171–180 of 186 posts
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“Markets can remain irrational longer than you can remain solvent“. This was also the case with Burry and others shorting in 2008.
Burry got lucky but has been wrong more recently. He’s basically an investment doomposter.
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“Markets can remain irrational longer than you can remain solvent“. This was also the case with Burry and others shorting in 2008.
And then there are central banks which can pump literally unlimited amounts of money into the market.
What other predictions has this short seller made in a verifiable manner? It's really pointless to find someone who just guessed correctly once and take their advice. Particulalrly if their failed predictions are never made public, or are too abtract to be verifiable. I used to invest in gold and silver, expecting them to be stable investments. Back in mid 2008, I noticed a lot of large price swings. I made a few tra…
> I just got really lucky that one time You didn't tho. Investing in gold should be a long-term investment, and in a long term price of gold trend is still rising. It was constantly rising till 2012, then fall a little bit in 2012-2016, and is rising again.
The point is that it is very difficult, practically impossible to time the market. So the commenter was right - he got lucky that one time.
And if you were trading in the markets for many years, you would see that occasionally you would be lucky too. But unless you employed some kind of risk and money management, the other times where you would be wrong (and those times would definitely happen as well) losses would cancel out all your lucky profits.
I was lucky a couple of times too and it means nothing.
My company has seen quite a few sell side analysts talking about SVB earlier this year, so I guess the risks were not unknown to financial markets. Problem is, we are in a scenario of great macroeconomic uncertainty. That can make borrowing costs (needed for shorting something) quite high, because everyone and their moms want to protect themselves from market downturns. So even if you guess correctly that some compan…
Timing is exactly the challenge! The share price of $SIVB actually climbed pretty significantly since the prediction back in January before collapsing this week. You don't need to look too hard to see examples of share prices doing weird things despite reality ($BBBY most recently)!
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If that's a textbook Ponzi structure, then every bank is a textbook Ponzi structure by this logic. It's irresponsible to paint ordinary accepted business models that have been in place for hundreds of years and that work fine the vast majority of the time with a criminal brush.
SVB is not like other banks. Ordinary banks don't have catastrophic interest rate exposure. Regular banks don't have money burning startups as their main customer base. Regular banks don't have the problem of having billions of dollars in deposits but no way to put that money to work. If you think SVB is a regular bank practicing accepted business models I'm not sure you appreciate how unusual SVB is in terms of thei…
> Regular banks don't have the problem of having billions of dollars in deposits but no way to put that money to work
SVB chose a way to put that money to work, but they miscalculated what would happen to the bond market. I don't know how or why they overexposed themselves to this risk, but I'm fairly certain it wasn't some decision made without the review of numerous investing and risk experts.
SVB was not a fly-by-night operation. It was founded over 40 years ago. My first paychecks from the startup I worked for during the dot-com 1.0 era were drawn from them.
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No, exposition and context is important, but this is irrelevant l'art pour l'art prose. As the comment said it adds nothing of value. The journalist could have spent a few sentences explaining why and how this short seller is giving an interview, why this bank matters, etc.
By the same token, did you need to put that in French? Did it serve a purpose? I don’t have a problem with you having done so, but I don’t have an issue with the article either.
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No, exposition and context is important, but this is irrelevant l'art pour l'art prose. As the comment said it adds nothing of value. The journalist could have spent a few sentences explaining why and how this short seller is giving an interview, why this bank matters, etc.
What exactly do you consider irrelevant about the opening line of the article? I'll quote it here since the comment I responded to was flagged. > Less than an hour before the California financial regulator closed Silicon Valley Bank’s doors on Friday, short seller Dale Wettlaufer is walking me through their financials, and laying out some metrics he’s been closely eyeballing for months. This establishes who the short…
Debatable. The amount is not disclosed. Also just in this HN thread there were some talk about how even if someone saw it coming taking the actual position was a bit risky (because borrowing the stock in a high-interest rate env can easily lead to closing the position too soon).
> This establishes who the short seller is, when the interview is taking place, and makes clear that short seller has come to his position after heavy review of SVB's finances over the course of months.
That sentence is too evocative of fluff. (To me. And I'm guessing to other HN commenters too.)
Its style does not match the subject matter, nor the rest of the article. It's too eloquent, too visual, yet imprecise. Were the doors really closed? What does that even mean to today's "terminally online" audience, who read these articles? What's the name of the regulator? Walking through, closely eyeballing for months ... yet in the next paragraphs they mention "last two years". Okay, sure, it's not a "gotcha" or some huge logical contradiction, but it's just unexplained to me as a reader.
All in all, I don't like the pacing, the format, the style, the terrible one sentence paragraphs of this article.
> The bank effectively touches every part of the private markets.
Yeah, but that's like saying buying a lot of SP500 touches every part of public markets. Yes, SVB was big, 209B big, but when the Vision fund is 150B, and VC has more than 2T, and PE has more than 4T assets under management, I'm not sure what to think of this.
To me this article, while has some interesting factoids, comes off as a strange almost personal account of the writer's "oh no one knows what will happen now" emotionally charged state. (Which is okay for a blog, but underwhelming for HN front page.)
