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How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

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Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#81

Post by vtlynch »

jared314 wrote: post #69
saidajigumi wrote: post #66

Earlier quoted context omitted.

> Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. Why should we give a pass to investors willing to expose themselves to excessive risk from being uninformed about their investments? Let's look further at this short selling behavior as it scales. What happens if investigative short-sellers become muckrakers noveau : sufficiently pervasive and influential that they colle…

> Let's look further at this short selling behavior as it scales. I'm not talking about general short selling. I'm talking about this specific case. He discovered the company was a fraud, shorted the stock, and then exposed it. That stock had to be sold, to someone else, for the short to be profitable. This means he knowingly participated in the scam.

Yup, hard not to see it this way.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#82

Post by giarc »

bstar77 wrote: post #39
jusben1369 wrote: post #38

Earlier quoted context omitted.

Terrifying/sad/fascinating story. Did you ever take an extended holiday over that time and notice general improvements to your health?

Yes. My Chihuahua has seen the best improvements after being out of our home for a week while we went on vacation- we also felt better too. I assumed we had a mold problem, but those test recently came up negative. I should note I have the least issues, but I spend the least amount of time at home.

Keep some of the floor. You may want to one day have it tested for formaldehyde levels.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#83

Post by Potando »

mc32 wrote: post #3
parfe wrote: post #2

The idea of private citizens both being able to investigate companies for wrong doing and earn income for their work appeals to me. No lawsuit, no legal process. After doing some investigations, just some quick transactions on a trading account, and a blog post later.

Yeah this is pretty great. Good work and good result. My only caveat would be unscrupulous people spreading unfounded rumors or uninformed opinions passing as fact which could result in innocent companies suffering from lack or rigor on the did of citizen investigators. At least it appears sixty minutes did son of their own investigation --althouh I imagine they went in with guilt in mind, which worked out in this ca…

Further investigation would show it's OK. The main losers would be the investors who believed the false information. So that's not a problem.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#84

Post by reneherse »

bstar77 wrote: post #35

This is sort of off topic, but I'm right in the middle of ripping up floors from Lumber Liquidators that I put down a few years ago- parts that are at the center of this cluster fuck. My whole family has been struggling with health issues that coincide with when I put these floors down. I have a Chihuahua that has developed terrible sinus problems, my 6 year old son is having sinus and cough issues and my wife has br…

I hope that your health improves quickly. I sympathize as I'm highly sensitive to many products that outgas VOCs. Avoiding these chemicals requires discipline and can be expensive, but the improvement to immediate quality of life is worth it (not to mention possible long term health benefits).

For home items, my strategy is to try to purchase products containing as much natural content as possible. Solid woods as opposed to particle board or MDF, natural fiber rugs if possible, avoid scented products and harsh cleaners. However, even this isn't fool proof. During a recent carpentry project I discovered that some softwoods outgas these compounds as well.

In my case, VOC sensitivity seems to be the result of cumulative exposure: On a large architectural project I spent many weeks inside a buttoned up building that was being painted. Came down with severe respiratory symptoms that resembled a bad flu. Eventually I recovered but ten years on I'm sensitive as a canary to the stuff.

I recommend that folks work in a well ventilated area or use a charcoal filter respirator when using anything having significant fumes. Even small doses of these chemicals are probably worth avoiding.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#85

Post by clarky07 »

jared314 wrote: post #69
saidajigumi wrote: post #66

Earlier quoted context omitted.

> Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. Why should we give a pass to investors willing to expose themselves to excessive risk from being uninformed about their investments? Let's look further at this short selling behavior as it scales. What happens if investigative short-sellers become muckrakers noveau : sufficiently pervasive and influential that they colle…

> Let's look further at this short selling behavior as it scales. I'm not talking about general short selling. I'm talking about this specific case. He discovered the company was a fraud, shorted the stock, and then exposed it. That stock had to be sold, to someone else, for the short to be profitable. This means he knowingly participated in the scam.

How is it a scam for a guy to do research on a company and then sell the stock when he decides said company isn't worth the current price. He isn't the person that made the company a scam, he just uncovered it. The poor sap on the other end didn't do as much research. Not they sellers fault. He can't be held responsible for the due diligence of every other investor in the world. That's basically what you are stating.

