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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

#61

Post by mtanski »

The amount of products that use formaldehyde somewhere in the process is staggering. From glues used for wood (floors) to fabric softening (carpets, baby clothes), inks, building materials.

This is a much bigger deal if you live in a "energy efficient" home that has very little heat/cold leakage. Modern insulation, fancy windows, HVACs that recycle indoor air contribute to this problem. Some of these products like floors will be off gassing for years while you live in the hermetic bubble of your home.

Source: my wife worked for a niche material company that was a big importer of bamboo wood. They sold everything from bamboo floors to plywood.

They generally tried to not use formaldehyde glues and bonding agents but it's hard to to police it. Their suppliers from China would cut corners or try to boost their profits. When caught they would stop for a while and then resume later on.

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

#62

Post by mtanski »

mtanski wrote: post #61

The amount of products that use formaldehyde somewhere in the process is staggering. From glues used for wood (floors) to fabric softening (carpets, baby clothes), inks, building materials. This is a much bigger deal if you live in a "energy efficient" home that has very little heat/cold leakage. Modern insulation, fancy windows, HVACs that recycle indoor air contribute to this problem. Some of these products like fl…

I had neighbors who wanted to make sure when the hallway was being painted they only used low VOC paint. They were somewhat offended when I told them the carpet they put uses a bonding agent that will off gas for years or they their children clothes were softened with formaldehyde.

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

#63

Post by syntheticcdo »

jared314 wrote: post #57
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…

> He shorted the ever living crap out of the stock, broke the news, and won big. Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. It sounds like he participated in a pump and dump scheme/scam.

The short seller did nothing wrong. Shorting simply means he borrowed the stock in order to sell it-- sell high, wait for the price to drop, then buy low in order to return the shares to the lender. The buyer on the other side of the short sale should have done more due diligence. No one forced them (be it a person or an institution) to take up that position.

The Chinese company (or some affiliate) was the one who had pumped the stock up. The short seller was just a regular market participant who was rewarded for his hard work and diligence.

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

#64

Post by pbhjpbhj »

hga wrote: post #52
erobbins wrote: post #41

Earlier quoted context omitted.

The first one that comes to mind was their fraudulent reporting about the audi 5000 and "sudden acceleration" in the 80s. Their lies almost destroyed an entire company. http://en.wikipedia.org/wiki/Audi_100#Reported_sudden_uninte...

And before that, in 1980, a hatchet job on the Jeep, must have been the CJ-7 both because of the date and how difficult it was for them to roll it, even using robot drivers that manipulated the steering wheel twice as fast as a human can while gunning the engine. There was plenty of less overt stuff in the '70s. Then you might mosey through this list, which only has the worst of the worst: https://en.wikipedia.org/wi…

It would be interesting to see if anyone associated with the show has made money of this - surely if you know, a week or two before it airs, of a piece that's going to destroy the reputation of a company then you can trade on that to great effect.

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

#65

Post by MicroBerto »

marinabercea wrote: post #43
MicroBerto wrote: post #37

Earlier quoted context omitted.

Anyone with a solid platform can make a lot of noise. Our blog has an article[1] that gets more traffic than you can imagine, and it's been part of the cause for some serious changes in a billion-plus dollar industry. Never underestimate the power of the pen and some quality research. [1] https://blog.priceplow.com/protein-scam-amino-acid-spiking

I wasn't aware free form amino acid padding was a real issue. Do you have any idea if this a world-wide problem or of particular US-interest only? I bookmarked your site, thanks!

Thanks! It's world-wide, but I believe European labels are more strict in terms of having to explain what exact doses you are using of the aminos.

But that doesn't mean you can't lie, or get screwed by your raw material supplier. That's why the companies that actually follow the existing laws and test their incoming and outgoing product have been way on top of this and those crappy suppliers.

FYI - About to post a blog article in an hour or two that you'll enjoy. It's about the ongoing NY Attorney General supplement testing fiasco.

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

#66

Post by saidajigumi »

jared314 wrote: post #57
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…

> He shorted the ever living crap out of the stock, broke the news, and won big. Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. It sounds like he participated in a pump and dump scheme/scam.

> 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 collectively become the market "conscience" that so often seems missing?

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

#67

Post by jared314 »

syntheticcdo wrote: post #63
jared314 wrote: post #57

Earlier quoted context omitted.

> He shorted the ever living crap out of the stock, broke the news, and won big. Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. It sounds like he participated in a pump and dump scheme/scam.

The short seller did nothing wrong. Shorting simply means he borrowed the stock in order to sell it-- sell high, wait for the price to drop, then buy low in order to return the shares to the lender. The buyer on the other side of the short sale should have done more due diligence. No one forced them (be it a person or an institution) to take up that position. The Chinese company (or some affiliate) was the one who ha…

If you listen to the story, he shorted the stock, knowing it was a fraud, and then exposed it.

He knowingly created more victims of the scam.

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

#68

Post by loarabia »

Someone1234 wrote: post #23
mindslight wrote: post #18

Earlier quoted context omitted.

To be fair, everything gets "This is known to cause cancer in the State of California". The only thing that label tells you is that the state of California likes to pointlessly sacrifice lab animals.

Everyone loves to give California a hard time, but they've done more to bring US product safety into the 21st century than any other US state. I'd describe California and the EU as being similar, and the rest of the US to be worse than either (some by far). Fortunately since international companies want to sell all over the US and Europe, it has meant that this is the new baseline most of them shoot for. "Legal in Ca…

Law of unintended consequences?

http://newscenter.berkeley.edu/2012/11/15/pbdes-and-neurodev...

edit I didn't notice but zerocrates had already pointed this out.

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

#69

Post by jared314 »

saidajigumi wrote: post #66
jared314 wrote: post #57

Earlier quoted context omitted.

> He shorted the ever living crap out of the stock, broke the news, and won big. Wait, I thought shorting meant he effectively sold shares to some other, unfortunate, investor. It sounds like he participated in a pump and dump scheme/scam.

> 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.

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

#70

Post by tsomctl »

ck2 wrote: post #44

Now look around you at the 1000 products that construct and are in your home that are made in China. We even import some food from China. Your car tires are probably made in China. Think all those things meet US regulations? Who is going to inspect them, the handful of people that are responsible for tens of thousands of freight containers per day?

Yes, most of those things do meet US regulations. The company inspecting them is the large US company that puts its brand on it. The same company that would be on the receiving end of a huge lawsuit if the products are dangerous.
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