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Statement of SEC Regarding Recent Market Volatility

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Re: Statement of SEC Regarding Recent Market Volatility

#781

Post by kypro »

numair wrote: post #107

Okay kids, story time. After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honor…

Can someone explain why my perspective is wrong on hedgefunds please?

My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford their repayments.

I fully understand that the financial system also took on too much risk and many understood those risks, but the narrative that hedgefunds are entirely to blame for the GFC, and that they were the only ones being irresponsible with leverage, is surely wrong?

If the blame was with anyone it should be the regulators... Why were individuals and hedgefunds able to take so much risk? In the absent of regulation individuals and hedgefunds should be expected to take maximum risk for their own gain. Just like how WSBs did when they were all exploiting the infinite leverage glitch.

Another thing that I don't think is true here is that the government is only there for the hedgefunds... If this last year has proven anything it's that the government is perfectly wiling to bail out individuals if they feel it's necessary to save the economy. And if the financial system is so rigged against individuals then isn't it odd how those individuals seem to be so able to destroy the hedgefunds with relative ease from a free smart phone app?

I'm not trying to be edgy, I genuinely don't understand why people seem to blame hedgefunds for every inequality problem in society.

Re: Statement of SEC Regarding Recent Market Volatility

#782

Post by eloff »

dkrich wrote: post #75

There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies. Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to…

The very high and very speculative participation by retail investors is scaring me. I'm reminded of the story of the hedge fund manager who was getting a shoe shine, and the shoe shine boy was giving him stock tips. He closed out his positions and correctly called the top of the bubble[1]. I don't know if the story is true, and it is just an anecdote anyway. But historically this kind of activity does mark the end of bull markets.

At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.

Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.

[1] I found it, it was Joe Kennedy in 1929: https://archive.fortune.com/magazines/fortune/fortune_archiv...

Re: Statement of SEC Regarding Recent Market Volatility

#783

Post by khawkins »

sanderjd wrote: post #691
NoOneNew wrote: post #388

Earlier quoted context omitted.

So it's WSB fault that the news outlets spun the narrative to confuse people? Sorry, but hasn't the news spinning and generally misconstruing news stories to the benefit of their advertisers and financiers agendas been the issue the past few years?

What about my comment seems to say that it is WSB's fault? I didn't comment on whose fault it is and I don't care, I just think pretty much everyone is acting like the only two parties involved are WSB memers and hedge funds. And maybe that was true for awhile. But it isn't now, there are lots of unsophisticated people who have bought into the frenzy and in a few months all the stories will be about how those people…

Nobody cares about the people who are "unsophistocated people who have bought into the frenzy", especially if they get screwed. Further, they shouldn't care about them because anyone who doesn't understand what's going on deserves to get whatever happens to them. Stock trading is high risk, high reward, and that should be clear to everyone.

The problem is that hedge funds constantly benefit from a much lower risk due to market structures designed to stabilize the market. Many of the WSB people are willing to risk a big large loss in order to reveal this flaw of the system. Many of them will not be fine, and, if they're successful, some hedge funds will be bankrupt and all of them will be scared moving forward.

Re: Statement of SEC Regarding Recent Market Volatility

#784

Post by brootstrap »

Bedon292 wrote: post #315
the_local_host wrote: post #201

Earlier quoted context omitted.

> It boggles the mind people think hedge funds can't profit off a mad rush like this... How exactly would they do it? Shorting it again would involve calling the top for a stock whose price recently has been unpredictable, but very high. Writing options seems nuts for something this volatile. I guess they could "buy volatility" with a straddle but again what would the numbers have to be on this where they turn a prof…

Volatility makes the HFT's money. Hundreds of millions of shares are flying around the past few days. Thats not from a bunch of people buying and holding. They make money on fractions of a percent swings. They can make a lot of money on 50% swings. The other thing is, the price WILL go down eventually. Even if not today. A fund with billions of dollars can afford to sit on a short of GME at $400 for a long time. Long…

One of my neighborhood friends is a HFT guy and he says he makes bank off fractions of a dollar. Not all trading is equal obviously. But he said sometimes it's like 3,4,5 decimals places deep that he is watching the stock prices and trading

Re: Statement of SEC Regarding Recent Market Volatility

#785

Post by nairboon »

fairity wrote: post #674

I don't understand the current lessons being drawn by the public from this situation. I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt. Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued. The problem that GME highlighted is that it's too easy to p…

is this satire?

