[HN Gopher] SoftBank unmasked as 'Nasdaq whale' that stoked tech...
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SoftBank unmasked as 'Nasdaq whale' that stoked tech rally
Author : xoxoy
Score : 438 points
Date : 2020-09-04 14:44 UTC (8 hours ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| twblalock wrote:
| And the index funds followed right along. Perhaps index funds, by
| blindly following market trends, amplify bad actors' ability to
| distort the market.
|
| Of course, retail investors followed slavishly along too. So this
| isn't merely a problem with index funds.
|
| Also, all that said, tech stock prices today are still way up
| compared to when Softbank started buying options back in April.
| MiroF wrote:
| > And the index funds followed right along. Perhaps index
| funds, by blindly following market trends, amplify bad actors'
| ability to distort the market.
|
| Well of course index funds follow market trends. How is that at
| all surprising? They are literally _index funds_.
| twblalock wrote:
| The point is that blindly following market trends, when the
| market is being manipulated, is not a good thing. Yet it's a
| core feature of index funds. It's a big potential downside of
| index funds.
|
| In general, the standard retirement investing advice these
| days is to invest in a portfolio of index funds -- don't
| bother with active funds, and don't pick individual stocks!
| People who take that advice probably expect that they are
| investing in a slice of ownership in companies that will grow
| over time, not that they are enabling/following along with
| market manipulation and being suckered into buying overvalued
| assets. It makes index funds a lot less attractive as a safe
| investment for normal people.
| MiroF wrote:
| I mean, competitive, publicly traded markets like the
| stocks underling SPY are not manipulated long-term.
|
| Index fund investors are not being "suckered." People who
| get convinced that they can time the market or pay someone
| else to time the market are the ones who are "suckered."
|
| > index funds a lot less attractive as a safe investment
| for normal people
|
| As long as you aren't day trading, I don't see why this
| volatility ought to even be a concern for normal people.
| I'm not buying/selling based on 5% shifts in the market on
| a day-to-day basis.
| 1A--__--__--1A wrote:
| Thank god for "INSERT INTO blah VALUES (bleh) ON DUPLICATE KEY
| UPDATE boop = 1".
|
| from Corgi
| iammru wrote:
| They're acting like teenagers with a Robinhood account. I get
| they lost a lot of money but this looks like a hail mary attempt
| to recover from their bad investments.
| ganoushoreilly wrote:
| > https://newrepublic.com/article/156788/zero-hedge-russian-
| tr....
|
| Yep it looks like yolobro /r/wallstreetbets is their
| inspiration
| itsoktocry wrote:
| > _from their bad investments._
|
| Do they have any good investments?
|
| They were heavy into WeWork and WireCard. They have about $10
| billion into Uber. Lots of small oddballs like investing in Wag
| at $300MM valuation. Lost a bunch buying bitcoin at the peak.
| Now this.
| xenospn wrote:
| Wag wired those $300M back a few months ago.
| blueline wrote:
| they used to own 100B of alibaba
|
| i have to assume bytedance has/will work out favorably for
| them.. maybe im wrong there
| djmobley wrote:
| It was a $300m investment for a ~45% stake in Wag.
|
| Absolute madness.
| iav wrote:
| Unlike VC funds, SoftBank releases full accounting of the
| Vision fund quarterly, so this question is entirely answered
| here: https://group.softbank/system/files/pdf/ir/presentation
| s/202...
|
| They had 6 full exits generating $5B of gains, plus another
| dozen companies went public and the mark to market on the
| whole is a $3B gain. I don't see that they've ever invested
| in Bitcoin. The remaining portfolio is down about $5B on $60B
| invested - I have a lot of questions about how they are
| marking those securities, but surely it's similar to the VC
| model of "Mark to the last third party investment, even if we
| led the investment, unless something really bad happened".
| That's where the WAG and WeWork losses would be. So all in
| they still think they are in the black by $3B on $80B
| invested. Even if they are mis marking the private book by
| 20%, the fund would generate a 0.9x return or disappointing
| but not a complete disaster.
