51–60 of 63 posts
SPACs should be banned. They’re a vehicle for perpetuation of the market as a gambling platform, while undermining the transparency requirements of the market.
Earlier quoted context omitted.
Then you still don't understand the problem. This had nothing to do with consumer margin; they could have not offered margin as a product and still ended up in this situation. The TLDR is that DTCC requires cash from the brokerage firm for buying a stock until settlement clears, which means the money you pay to buy $100 worth of apple, a percentage of that amount must be paid directly by the brokerage i.e. not from t…
T+2 is an artifact of fund transfer settlement times isn’t it? Or to rephrase, why do we still have T+2 for equities?
We could probably switch to T+1 without significant problems. Real-time settlement would be a whole other kettle of fish.
Earlier quoted context omitted.
I’m curious why you believe he’s a self serving salesman. I’ve seen a few of his interviews on YouTube and particularly some of his CNBC interviews. I can’t recall him trying to give me specific investing advice, but his analysis on a lot of recent events has made sense. And a lot of his general life advice is great. I’m a follower of Chamath, but that doesn’t mean I believe he can predict the stock market any better…
So basically funds cannot advertise to poor people, or at all because poor people might hear. Those are the regulations in this country. To get around that (aside from using a different registration exemption), a person in the fund is elevated to mythical celebrity status and just talks about money topics a lot , while the fund self fulfills this person’s prophecies by throwing money at all problems (investments insi…
I know very little about him but was initially intrigued because he’s often referred to as a “good guy” with altruistic motives who also isn’t afraid to call others out. Then I saw him on CNBC in the midst of the GameStop fiasco, railing against Robinhood on the premise that people should be outraged because Robinhood almost ran out of money and had to restrict trades. Whether or not that’s something to be outraged a…
He is a great talker, great hype man, possibly a great growth marketer, but he is certainly not a great investor.
“To be fair, all of his SPACS are up since IPO”
Part of the SPAC structure is that you can redeem each share for roughly the IPO price in cash instead of taking shares in the new company (actually it's tied to the amount of the cash in the SPAC), at merger. So this basically sets a price floor on pre-merger SPACs, minus opportunity cost.
And, indeed, 1 out of his 3 merged SPACs is below IPO price.
Earlier quoted context omitted.
> In the end, it turned out that the whole T+2 system was stupid, and leaked through the abstractions built on top. While T+2 is antiquated, that doesn't excuse Robinhood giving margin accounts to unsophisticated participants (who don't understand the consequences of trading on margin), fronting them funds with "instant funding" while their ACH transfers are in flight, all while having limited capital on hand. Vlad c…
Then you still don't understand the problem. This had nothing to do with consumer margin; they could have not offered margin as a product and still ended up in this situation. The TLDR is that DTCC requires cash from the brokerage firm for buying a stock until settlement clears, which means the money you pay to buy $100 worth of apple, a percentage of that amount must be paid directly by the brokerage i.e. not from t…
A customer with a given amount of capital can buy far more stock on margin than on cash. Buying additional stock on the firm's dime puts the firm itself at risk and also increases deposit requirements. DTCC deposit requirements take margin into account but even if that were not the case RH bought more stock on margin than it would have in a cash-only restriction.
When Robinhood clients trade on margin, Robinhood itself takes risk on the position. There is no guarantee that margined trades will be liquidated when they go beyond minimum maintenance. Markets have discontinuous jumps all the time. So you can get situations like what happened with Archegos, where banks lost billions on the margin leverage that they provided to the customer.
T+2 isn't archaic, it was introduced a few years ago and even in T+2 many firms are unable to deliver shares on time. Vlad started to blame T+2 because his firm didn't have enough money to cover deposits, but (A) that could have been resolved by restricting margin to reduce GME buying power, and (B) hundreds of thousands of those shares failed to deliver on T+2 anyway.
Earlier quoted context omitted.
Then you still don't understand the problem. This had nothing to do with consumer margin; they could have not offered margin as a product and still ended up in this situation. The TLDR is that DTCC requires cash from the brokerage firm for buying a stock until settlement clears, which means the money you pay to buy $100 worth of apple, a percentage of that amount must be paid directly by the brokerage i.e. not from t…
T+2 is an artifact of fund transfer settlement times isn’t it? Or to rephrase, why do we still have T+2 for equities?
Even on T+2, hundreds of millions of dollars' worth of GME stock failed to deliver. Thus, I thumb my nose at the suggestion that T+1 (which is what we use in the options market) would have resolved the issue.
In actuality, Vlad is correct that faster settlement would have liberated some of his firm's cash, but it's not a real solution considering that other parts of the settlement process would break. It's easier for him to point fingers than to admit "We were writing checks that our firm couldn't cash."