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Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

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Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#271

Post by slt2021 »

dehrmann wrote: post #173
wbl wrote: post #165

Earlier quoted context omitted.

The reason people pay for trade flow is the same reason they sit at the table of drunks when playing poker.

It's slightly different. With poker, you play with drunks because they make mistakes. With order flow, you want trades from small fish who don't have any special knowledge so you market make and not be taken advantage of, yourself.

Except that unlike in casino, in stock market a Designated Market Maker can go against the crowd and "wait it out" any negative downfall.

Lets say customers bought GME and GME shoot up. Citadel just waited out until the movement fizzled out. They were able to hold naked short position for prolonged period of time (basically printing fake shares) to artificially increase the float

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#272

Post by slt2021 »

gruez wrote: post #138
Lionga wrote: post #111

Earlier quoted context omitted.

1. Just look at their financial statements they , nobody is allowed this naked shorting but Cidatel is because they are a market manipu ahhh sorry maker. Not that others won't naked short also, it is just they do not do it openly.

>nobody is allowed this naked shorting but Cidatel is because they are a market manipu ahhh sorry maker. That's... working as intended? > market makers provide a required amount of liquidity to the security's market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders. In return, the specialist is granted various informational and trade execution advantages. You…

Citadel is basically counterfeiting shares, just like the Fed is printing dollars.

its a scam and is a reason how Citadel makes $30,000,000,000 profit per year

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#273

Post by taway789aaa6 »

BobbyJo wrote: post #113
taway789aaa6 wrote: post #34

Earlier quoted context omitted.

The "farce" is that when a market maker like Citadel purchase your order flow, the orders are typically not routed to the lit market (e.g. NYSE, IEX, etc) but instead routed to "alternative trading systems" (ATS) e.g. "dark pools" where your purchase has no effect on the price of the security. This breaks the whole idea of a "market" where every buy puts upward pressure on a price and sales put downward pressure. Thu…

> That's not even getting started on the "farce" that is an ETF and how they are balanced/re-balanced. Have any pointers to info on this? I'm looking to buy into some ETFs but I've been unable to find much information on balancing (I'd like to selectively manage my exposure to some stocks that are heavy in indexes at the moment).

Schwab has a pretty good explainer: https://www.schwabassetmanagement.com/content/understanding-...

Ultimately the AP (authorized participant) is incentivized to make ETFs available because they get to use supply/demand imbalances as an arbitrage opportunity.

> The creation and redemption mechanisms help ETF shares to trade at a price close to the market value of their underlying assets. When ETF shares begin to trade at a price that is higher than the market value of their underlying assets (at a “premium”), APs may find it profitable to create ETF shares by buying the underlying securities and exchanging them for ETF shares, and then sell those shares into the market. Similarly, when ETF shares begin to trade at a price lower than the market value of their underlying assets (at a “discount”), APs may find it profitable to buy ETF shares in the secondary market and redeem them to the ETF in exchange for the underlying securities. These actions by APs, commonly described as “arbitrage opportunities,” help to keep the market-determined price of an ETF’s shares close to the market value of their underlying assets.

http://www.understandetfs.org/creation_redemption.html

My understanding is that volatility is good for ETF APs because there are more arbitrage opportunities.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#274

Post by slt2021 »

toast0 wrote: post #206
taway789aaa6 wrote: post #53

Earlier quoted context omitted.

> The market maker will eventually need to trade out of that position This is why Citadel has $60+ billion dollars of "securities sold not yet purchased" on their financial statements. They have sold $60+ BILLION of shares to investors and not yet bought the underlying securities. So when exactly will that $60 billion of buy pressure hit the market?

> They have sold $60+ BILLION of shares to investors and not yet bought the underlying securities. > So when exactly will that $60 billion of buy pressure hit the market? Citadel needs to deliver the stock they sold on T+1 as of May 28, 2024. There's some allowance for failure to deliver, but the data is out there, if Citadel is routinely failing to deliver, you should be complaining about that, not about their finan…

they can keep failure to deliver forever until the market moves in their desired position to actually send orders to lit market.

they use derivatives and heavily recycle buy/sell shares to keep kicking the FTD can down the road for as long as the market returns to their desired position.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#276

Post by slt2021 »

jkulubya wrote: post #162
Lionga wrote: post #112

Earlier quoted context omitted.

As a market maker Citadel is allowed to do naked shorting.