| valuearb wrote:
| It's very likely they are mismarking and those returns are
| overstated to some level.
| itsoktocry wrote:
| > _I don't see that they've ever invested in Bitcoin._
|
| Apparently it was a personal investment:
|
| https://www.cnbc.com/2019/04/23/masayoshi-son-invested-in-
| bi...
|
| > _the fund would generate a 0.9x return or disappointing
| but not a complete disaster._
|
| Definitely disappointing, with a nearly exclusive
| biotech/tech portfolio during once of the biggest tech bull
| runs ever.
| iav wrote:
| True, and if I recall Apple is even a "small" LP in the
| Vision Fund. So Tim Cook could have bought his own stock
| but instead thought giving a few billion to Masa was a
| better trade! But hindsight is 20/20 and we don't know
| what the fund is ultimately going to return. I have
| friends who work there - the sad part is the amount of
| sheer work that had to be done to keep the returns where
| they are today, restructuring old investments and
| squeezing every drop from the winners to make up for the
| total write offs.
| thrwyoilarticle wrote:
| $20 million to $150 billion in Alibaba would be considered
| pretty good.
| netsharc wrote:
| Confusing luck with genius, and believing with said genius
| you can repeat such performance...
| johnwheeler wrote:
| This is so sad. Masayoshi Son is an ego investor trying to prove
| himself with the likes of Warren Buffett by making massive bets
| in an industry he doesn't understand. Coming off the WeWork
| debacle, he's gambling the money of others' for the sake of his
| own reputation. Unlike Buffett, he's largely unproven and using a
| far greater percentage of O.P.M. (Other peoples' money) than his
| own.
| neonate wrote:
| https://archive.is/jnChJ
| xwdv wrote:
| So what happens next? I unloaded a bunch of tech positions
| yesterday and am wondering what to do with all the dry powder.
| fukpaywalls wrote:
| There's a fucking paywall on this article! it should be banned
| from here.
| [deleted]
| dharma1 wrote:
| https://twitter.com/sentimentrader/status/130191483614261248...
|
| "That FT article (following @zerohedge ) on Softbank suggests the
| fail whale bought "billions" of call options.
|
| The real story is that Softbank is dwarfed by retail traders, who
| spent $34 BILLION in call premiums in a month.
|
| Unless Softbank cuts its orders into 10-lots, that is."
| redisman wrote:
| I wonder could it be possible that we're experiencing a new
| kind of bubble caused by the confusing data from all the
| amateurs entering the market and causing the ML algorithms to
| think that things are amazing. The real world surely doesn't
| look amazing at the moment.
| mschuster91 wrote:
| Most of the amateurs go after the big safe bet - and that is
| Google, Amazon, Netflix, Facebook, Apple and Tesla. The first
| five can't lose much in value, people are buying their
| services like crazy (especially Amazon and Netflix given that
| 'rona blocks their physical counterparts and it looks like
| this is gonna be a long wait until 'rona is over) and they
| are enjoying generally wide margins (especially Apple).
|
| Tesla is a bit more of a risky bet, but they sell actual
| cars, and by far have more expertise in electric vehicles
| than _all_ their competition combined, dito for their
| automated driving.
|
| Every other stock? Phew. They're all in for a ride... if I
| were to guess I'd bet on food-related brands to stay
| relatively safe as people still do need to eat, but
| everything related to travel and heavy industry has a
| _really_ scary future ahead due to 'rona plus environmental
| concerns.
| graerg wrote:
| > The first five can't lose much in value
|
| Allow me to introduce you to my friends, OTM and theta...
| qeternity wrote:
| I'm not sure what OTM has to do with anything and theta
| is certainly not the driver here most of the time (except
| at expiry when theta decay drives hedging).
|
| This is gamma. Pure and simple. The double edged sword of
| convexity.
| jachee wrote:
| It's like an amateur poker player sitting down with WPT pros.
|
| The pros don't know how to read the amateurs, who make
| nominally suboptimal plays, and can be disrupted briefly.
|
| All part of the market staying irrational.
