231–240 of 327 posts
Article misses the point (perhaps due to their capital investments) that the resurgence in active trading is almost entirely just gambling, but exempted from casino regulation. Also, saying "no more" to refer to a blip fad is a ridiculous healdit.
I am a hedge fund guy who invests his own $$$$ passively so make of this what you will. There will always be a mix of active and passive. Fundamentally - passive only works when it follows smart active. Actives do expensive research and trade against each other to arrive at the consensus price. Passives trade at that price for "free." Since both get the same price on average but passives incur no cost, they win on av…
So I've been trying to work this out. Previously I understood the idea "The passives are simply the average of the actives". So even if you had 99% passive, so long as the actives were doing their homework the system would work, but as you said you need to watch for exploits. But then I had the question: When the world has gone passive, who is left as an active investor? 1. Wallstreetbets users who do poorly on avera…
I've always found stock buybacks intriguing and confusing. Here's a hypothetical scenario that seems to go against what you're saying:
Company A buys back $1 work of stock. Since there is now $1 less in Company A's bank account, that company is now worth $1 less. So the market cap should in theory be $1 less. Since the market cap should be $1 less, and $1 of stock disappeared, those perfectly balance out and mean the stock price should stay the same.
Now the index investors take a look at the situation. Company A's market cap has shrunk, whereas other companies' market caps haven't. So Company A has a smaller share of the index than other companies than it had before. But the index investors still have the old ratio of Company A to other companies, so they are overinvested in Company A. They all sell a bit of Company A in order to get the correct balance according to the index. Company A goes down in value.
So a stock buyback caused the price to go down.
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Could you give us examples of those zombie companies? What are the ticker symbols and which indexes include them?
NNDM is an example. Hasn't seen any growth despite having a marketable product over their entire 8 year timeframe. Worth ~2B right now despite only making ~3.4M in revenue per year and losing ~50M per year. All thanks, to becoming apart of ARKK.
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They make claims of better tax efficiency via tax-loss harvesting [1]. I don't know or care enough to evaluate it, but maybe it's better for some people, even if the allocation is no better than an ETF? Even if it worked, I wouldn't bother to do it manually. This doesn't matter for a retirement account, though. [1] https://support.wealthfront.com/hc/en-us/articles/209348486-...
That is going to depend on what the rules are, and what rates you pay. But is tax-loss harvesting beyond the wit of everyone but WealthFront? No. If you aren't bothered to do it manually then it can't be a big benefit for you...it is always amazes me that companies manage to base their products around utterly pointless/marginal features that no-one uses, like why do you care? It is like people choosing an advisor bec…
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NNDM is an example. Hasn't seen any growth despite having a marketable product over their entire 8 year timeframe. Worth ~2B right now despite only making ~3.4M in revenue per year and losing ~50M per year. All thanks, to becoming apart of ARKK.
NNDM has nothing to do with passive investors. It's bid up by retail hype.
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They make claims of better tax efficiency via tax-loss harvesting [1]. I don't know or care enough to evaluate it, but maybe it's better for some people, even if the allocation is no better than an ETF? Even if it worked, I wouldn't bother to do it manually. This doesn't matter for a retirement account, though. [1] https://support.wealthfront.com/hc/en-us/articles/209348486-...
That is going to depend on what the rules are, and what rates you pay. But is tax-loss harvesting beyond the wit of everyone but WealthFront? No. If you aren't bothered to do it manually then it can't be a big benefit for you...it is always amazes me that companies manage to base their products around utterly pointless/marginal features that no-one uses, like why do you care? It is like people choosing an advisor bec…
Wealthfront has economies of scale to write a program to perform tax loss harvesting automatically. Just because it's not worthwhile for me to do it manually myself doesn't make it not worthwhile for a program to do it automatically. Wealthfront does daily tax loss harvesting on individual stocks. That would be a tremendous amount of work for me to do manually.
That said, I don't know whether Wealthfront's benefit outweighs their 0.25% fee.
I guess what we really need is a well-regarded open source program that hooks into brokerage's API and does this advanced tax loss harvesting.
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NNDM has nothing to do with passive investors. It's bid up by retail hype.
Nope, recent prices are largely correlated to ARK activity. Price decreases have largely been due to the 11! offerings NNDM has recently made, to tap ARK investors money. https://cathiesark.com/ark-combined-holdings-of-nndm
ARKK has been buying NNDM, yes, but:
- they're not passive. they're active.
- they only own 5% of the stock. almost any public stock will have at least 5% owned by some fund, so it's not notable and doesn't disprove the notion that it's retail driven.
- ARKK are known to pile into retail frenzy stocks, so that correlation is going to exist often.
[1] https://www.nasdaq.com/market-activity/stocks/nndm/instituti...
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ARKK is far from passive
Sure it is. The money you put into it is placed for you. That's passive. The fund itself may algorithmically place it in various things, but that's outside your control. Conversely, look at super undervalued companies like JKS and CSIQ. JKS is the largest and fastest growing solar company in the world BTW. Yet these companies sit mostly under foreign market ETFs which have never been very popular, and hence why they…
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So I've been trying to work this out. Previously I understood the idea "The passives are simply the average of the actives". So even if you had 99% passive, so long as the actives were doing their homework the system would work, but as you said you need to watch for exploits. But then I had the question: When the world has gone passive, who is left as an active investor? 1. Wallstreetbets users who do poorly on avera…
>the companies who use debt to buyback their shares are whats driving the market. Every dollar they spend on their stock is then magnified 100x by the big passive funds, and both 1 & 2 have no agency other than to try to get swept up in the winds. I've always found stock buybacks intriguing and confusing. Here's a hypothetical scenario that seems to go against what you're saying: Company A buys back $1 work of stock.…
When you do a buyback, the book value drops (company loses cash), but the discounted future cash flows remains unchanged. The number of outstanding shares also drops.
The net result is the stock price increases as a company accumulates cash and uses it for buybacks because the number of outstanding shares drops.
Another way of thinking about it is that it's the same as dividends, but the dividend only goes to the sellers of the stock during a buyback.
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Nope, recent prices are largely correlated to ARK activity. Price decreases have largely been due to the 11! offerings NNDM has recently made, to tap ARK investors money. https://cathiesark.com/ark-combined-holdings-of-nndm
NNDM is heavily retail driven, it's been a fan favorite for a year. Their institutional ownership is only 10%[1]. It's similar to IBIO, NKLA, etc, where there's some attention from funds but retail hype on social media is driving it up. ARKK has been buying NNDM, yes, but: - they're not passive. they're active. - they only own 5% of the stock. almost any public stock will have at least 5% owned by some fund, so it's…
The vast majority of trade activity recently is from ARK. You can see this by looking at the link I showed and compare the strong correlation in rising stock prices and ARK buying. Alternatively any retail investors that jumped in, likely did so from news of ARK buying.