A naked short on their own account would be illegal. A time-bound naked short to fulfill their role as market maker would be acceptable. But even then, all trades are either eventually settled at some time t, or fail to settle, e.g. if the seller is not good for the shares. Any of these 2 events happening is reported outside of a single broker-dealer, i.e. public info. And to settle a trade, you will need the actual…

they kick the can down the road every day, until the market price returns to what they desire and only then they send order to a lit market.

also heavy usage of synthetic shares and derivatives to hide naked shorts

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#277

Post by taway789aaa6 »

jjmaxwell4 wrote: post #59
taway789aaa6 wrote: post #47

> The Firm assesses fees monthly, in arrears. Fixed fees are $20/month, in arrears. Fees are debited directly from client accounts. If the fee is $1/month, why does your form ADV state that fixed fees are $20/month? https://double-disclosures.s3.amazonaws.com/Double+Finance+A...

This is an older version of our Form ADV - we're fixing this now. We've updated our ADV with the SEC but this link remains attached to our older one. This is our current latest filed with the SEC: https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_ia...

What led to the 95% decrease in fixed fees?

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#278

Post by toast0 »

dmoy wrote: post #257
toast0 wrote: post #222

Earlier quoted context omitted.

Vanguard keeps sending me emails lately about enabling lending on my brokerage account[1]; although I only have classic mutual funds in there, which I don't think can be lent. I imagine their brokerage lending will include a cut for the brokerage, although maybe it will be closer to cost than at other brokerages. I don't really know where the Vanguard brokerage net revenue ends up. [1] And frankly a lot of other 'opp…

Most vanguard classical mutual funds are share classes of an underlying ETF, and can be lent. Last I checked (which to be fair was like a year or so ago), vanguard didn't take a cut for securities lending. It does however boost the fund's performance https://corporate.vanguard.com/content/corporatesite/us/en/c...

That page is from Vanguard the funds.

Vanguard the brokerage also has a share lending program, advertisement here https://investor.vanguard.com/campaign/earn-additional-incom...

> Vanguard Brokerage maintains an economic interest in Fully Paid Lending program loans and earns revenue in connection with such loans.

Vanguard the brokerage wants me to enable lending, but my mutual fund shares in Vanguard the brokerage can't be lent, because mutual funds are not lendable. If I converted it to an ETF, then the ETF could be lent, but I don't know how much interest there is in borrowing ETFs to short.

The underlying holdings in the mutual fund can be lent by Vanguard the funds. Vanguard says all the proceeds from lending (net of expenses) go to the funds. I think Schwab and Fidelity take a cut of lending proceeds on funds beyond their program expenses, but then they take a 'zero expense ratio'. It doesn't necessarily matter to me where specifically the Fund administrator takes their fees, it's the end of the day net investment value. And honestly, inertia is a big part of it, I have too much unrealized capital gains to really consider changing my stock funds, but I could be convinced to switch to a different brokerage.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#279

Post by pkkkzip »

FactKnower69 wrote: post #245
hn_throwaway_99 wrote: post #16

I saw the "Your Money is Secure" section, but after things like the Synapse fiasco, I would like to get confirmation from you. It says my money would be SIPC insured, which means if anything goes missing (obviously not through loss of equity value, but through missing funds or a ledger bug), I get my money back, up to the SIPC limit, right? I just want to ensure this isn't the same situation with fintechs that say yo…

>I'm just really, really wary of new fintech products to save like .3% on fees off by an order of magnitude, you're saving 0.03% on fees

in the long run its negative because order flows are sold to hedge funds who ultimately trade against the masses.

I'm also not sure I would trust any fintech startup from YC after Yotta and Coinbase.

Matter of fact, I increasingly find YC rewards unscrupulous and morally cavalier founders and products that does more harm to society than good.

i find myself increasingly growing wary of YC affiliated founders not to mention the obvious CCP money involved.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#280

Post by gruez »

slt2021 wrote: post #272
gruez wrote: post #138

Earlier quoted context omitted.

>nobody is allowed this naked shorting but Cidatel is because they are a market manipu ahhh sorry maker. That's... working as intended? > market makers provide a required amount of liquidity to the security's market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders. In return, the specialist is granted various informational and trade execution advantages. You…

Citadel is basically counterfeiting shares, just like the Fed is printing dollars. its a scam and is a reason how Citadel makes $30,000,000,000 profit per year

>its a scam and is a reason how Citadel makes $30,000,000,000 profit per year

Where are you getting "$30,000,000,000" (billion) in profit? Wikipedia says they only made $6.3 billion in revenue in 2023. Moreover, they were in existence for 22 years. Even if they only started "counterfeiting shares" in 2021, $30B in profit per year (so $90B in the past 3 years) seems absurd for only $60B worth of "counterfeiting shares" on their balance sheets.

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