| pfraze wrote:
| I once sat down to a $2/$4 limit poker game in Vegas. The
| limit was so low that you knew a maxed pot was unlikely to
| ever bankrupt you. It's meant to be for amateurs without
| much cash for gambling (me).
|
| Some guy at the table had figured out that with enough cash
| you can just max every bet and let the odds dictate his
| results. Because other players were folding based on the
| quality of their hand, they were missing opportunities to
| hit on the river which he got. This devolved the game from
| reading your opponent to reading the inherent odds of card
| hits.
|
| It's not the exact same game, but when I think about the
| market being irrational, I think about that guy. He made
| the game inherently irrational. EDIT: or, at least, he
| played it irrationally, causing the usual signals to be
| removed from play.
|
| The table beat him, but since he forced the game into
| playing the odds, the only effective strategy was to play
| conservatively. There was no point in trying to read his
| hand or bluff him.
| [deleted]
| guardiangod wrote:
| Why do most posters here think SB lost money with this? They've
| definitely _made_ money, a lot of it. I'd be damn if they didn't
| double or even triple.
|
| The article claims SB started their moves in April ($4 billion in
| FAANG stocks and another $4 in _call_ options) and continued up
| to last week. Even if SB lost all of Aug's gains, they'd still
| come out ahead with the gains from April-July. The retail
| investors poured in over $32 billion into the market in the same
| span.
|
| Now whether this is good old smart investment or blatant stock
| manipulation, is a different story. Though I got a feeling
| Trump's DoJ will not exactly rush to crack down on SB.
| Traster wrote:
| It's almost certain the paper value of their investments is up
| - if you drive $4Bn into a market, the prices are going to go
| up. The question is whether they can actually extract that
| value from the market. More likely, they now have a decent
| paper profit but the first sign of movement out of their
| position will involve a precipitous drop.
| fataliss wrote:
| Gotta fuel these flaky startup investments somehow! I always
| wondered how this company was still alive despite terrible
| investment track record. I guess they are at least good at
| financial engineering and market manipulations...
| netsharc wrote:
| Yeah, losing a few billion dollars (not sure how many they
| did lose) is not that bad if you still have several billion
| dollars to manipulate things with...
| z3ncyberpunk wrote:
| Jokes on us, the whole economy is based on exploitation and
| manipulation!
| synaesthesisx wrote:
| This is hands down the most entertaining thing I've read today.
| SoftBank is responsible for the spike in gamma across the board,
| dumping massive amounts of money into OTM calls. Retail (WSB)
| speculators see unusual options flow, end up piling in on calls
| and amplify the effect. Market makers are forced to buy the
| underlying in order to delta hedge, and the price goes up even
| higher. Rinse and repeat...the positive feedback loop continues
| and stocks actually only go up.
|
| The financial system is far more broken than people realize.
|
| I'm guilty of taking advantage of this myself, but it's basically
| been free money for the last several months. Up until yesterday
| at least...
| maest wrote:
| > basically been free money for the last several months
|
| Can you please not say stuff like that?
|
| You're only calling it "free money" with the benefit of
| hindsight. And even then, it's still not "free", since you got
| a big 5% drop in one day.
| MiroF wrote:
| People are just ill-informed about markets in general,
| comments like this make it pretty obvious.
|
| "Free money" in a publicly traded market, yeah sure. "Anyone
| could have seen that fall coming", again, yeah sure.
| elevenoh wrote:
| Exactly.
|
| 'Can you please not confidently project what is at best
| hindsight-bias? This isn't a palto alto meetup aka
| signalling-fest'
| tarsinge wrote:
| As an outside observer, I used to believe the stock market was
| solid and mostly rational, and that obviously it could not be
| influenced by a single actor or a subreddit community, contrary
| to a "playground" like the Bitcoin market. I get the feeling
| everyone says they see the emperor's clothes in the stock
| market reliability, anticipating everything, but in reality
| it's just short term gambling and post rationalization.
|
| Edit: punctuation
| di4na wrote:
| Part of that is due to the fact that most of the market is
| now passive investment. Being pension funds, endowment, etc
| etc.
