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Redditors are right about the unfairness of the market

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Re: Redditors are right about the unfairness of the market

#21

Post by BrianOnHN »

cryptica wrote: post #5

Money printing and the Cantillion effects associated with it have created asymmetric playing fields which are fundamentally unfair. The injustice of modern markets can be explained with an analogy: Imagine that you don't have much money and you open a coffee shop; assume that it's your only stream of income... Now imagine that a few years later, a multi-millionaire opens up a coffee shop right next to yours as a pass…

Isn't this exactly how YC network effects work?

Is that why the parent is downvoted?

Re: Redditors are right about the unfairness of the market

#22

Post by DarkWiiPlayer »

HenryKissinger wrote: post #3

Redditors: complain about alleged market manipulation by "hedgies". Coordinate between one another on subreddits like /r/WallStreetBets, /r/SuperStonk, and /r/GME. Encouraging thousands of others to "buy and hodl" a particular stock sounds like a coordinated scheme to me. In a democracy that values free speech and the liberty of association, combined with the Internet, it was inevitable, but then the bar for what cou…

Sooo... market manipulation is wrong if and only if it is being discussed on a public medium like reddit, but not if an entity like a hedge-fund does it on its own? That's an interesting take.

Re: Redditors are right about the unfairness of the market

#23

Post by ziml77 »

autosharp wrote: post #4
auslegung wrote: post #2

This wouldn’t work, but my hot take is that anyone with potential insider information can only buy/sell index funds.

This doesn't begin to address the issue. E.g. if you work at the fed you buy a 3x treasury index fund if you know rates will be lowered, or short 3x treasury index if you know rates will be raised. If you are a judge or legislator and you get to say if 30% charge on app stores is reasonable, this affects 20% of the Nasdaq 100 index. So you buy/sell that over a 24 hour period.

A couple possible solutions:

Disallow them from being directly involved in investment decisions. Make them hand their money over to someone who will make investments on their behalf with influence limited to broad things like risk profile and the term they want returns over.

Alternatively, implement a minimum holding period. It's much harder to trade on insider info if there must be a long period of time from purchase to sale. One place where I worked wouldn't let us sell until at least 3 months after we purchased any shares.

Re: Redditors are right about the unfairness of the market

#24

Post by elliekelly »

zz865 wrote: post #13

I understand that people shouldn't benefit from insider information for their personal trading - but there are rules around this. Blanket banning stock trading has a lot of downsides. Its an important part of everyone's financial wellbeing - esp if you are wealthy or powerful. I left my job in financial industry primarily because of this.

You make it sound like a quality of life issue similar to having a flexible schedule when it’s really about managing the conflict of interest. Part of the problem is the rules judges and elected officials are held to barely scratch the surface of what a financial professional must do.

Re: Redditors are right about the unfairness of the market

#25

Post by vxNsr »

cryptica wrote: post #5

Money printing and the Cantillion effects associated with it have created asymmetric playing fields which are fundamentally unfair. The injustice of modern markets can be explained with an analogy: Imagine that you don't have much money and you open a coffee shop; assume that it's your only stream of income... Now imagine that a few years later, a multi-millionaire opens up a coffee shop right next to yours as a pass…

> as corporate livestock you add negative value to society (you're now a cog in the money laundering machine) but you're getting paid more than what you did when you were adding value to society.

Can you explain this bit more? Why are you adding negative value?

Re: Redditors are right about the unfairness of the market

#26

Post by ludamad »

ianai wrote: post #17
OJFord wrote: post #12

Earlier quoted context omitted.

You do say it wouldn't work, but just to really spell out the obvious ones: - no more options/shares for employees; - significant insider buying/holding is generally considered a positive signal, alignment of incentives, etc. would need replacing with a more complicated compensation agreement linking bonuses to average share price over the year or something. Slightly less obvious one is that you still have inside inf…

at least consider a ban on stock buybacks like was the case until that regulation was rolled back in the 80s.

What why? Surely you mean stock buybacks in very specific scenarios such as after a bailout? Isn't it just the inverse operation of printing stock?

Re: Redditors are right about the unfairness of the market

#27

Post by aqme28 »

auslegung wrote: post #2

This wouldn’t work, but my hot take is that anyone with potential insider information can only buy/sell index funds.

What this would mean is that insiders with large holdings of stock (due to e.g. grants) would be forced to quit their jobs just so they could have some liquidity.

That's a terrible incentive.

Re: Redditors are right about the unfairness of the market

#28

Post by nradov »

ianai wrote: post #17
OJFord wrote: post #12

Earlier quoted context omitted.

You do say it wouldn't work, but just to really spell out the obvious ones: - no more options/shares for employees; - significant insider buying/holding is generally considered a positive signal, alignment of incentives, etc. would need replacing with a more complicated compensation agreement linking bonuses to average share price over the year or something. Slightly less obvious one is that you still have inside inf…

at least consider a ban on stock buybacks like was the case until that regulation was rolled back in the 80s.

There's nothing really wrong with stock buybacks. They're just a tax efficient method for companies without strong growth opportunities to return value to shareholders.

Re: Redditors are right about the unfairness of the market

#29

Post by DarkWiiPlayer »

ziml77 wrote: post #8
autosharp wrote: post #6

Earlier quoted context omitted.

Yes, you found a contradiction between different Reddit users.

The same people who feel like Wall Street is fighting against small investors and manipulating the market are the same ones who coordinate on /r/wallstreetbets. They are specifically coordinating against the big firms. That was the whole idea behind the GameStop thing. They were purposely trying to ensure that a hedge fund wouldn't be able to buy GameStop shares to cover their massively over-shorted position.

So what's the point? If one is guilty, everyone is guilty; and I'm pretty sure most of the redditors were going at it from a perspective of "beat them with their own dirty tricks" precisely because playing by the rules while others don't is what people consider unfair.

Re: Redditors are right about the unfairness of the market

#30

Post by elliekelly »

cryptica wrote: post #5

Money printing and the Cantillion effects associated with it have created asymmetric playing fields which are fundamentally unfair. The injustice of modern markets can be explained with an analogy: Imagine that you don't have much money and you open a coffee shop; assume that it's your only stream of income... Now imagine that a few years later, a multi-millionaire opens up a coffee shop right next to yours as a pass…

Selling at a loss in order to beat the competition is (in theory at least) an antitrust violation. But, to your point, it’s unlikely anything would be done about it.
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