Hedge funds use satellite images to beat Wall Street • Hacker News Board

Re: Hedge funds use satellite images to beat Wall Street

#161

Post by eeZah7Ux » Fri, Jun 21, 2019, 7:11 PM UTC

harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

> There is no expectation of fairness in the stock market

...until people are forced to play the game by external conditions, e.g. being employed and therefore having a pension that is based on funds.

Re: Hedge funds use satellite images to beat Wall Street

#162

Post by tryptophan » Fri, Jun 21, 2019, 7:12 PM UTC

totaldude87 wrote: post #148

I think i saw the same thing in the showtime series "Billions"? where Taylor uses this information , thought this is another level of technical analysis :) Moral ethics aside, this looks legal?!, even if the shorts tank shares based on images of car parking lots..

Watching Billions to learn about what hedgefunds do is like watching Silicon Valley to learn how to make a startup.

Re: Hedge funds use satellite images to beat Wall Street

#163

Post by bluGill » Fri, Jun 21, 2019, 7:13 PM UTC

yellowstuff wrote: post #64

davidw wrote: post #49

Earlier quoted context omitted.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

I can't think of any reason we'd want to encourage retail investors to buy single name stocks. In days of yore you could argue that it was a good way for them to share in the bounties of economic growth, but with the rise of low-cost passive index funds that's obviously no longer true.

If you do your own legwork you can find companies that are not going to go up long term. There is as much of this as there was in the past, but there is still a lot of better than market investments for someone who a little money.

Personally I find the above work boring - it ends up being a full time job, so once I subtract my salary I'm not really better off financially than an index fund and I'd hate my job.

As for why don't the big guys do this: it isn't worth their time to chase a small gain (say $20,000) so there are many things the small guy can do that are more than wroth it that is beneath the notice of the big guy. They know about these things, they need to make more money to pay for their overhead.

Re: Hedge funds use satellite images to beat Wall Street

#164

Post by eeZah7Ux » Fri, Jun 21, 2019, 7:14 PM UTC

hnburnsy wrote: post #147

This was a better story from 2016 on how they are deploying the satellites... "A company called Planet Labs Inc. has launched a small constellation of what it calls “cubesats” that can deliver much more frequent imagery of economically sensitive spots than traditional satellites. Those spots include retailers’ parking lots, oil-storage tanks or farmland" https://www.wsj.com/articles/satellites-hedge-funds-eye-in-t...

sigh

Re: Hedge funds use satellite images to beat Wall Street

#165

Post by Bakary » Fri, Jun 21, 2019, 7:14 PM UTC

"I [suspect] that we are throwing more and more of our resources, including the cream of our youth, into financial activities remote from the production of goods and services, into activities that generate high private rewards disproportionate to their social productivity. I suspect that the immense power of the computer is being harnessed to this 'paper economy', not to do the same transactions more economically but to balloon the quantity and variety of financial exchanges." --James Tobin, July 1984

Re: Hedge funds use satellite images to beat Wall Street

#166

Post by tanderson92 » Fri, Jun 21, 2019, 7:15 PM UTC

tryptophan wrote: post #160

logifail wrote: post #158

Earlier quoted context omitted.

> As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. What about companies that find out about your retail trade before it's even executed , and are able to act on that information to profit from your very intent to trade?

This is called front running and is super illegal.

Not all front-running is illegal, see this article which discusses a few examples, including quote matching and order anticipation: https://blogs.cfainstitute.org/investor/2013/04/24/what-to-d...

Front-running is very common in bond trading.

Re: Hedge funds use satellite images to beat Wall Street

#167

Post by pigscantfly » Fri, Jun 21, 2019, 7:15 PM UTC

blihp wrote: post #141

bluGill wrote: post #23

Nothing new here other than satellites. Years ago (1990s?) Peter Lynch - at the time manager of the largest mutual fund followed his daughters into a shopping mall for back to school - his daughters didn't go into GAP stores so he went back to the office and sold as his shared of GAP. His fund beat everyone else by a large margin because GAP stocks dropped a month latter when they announced the earnings drop. This is…

Was going to make the same comment. I remember Peter talking about how he used foot traffic at the mall to size up retailers he was looking at back in the early 90's. These were interviews on channels like CNBC, so pretty widely watched by retail investors. All the satellites do is automate the work and I'm pretty sure hedge funds have been using satellite pics for well over a decade now. (I recall reading about the…

They've been using ML to automate most of that work for at least five years.

Re: Hedge funds use satellite images to beat Wall Street

#168

Post by gist » Fri, Jun 21, 2019, 7:15 PM UTC

est31 wrote: post #157

Hedge funds do a ton of crazy research like this. I remember reading about hedge funds buying new cars only to sell them immediately after. They were only interested in their serial numbers which they used to estimate the count of sold cars of a specific model using the german tanks method. Before the sales numbers are out, information like this is very valuable.

> about hedge funds buying new cars only to sell them immediately after

To get this data you wouldn't need to buy the cars. So it sounds like they did something that sounded like that as opposed to what you remember. Even w/o social engineering you could quite easily get some dealer to give you that type of information (or someone working there or otherwise).

Re: Hedge funds use satellite images to beat Wall Street

#169

Post by eeZah7Ux » Fri, Jun 21, 2019, 7:15 PM UTC

nwah1 wrote: post #7

dillonmckay wrote: post #4

Earlier quoted context omitted.

‘Outsider information’?

Precisely. It's unfair for the little guys, but lot's of stuff is unfair... such as most of high speed trading, and the people who use arbitrage to skim from the index funds that use predictable purchasing.

...which doesn't make it any more acceptable.

Re: Hedge funds use satellite images to beat Wall Street

#170

Post by logifail » Fri, Jun 21, 2019, 7:16 PM UTC

tryptophan wrote: post #160

logifail wrote: post #158

Earlier quoted context omitted.

> As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. What about companies that find out about your retail trade before it's even executed , and are able to act on that information to profit from your very intent to trade?

This is called front running and is super illegal.

> This is called front running and is super illegal.

Are you sure it's illegal if it's a hedge fund with access to order flow from a third party?

"Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal for hedge funds and any independent traders to front run them. One could argue that the hedge fund managers are doing nothing wrong; it's the investors' fault for acting irresponsibly. The problem with that argument is that many of these investors don't have a clue about what is happening to them." [0]

http://www.dark-bid.com/hedge-funds-front-running-investors....