Re: Statement of SEC Regarding Recent Market Volatility

#786

Post by mrkramer »

mrkramer wrote: post #90
TeMPOraL wrote: post #33

Earlier quoted context omitted.

With the amount of media attention WSB has been gaining, this is setting itself up for "Wall Street versus The People" situation. It may be politically tough to go against the retailers now, particularly mid-pandemic and with all the other political comorbidities US is suffering from.

This is not about "Wall Street versus The People" or WallStreet vs Retail (small investors) it is about federal securities laws. And you know where the law is? In court. I think court needs to decide whether what is WSB doing illegal or legal.

I think court needs to decide whether what is WSB doing is* illegal or legal.

Re: Statement of SEC Regarding Recent Market Volatility

#787

Post by selectodude »

numair wrote: post #107

Okay kids, story time. After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honor…

He conveniently left out the fact that Lehman was the only bank that wasn’t helpful during the collapse of Long Term Capital Management, not that it changes anything. Basically the other banks and the NY Fed decided to send a fuck you for not cooperating ten years prior.

Re: Statement of SEC Regarding Recent Market Volatility

#788

Post by caffeine »

Ghostt8117 wrote: post #779
caffeine wrote: post #767

Earlier quoted context omitted.

This "wild new phenomenon" is just boring old market manipulation. The only thing new about it is that the perpetrator is a subreddit instead of a licensed broker/dealer or other regulated entity. The appropriate thing to do is for the SEC to subpoena Reddit and RobinHood, correlate trades with posts to prove intent to manipulate the price (which IS illegal), and charge every individual with market manipulation. Just…

Charge everyone with market manipulation the same way that everyone who caused the 2008 recession was charged? Sincere question, because if they decide to charge individual investors who commented on a Reddit thread with market manipulation after my generation witnessed the downfall of the economy due to sheer lies and blatant manipulation by banks, with no major charges against anyone of importance, I, at least, wil…

I am not against charging certain actors in the 2008 crisis with fraud and manipulation either.

The 2008 recession is not really a comparable event to the current GME short squeeze. It was rather a broad series of events, most of which were unfortunately legal, some of which were probably not.

In that case I would be in favour of charging the ratings agencies with fraud, and possibly the financial regulators with gross incompetence.

Edit: I don't see it as "big guys vs small guys". I see it as "law abiding people vs not".

So my reaction is not "its unfair to prosecute the little guy," but rather "we didnt get those criminals but at least we can get these criminals."

Re: Statement of SEC Regarding Recent Market Volatility

#789

Post by Unklejoe »

dleslie wrote: post #116
dkrich wrote: post #75

There’s a long history of similar occurrences that follow along a common line: whatever appears to support individual investors will be the path taken by politicians and regulatory bodies. Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to…

The FOMO is palpable. There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life. This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.

> This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.

Maybe, but I'm pretty well off (at least compared to the rest of the country) and I still feel the same way. It's primal if you ask me.

Re: Statement of SEC Regarding Recent Market Volatility

#790

Post by sosuke »

snowwrestler wrote: post #471
throwaway-571 wrote: post #302

Earlier quoted context omitted.

Is there a spoiler tag on HN ? These ones still hurt: There is a lot of thing one could have done "for the LULz" but decided to browse HN, Imgur or Reddit instead. - Bitcoin. I heard about it when it was still possible to mint it on CPU, but chose to run SETI@Home instead. - Bitcoin when it was at merely $9000. - Ethereum when it was going under $1. - Dogecoin like anytime before yesterday (up 6x or something today).…

The key to managing this FOMO for me is really committing emotionally to the concept of hindsight bias. We remember the winners we missed way more than the losers, because the winners are still present in our lives today, whereas the losers never became noteworthy (because they lost). But it’s extremely difficult to tell them apart ahead of time. So current me needs to give past me a pass... past me failed at somethi…

I have this unsupported idea that after I get a win I won't be as hard on myself for past errors. Like the 3 BTC I had to sell when it was at $3k.
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