason we allow them to invest in companies like Theranos. They know the risks they were getting into and will still be fine without a extra 0 in their bank account. Regular followers of WSB are aware of the risks as well, so I'm fine with them attempting a short squeeze. The problem is that…

No one who has been in WSB for a while wants the publicity, believe me. No one who has been around views this as some noble moral crusade. But WSB went from <1M subs in 2019 to 2M by end of 2020, to 6M now. We didn’t magically orchestrate it, they flocked to WSB after every media outlet in the world mentioned it for a week+ straight since Gamestop happened. Its an open forum and we don’t decide who joins, or when, or what they post. When 4M new people show up in a sub of 2M in a week, its Theseus’ ship twice over at warp speed.

Re: Statement of SEC Regarding Recent Market Volatility

#878

Post by adriancr » Sat, Jan 30, 2021, 1:43 PM UTC

threedots wrote: post #683

adriancr wrote: post #616

Earlier quoted context omitted.

Ok, let's assume they shorted at 10$, they lost 3 Billion at 65$ (and say they closed the position) So, the stock needed to be bought back was worth 3 billion at 65$, reduce the 10$ per share it was shorted at and you get 3000M/55 = 54M shares. Total stock float of GME is ~64M, so the short % was ~80% You see how it's way off of the 14%? (and close to impossible to close out of?) If they did not get out then they wou…

If they bought in at 10 and sold between 50-100 if they owned 14% of the free float they would have lost 0.5-1bn. That assumes they didn't increase exposure as the price went up and it ignores the borrow cost. They then lost a bunch of money on options the exact amount of which we don't know. They also lost a whole bunch of money on other positions going against them which we don't know but can guess at. To get to a…

This is what I don't get, they are a hedge fund, even balanced book as you say, 200% gross exposure.

By your calculations they lost 0.5-1b from GME. That means 2b from somewhere else in the market.

Questions I'd have:

- even balanced book in my mind means they hedge risk and shouldn't lose across the board 30% in a week otherwise they are incompetent... and they seem far from that.

- with that in mind, how would they lose 2b in the rest of the market?, that means they dont hedge properly.

- As for GME, they didnt do proper risk management but that seems the only place they got blindsided. (Still surprising they had no insurance for a short squeeze...)

- Overall the stated losses were 30% of portfolio in a week... with only GME moving... you can see why I assume it was more then 14% and your logic seems flawed.

Re: Statement of SEC Regarding Recent Market Volatility

#879

Post by FartyMcFarter » Sat, Jan 30, 2021, 1:44 PM UTC

trsohmers wrote: post #218

FartyMcFarter wrote: post #136

Earlier quoted context omitted.

> Just have a "dinner conversation" about it. This would be illegal I think.

It isn't. Hedge fund managers have "idea dinners" with dozens of their friends all the time to discuss what plays they are thinking... they frequently also bring in guests that represent companies, or even politicians/former politicians to discuss lobbying strategies to keep this exact type of collusion and market manipulation legal for them. But as soon as a bunch of the dreaded "retail investors" start doing it in…

That's amazing. So they basically found a legal protocol to do things that would otherwise be illegal, and institutions like judges and the SEC just let that happen?

Re: Statement of SEC Regarding Recent Market Volatility

#880

Post by xtiansimon » Sat, Jan 30, 2021, 2:34 PM UTC

robntheh00d wrote: post #644

remolacha wrote: post #486

Earlier quoted context omitted.

People can seek capital from whomever they want. But it’s also true that outside capital is useful. If my community has lots of resources and no ideas about how to use them, then the world is better off if I take my resources and find an under-resourced entrepreneur in a less wealthy part of the world to invest in. That’s what capital represents.

Please stop believing you are telling me something that I do not already know. I’ve been following finance for decades. American communities are under financed because of capital extraction to improve margins. It’s a mathematical fact which carries far more weight than your hand wavy generalizations. The extraction has decimated US communities, empowered slave labor across the globe, and entrenched power in hedge fun…

> "I’ve been following finance for decades."

But apparently not HN community. Your user was created 1d ago. :P