Every single stock transaction involves 2 people who think the opposite thing is going to happen. The vast majority of the time 1 of those participants knows more than the other.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#86

Post by evanpw »

analog31 wrote: post #76
koenigdavidmj wrote: post #20

Earlier quoted context omitted.

There was a case study of short selling on NPR's Planet Money a few weeks ago: http://www.npr.org/2015/01/30/382587945/winning-at-short-sel... Basically, the guy discovered a Chinese test prep company (think College Board) that had recently started to be listed on American stock exchanges, and discovered that their payment system returned an error. He emailed their support address, and it bounced. He hired a guy on C…

Did he engage in insider trading? He traded on material, non-public information, although one could certainly argue that the non-existence of a business is public information.

You have to get the information in breach of a duty of confidentiality (and in exchange for some personal benefit) in order for it to be illegal, at least in the US. If you discover something on your own, you're free to trade on it.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#87

Post by lizavp »

bstar77 wrote: post #35

This is sort of off topic, but I'm right in the middle of ripping up floors from Lumber Liquidators that I put down a few years ago- parts that are at the center of this cluster fuck. My whole family has been struggling with health issues that coincide with when I put these floors down. I have a Chihuahua that has developed terrible sinus problems, my 6 year old son is having sinus and cough issues and my wife has br…

Document everything. Get a sample [tested]. Talk to a lawyer. I hope you and your family get well soon.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#88

Post by pasbesoin »

bstar77 wrote: post #35

This is sort of off topic, but I'm right in the middle of ripping up floors from Lumber Liquidators that I put down a few years ago- parts that are at the center of this cluster fuck. My whole family has been struggling with health issues that coincide with when I put these floors down. I have a Chihuahua that has developed terrible sinus problems, my 6 year old son is having sinus and cough issues and my wife has br…

Years ago, I spent a week at a friend's summer house, in an attic area that had just been roughed in with chip board. I was sleeping there but away from it entirely the rest of the time and from the house most of the time -- attending a week long event in another town.

I became quite sick by the end of the week. In retrospect, the outgassing from that chip board did quite a number on me.

I have no difficulty at all believing people who put in manufactured materials and end up sick. E.g. also the Chinese drywall scandal that became prominent a few years ago.

I regret that "cheap" has so permeated our culture that avoiding it has become a marginal market with correspondingly elevated prices.

And even when you pay more, today it's not a guarantee that the basic materials involved will be higher quality. Lots of McMansions stuffed full of such stuff. I watched one go up a few years ago across from my parent's place, and despite the tony location and price, they didn't do the exterior correctly. We're waiting for the water issues to manifest.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#89

Post by zerocrates »

rwallace wrote: post #72
zerocrates wrote: post #36

Earlier quoted context omitted.

> It is better for everyone. It really is. Except of course when they get it wrong and have to reverse course, as seen in the news over the last several years in the case of flame retardants for furniture.

What's the latest verdict on flame retardants? Last I heard, the conclusion was that they are carcinogenic, but you have to weigh the risk of dying of cancer in twenty years against the risk of dying in a fire tomorrow, and the best guess seemed to be that they save more lives than they cost.

Lately, the dialogue is skewed against flame retardant treatments, though this is probably as much because of Toxic Hot Seat as anything else.

So, my sense of the current "wisdom" is that the cancer and toxicity issues are significant, especially for firefighters, and the retardants offer relatively little protection against fires. A big factor in the turnaround is that the California standards were primarily concerned about protecting against dropped lit cigarettes, and so many fewer people smoke, particularly indoors.

Re: How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge

#90

Post by lectrick »

jldugger wrote: post #58
lectrick wrote: post #55

Is it legal and ethical to deeply research a firm until you find very serious problems, then short their stock, then announce your findings? It feels... OK to me. For some reason this strikes me as a surprising way to make money. Never heard of this before now.

It's not only ethical, it's about the only reason short selling hasn't been outlawed.

Doesn't shorting also help stabilize the value of a security?
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