|
| The latest numbers i have seen is that 80% of the market
| shares is controlled by institutional investors.
|
| That is a looooot of the market tied to a set of investors
| that cannot bet on anything else than up due to their own
| long term problems. At this point, the market is better
| viewed as a gigantic retirement fund/saving account than as a
| way to decide on price.
|
| Once you look at the market that way, a lot more of the
| behaviours make sense.
| MiroF wrote:
| Why do institutional investors undermine price discovery?
| This comment doesn't make sense to me.
|
| > The latest numbers i have seen is that 80% of the market
| shares is controlled by institutional investors.
|
| Institutional investor != passive investment.
|
| As long as trades are happening, there is some sort pricing
| mechanism.
| rubber_duck wrote:
| I'd guess there is there is too much money in it due to
| the fact that central banks killed interest rates and
| started buying government bonds as needed - where pension
| funds would hold those they now need to search positivie
| returns and there's just not enough good bets there -
| would explain why the valuations are sky high
| joemazerino wrote:
| A rising tide lifts all boats. If the majority of the money
| in the market is on autopilot then why not fluctuate it?
| jandrese wrote:
| Theoretically the disconnect from reality will eventually
| catch up you and the whole system will suffer from a
| major correction.
| [deleted]
| WrtCdEvrydy wrote:
| The stock market is just hysteria fueled by 401k retirement
| funds.
| dheera wrote:
| I always saw the stock market as governed by heavy hands and
| hype, and always assumed that investors need to MOSTLY base
| their financial models on a simulation of heavy hand agents
| and hype rather than fundamentals.
|
| If we wanted a stock market based on fundamentals, it should
| not be a free market. Instead, the power to set prices should
| be left to qualified experts in each stock's industry, and
| stocks should be allowed to change hands only at those
| prices. The experts should come from both scientific and
| business backgrounds and not analysts who spend their lives
| on Wall St. and are so incredibly out of touch with
| technology. Unfortunately the reality of the system we have
| created is that the more knowledgeable you are about
| something, typically the less money you have, and the more
| money you have, the less knowledge you have. We need to
| reverse that.
| MiroF wrote:
| > Instead, the power to set prices should be left to
| qualified experts in each stock's industry
|
| https://www.newyorker.com/magazine/2005/12/05/everybodys-
| an-...
|
| > Human beings who spend their lives studying the state of
| the world, in other words, are poorer forecasters than
| dart-throwing monkeys, who would have distributed their
| picks evenly over the three choices.
| dheera wrote:
| "He picked two hundred and eighty-four people who made
| their living "commenting or offering advice on political
| and economic trends," and he started asking them to
| assess the probability that various things would or would
| not come to pass, both in the areas of the world in which
| they specialized and in areas about which they were not
| expert"
|
| This is a little different from what I was suggesting.
| Predicting the future is an inherently difficult task for
| experts and I'll give you that.
|
| Rather I'm suggesting that experts set a _valuation_
| based on known facts about the company and the state of
| the industry.
|
| Here's an example. I work in the self driving industry. I
| always _knew_ based on state of the art tech that Tesla
| couldn 't possibly meet their aggressive timelines of
| full self driving. I think it's realistic one day, but
| not on the timeline they claimed a couple years ago.
| However, the reality is that the public is duped into
| thinking they'll be on time, and so what happens? I have
| to base my investment based on what the public thinks of
| Tesla, rather than what I think of Tesla.
|
| Here's another example. Uber car crashes. NVIDIA stock
| crashes the next day because the public thought it had
| something to do with NVIDIA GPUs. I, and all other ML
| experts should have been able to call this out and freeze
| the price of NVDA and say "we have it on good authority
| that NVDA did not do anything to cause that car crash".
|
| The current way the markets work shifts the paradigm from
| "invest in what you believe in" (which I is the way the
| world should work) to "invest in what you don't believe
| in but what everyone else is fooled into believing in".
|
| I mean, the incentive structure is such that I've even
| bought stocks in many companies I hate, and sold or put
| stocks in companies I believe in from my scientific
| background on first principles. Somehow that isn't the
| way things should work.
