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Hedge fund Melvin sustains 53% loss after Reddit onslaught

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Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#391

Post by Erwin »

koonsolo wrote: post #388
lultimouomo wrote: post #381

Earlier quoted context omitted.

When the stock crashes, you can sell some bonds, which have not crashed, and buy stock on the cheap. When the stock recovers, you sell some stock and buy bonds. Rinse and repeat. (You don't need to try and time the market for this to work. You can have a threshold so that you rebalance when you deviate from your target allocation more than X%)

I don't see how this would outperform 100% stocks over 10 years. Or in other words, show me the numbers.

You can use a site like this to compare: https://portfoliocharts.com/portfolio/total-stock-market/ versus https://portfoliocharts.com/portfolio/classic-60-40/

Mixing bonds gives you a slightly higher safe withdrawal rate but you do lose 2 percentage points average yearly returns.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#392

Post by koonsolo »

Erwin wrote: post #391
koonsolo wrote: post #388

Earlier quoted context omitted.

I don't see how this would outperform 100% stocks over 10 years. Or in other words, show me the numbers.

You can use a site like this to compare: https://portfoliocharts.com/portfolio/total-stock-market/ versus https://portfoliocharts.com/portfolio/classic-60-40/ Mixing bonds gives you a slightly higher safe withdrawal rate but you do lose 2 percentage points average yearly returns.

Yeah, that's what I thought. So I don't get how it can "outperform" it

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#393

Post by runako »

sailingparrot wrote: post #380
gvhst wrote: post #379

Earlier quoted context omitted.

Many hedge fund's run a factor neutral (market + other risk factors are hedged out of the portfolio) long short book. If done right (and thats the catch) there should be low correlation to S&P. T-bills are the performance benchmark for hedge funds but not the risk benchmark (which is generally something riskier). This can sound counterintuitive as T-bills are a very low hurdle to clear. However, in a downturn scenari…

Do you happen to have any resource that dives into this? This is really interesting would love to know more about how this works in details.

Not the OP, but _When Genius Failed_ by Lowenstein was a good book for understanding what happens in the asterisk ("if done right").

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#394

Post by sailingparrot »

runako wrote: post #393
sailingparrot wrote: post #380

Earlier quoted context omitted.

Do you happen to have any resource that dives into this? This is really interesting would love to know more about how this works in details.

Not the OP, but _When Genius Failed_ by Lowenstein was a good book for understanding what happens in the asterisk ("if done right").

Thanks! I'll check it out.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#395

Post by dang »

tpmx wrote: post #81
motohagiography wrote: post #58

%53, so far. The problem with the short interest being %140 is that the notional value of shares to cover that extra %40 is in fact, infinite. It's literally everything those funds can sell, borrow, and get bailed out to cover their position. My prediction last week was this has system wide implications, and I'm thinking 1. the Fed will intervene, leverage Robinhood's EULA, and buy out everyone's shares at a price th…

> %53 What's with that weird way of writing a percentage numeric? Some weird "i'm an insider, trust me" signalling?

Please don't take HN on offtopic flamewar tangents and certainly please don't perpetuate them, as you did below. That's not cool.

https://news.ycombinator.com/newsguidelines.html

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#397

Post by dang »

aerovistae wrote: post #296
tpmx wrote: post #145

Earlier quoted context omitted.

Wow what? Yes, I wrote that people here tend to speak English rather than Turkish in this forum. Horrible me.

No, wow that you called someone out on writing something slight different from the convention despite it not hindering your ability to understand the sentence, and suggested they were doing it as some kind of secret signal. Makes me wonder about your mental state.

Please don't cross into personal attack, or post unsubstantive comments, regardless of how annoying another comment is or you feel it is. That just makes the thread even worse.

https://news.ycombinator.com/newsguidelines.html

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#398

Post by runako »

weeboid wrote: post #367
runako wrote: post #275

Earlier quoted context omitted.

Context is important, so the Nasdaq 100 (as represented by the QQQ ETF) returned ~49% in 2020, 39% in 2019, and 24% over the last 5 years. Beating the indexes by 5-6 points consistently is very good, but it's important to keep in mind that most equities were doing really well over that period. (Edit: It's been reported elsewhere that these numbers are net of fees. However, it's entirely possible that for taxable acco…

Doesn’t this 50% loss apply to the cum sum of gains though? That is, if I started with $1 and made $1,000, a 50% loss would still be $500

Yes you have more money than you started with, but you will still be down compared with an index that did not have a 50% drawdown at any point.

- Unless you were late to the party. If you didn't get in the fund until (say) November, you have lost money.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#400

Post by toomuchtodo »

jcfrei wrote: post #244
robbomacrae wrote: post #91

Earlier quoted context omitted.

So many conspiracy theories on both sides these days. Don't forget Ocram's razor. I don't think there are many sophisticated actors here at all. I'm speaking as one who did DD on GME back in September and throw some money in (thought it was a great opportunity mainly because of Cohen + the upcoming console super cycle with a tiny chance of squeeze thrown in) It was a smart discovery by WSB and got a bit more than ave…

It's virtually guaranteed that this stock popped up on the radars of the funds who run momentum trading strategies. And it would be very weird for a lot of them not to jump on that bandwagon (at the very least because it's their mandate to do so).

This is apparent from the level 2 market data and the size of share blocks that have been moving.
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