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> Bleecker Street Research is a hedge fund that has been shorting since 2014. They wouldn't be in business if they were only lucky once. I disagree. Their model is similar to VCs in a way. Hedge funds don't care about the number of times they were correct vs. wrong, they care about the wins from the correct bets being more than losses from the bets that went wrong. It goes even further, if you think about what the po…
No their model has nothing to do with VC. Maybe it would be useful if at least you read the definition on Wikipedia before trying to pass completely incorrect notions as truth? https://en.m.wikipedia.org/wiki/Hedge_fund
I was trying to say that their success metric is the same: the total amount of dollars gained, not the number of bets on companies (VC) or the number of positions (hedge fund) that worked out.
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What exactly do you consider irrelevant about the opening line of the article? I'll quote it here since the comment I responded to was flagged. > Less than an hour before the California financial regulator closed Silicon Valley Bank’s doors on Friday, short seller Dale Wettlaufer is walking me through their financials, and laying out some metrics he’s been closely eyeballing for months. This establishes who the short…
> They just made a huge return on a short play that most people never saw coming. Debatable. The amount is not disclosed. Also just in this HN thread there were some talk about how even if someone saw it coming taking the actual position was a bit risky (because borrowing the stock in a high-interest rate env can easily lead to closing the position too soon). > This establishes who the short seller is, when the inter…
Regardless of how much money they actually made on the play, they can now openly claim to be the ones who saw this coming. The marketing value to them is distinct from the actual financial return and clearly why they decided to do a public interview with a major financial publication on the subject. And yes, it was obviously a risky even if the position made sense logically, hence the old maxim, "the market can stay irrational longer than you can stay solvent". But all of that is irrelevant to the fact that this particular play worked out for them and they can use it to promote themselves. There were people who tried to short mortgage backed securities in the early 2000s and got the timing wrong. Michael Burry got the timing right. At least a part of that was luck, but it hasn't stopped him from using it for self-promotion.
> Its style does not match the subject matter, nor the rest of the article. It's too eloquent, too visual, yet imprecise.
I honestly don't even understand what you're trying to say. Stylistically it seems completely coherent to me, and how can the sentence be "too eloquent"? I also don't see what's imprecise about it. I also have no idea what "too visual" means. Are you referring to terms like walking through and eyeballing? These are very common terms for explaining and tracking respectively and quite clear in context.
> Were the doors really closed? What does that even mean to today's "terminally online" audience, who read these articles?
"close its doors" is a very common idiom [0] meaning to shut down. I have no idea why a "terminally online" audience would be relevant to that fact.
> What's the name of the regulator?
There's only one California financial regulator. They're directly referencing the state entity responsible for regulating financial institutions in California. The official name for that organization is The Department of Financial Protection and Innovation, but it's quite clear who they're talking about based on context.
> closely eyeballing for months ... yet in the next paragraphs they mention "last two years". Okay, sure, it's not a "gotcha" or some huge logical contradiction, but it's just unexplained to me as a reader.
You're taking two referenced timeframes out of context. "Eyeballing for months" is how long Wettlaufer has been tracking the situation. "Last two years" is the amount of time the situation has been unfolding. The author is stating that Wettlaufer has spent the last few months reviewing the last two years of activity. There's nothing inconsistent about that.
> All in all, I don't like the pacing, the format, the style, the terrible one sentence paragraphs of this article.
That's fine if you don't personally like it. We can agree to disagree here. But I objectively I don't think your criticisms land.
> To me this article, while has some interesting factoids, comes off as a strange almost personal account of the writer's "oh no one knows what will happen now" emotionally charged state. (Which is okay for a blog, but underwhelming for HN front page.)
Again, perhaps we're at the point of agree to disagree, but I don't see anything emotional about this article at all and it in no way seems like a personal account. It's a narrative written form a perspective but I think it very clearly lays out a number of facts about the situation.
>> The bank effectively touches every part of the private markets.
>Yeah, but that's like saying buying a lot of SP500 touches every part of public markets. Yes, SVB was big, 209B big, but when the Vision fund is 150B, and VC has more than 2T, and PE has more than 4T assets under management, I'm not sure what to think of this.
You've cherry picked one sentence out of a paragraph. The rest of the paragraph makes very clear why this bank is important and important to start-ups and VCs specifically.
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SVB is not like other banks. Ordinary banks don't have catastrophic interest rate exposure. Regular banks don't have money burning startups as their main customer base. Regular banks don't have the problem of having billions of dollars in deposits but no way to put that money to work. If you think SVB is a regular bank practicing accepted business models I'm not sure you appreciate how unusual SVB is in terms of thei…
My point is about banking as a business model being mischaracterized as a Ponzi scheme, not about SVB’s particular level of risk exposure. > Regular banks don't have the problem of having billions of dollars in deposits but no way to put that money to work SVB chose a way to put that money to work, but they miscalculated what would happen to the bond market. I don't know how or why they overexposed themselves to this…
VC investment is highly sensitive to interest rates. Always has been, and everybody knows this. Instead of hedging against this risk SVB decided to double down on it and bet the bank on interest rates going back to zero. I'm sure they had a bunch of risk experts sign off on it, but we both know that doesn't mean anything. Complacency sets in after 15 years of low interest rates, and I think it's exactly because SVB did so well in the ZIRP environment that they got careless.