| MiroF wrote:
| > Uber car crashes. NVIDIA stock crashes the next day
| because the public thought it had something to do with
| NVIDIA GPUs. I, and all other ML experts should have been
| able to call this out and freeze the price of NVDA and
| say "we have it on good authority that NVDA did not do
| anything to cause that car crash".
|
| See, but you _don 't actually know_ that's why the price
| of nvidia fell, nor do you know that it is an irrational
| reason for the nvidia stock to fall. Just because you
| work in the industry doesn't make you an expert on
| pricing.
|
| There's lots of problems with this idea (it's incoherent
| wrt supply&demand, why should people closely affiliated
| with an industry be the one's setting prices, prices
| should reflect future expectations not current
| valuations).
|
| > Predicting the future is an inherently difficult task
| for experts and I'll give you that.
|
| But that's exactly what _prices_ do. Why would I buy any
| stock at all unless I 'm making a forward prediction
| about what is happening?
| dheera wrote:
| > Why would I buy any stock at all unless I'm making a
| forward prediction about what is happening?
|
| That's exactly what I'm proposing we should change. We
| should be trading on a company's ability to make the
| world a better place. That would align incentives across
| people in a much better way than earnings reports. It
| also, incidentally, ensure that a company's profit
| structure is designed to align with its mission rather
| than align with some arbitrary earnings report deadlines.
|
| I realize that metrics for this are hard to design, but
| we're in the 2nd millenium A.D. and it's okay for us to
| revise how we think about money.
|
| I believe in a future of clean energy electric power, and
| it's f*ed up that I can't always invest in it because
| there are times when investing in oil gets me more $ that
| I can use to improve my own personal clean energy efforts
| while investing in electric would cause me to be at high
| risk of losing money, and therefore depend on oil because
| it's cheaper. That's a really messed up, convoluted
| system right there.
| MiroF wrote:
| > I realize that metrics for this are hard to design, but
| we're in the 2nd millenium A.D. and it's okay for us to
| revise how we think about money.
|
| It's not just that the metrics are "hard" to design. It's
| a question of why would I buy stocks based on a company's
| ability to make the world a better place. What makes the
| "stock" piece of paper worth more when the company does
| more to make the world a better place. For real-life
| stocks, it's the expectation of future
| buybacks/dividends. For your metric, it's unclear why
| anyone would participate.
| dheera wrote:
| > why would I buy stocks based on a company's ability to
| make the world a better place
|
| I'm precisely proposing that we change the incentive
| structure in a future version of the economy such that it
| _would_ benefit you to invest in a company 's ability to
| make the world a better place.
|
| That would eliminate OP's problem, among lots of other
| things.
|
| I'm proposing that the _role_ of investors should be
| fully aligned with the role of scientists and engineers,
| and the incentives should be designed such that that is
| the case.
|
| Captialism 2.0, if you will. It's a quarter-baked idea,
| and there are lots of questions to answer, but I'd like
| to kickstart and encourage more thought and discussion
| about a future revamped economic system that aligns
| incentives better than what we have today.
| blackearl wrote:
| I don't know how much or how little influence things like
| Robinhood and WSB have but it sure is entertaining to read
| about. I'm just hoping my conservative retirement investments
| don't get tanked for the lols
| JumpCrisscross wrote:
| > _how much or how little influence things like Robinhood
| and WSB_
|
| Every attempt at seriously measuring this, and there
| haven't been many I've found that can be publicly shared
| [1], found close to negligible levels of broader-market
| effects.
|
| $4bn in options buying, on the other hand, will do it.
|
| [1] https://ofdollarsanddata.com/robinhood-trader/
| ra7 wrote:
| With the way the market moved last few weeks (especially
| AAPL and TSLA), you could be forgiven to think the
| Robinhood effect was real. Especially when people like
| Matt Levine and even WSJ starts talking about it. People
| working from home, nowhere to spend money, seeing market
| news everyday and then jumping on to the most popular app
| to trade - all very believable for an unsophisticated
| "investor" like me.
|
| I remember seeing a post on r/options this week about
| exactly this - large volume OTM calls causing MMs to buy
| stock and inflate price. This news has been very
| interesting in light of that.
| MiroF wrote:
| > all very believable for an unsophisticated "investor"
| like me.
|
| Yeah, the problem here is that irrational picks by these
| people working from home are just opportunities for
| arbitrage by the institutional investors, who stabilize
| the price.
| JumpCrisscross wrote:
| > _large volume OTM calls causing MMs to buy stock and
| inflate price_
|
| I'm a former options market maker. Seeing large volumes
| of retail flow is very different from seeing a giant
| institutional order. It affects what goes into the market
| versus gets internally crossed and what gets hedged and
| to what degree and how.
|
| Individual investors have a moderately bad track record
| day trading. They have an _abysmal_ one with options. I'm
| a decade out of the business, but we almost always
| defaulted to taking retail flow at risk.
| ashtonkem wrote:
| Interacting with traders would have broken you of that
| illusion too. Professional traders are much more prone to
| group think than they'll ever admit to, which occasionally
| causes the market to do sub-optimal things.
| Slartie wrote:
| I am more and more coming to the conclusion that a huge
| portion of susceptibility to groupthink even seems to be a
| central requirement to be a "good" trader (as in: one who
| outperforms the market).
|
| If you just go with the trend most of the time, you take
| part in a self-amplifying hype cycle that pushes all
| participants' equities higher. Whereas if you try to
| "outsmart" the group, you will fail most of the time, even
| if you might be right in your skepticism, because stock
| prices aren't strictly based on actual objective reality,
| but more on the perception of reality by most market
| participants.
| woeirua wrote:
| The efficient market hypothesis is the biggest lie in modern
| history. Bubbles don't happen in efficient markets.
| MiroF wrote:
| > Bubbles don't happen in efficient markets.
|
| But how do you know a bubble ahead of time?
| bumby wrote:
| I'm reminded of some research I tried to get published a
| while back. One editor comment came back with a suggestion
| to reject simply with "this appears to contradict the EMH."
| No further explanation.
|
| Well, no shit. It said so right in the introduction. I
| think this is what's called "theory induced blindness"
| [deleted]
| oso2k wrote:
| I am reminded of the movie Pi [0].
|
| [0] - https://en.wikipedia.org/wiki/Pi_(film)
| a13n wrote:
| The stock market can remain irrational longer than you can
| remain solvent.
| donkeyd wrote:
| God, this has been so true for me. I was trading puts on
| the massive increase in US Covid cases, but stocks just
| kept going up. And now we're hitting ATHs while economists
| are predicting the worst GDP decline ever. Gold and Stocks
| are both rapidly rising, which isn't really logical, since
| Gold is a save haven, usually.
|
| I looked back at gold vs stocks and the last time stocks
| and gold rose at approximately the same speed, was just
| before the 2008 crash.
| MiroF wrote:
| > US Covid cases, but stocks just kept going up
|
| Just because you don't understand why the market is
| priced a certain way doesn't mean the market is
| irrational.
|
| Perhaps stocks went up because of the expectations
| generated by past Fed policy stances post-2008.
| vkou wrote:
| The explanation for your conundrum is that the value of
| fiat currencies is dropping. It's why gold and stocks can
| both be going up.
|
| And no, this is not due to inflation (Which is near-
| zero). This is due to QE, and easy credit.
| JBiserkov wrote:
| >which isn't really logical, since Gold is a save haven,
| usually.
|
| I don't know anything about anything, but it seems to me
| this is a logical consequence of inflation? Purchasing
| power of $ goes down, prices (of everything) go up.
| arcticbull wrote:
| Inflation is on track for 0.44% annualized in 2020, about
| 1/4 of an average year due to the reduced velocity of
| money caused by the downturn more than offsetting the new
| money being printed.
| space_fountain wrote:
| Is there a way in which finical assets can inflate more
| the basic of goods that make up inflation metrics? Is
| gold even part of the index?
|
| Like if all that new money isn't being used to buy things
| like food or even housing that factor into the inflation
| index than wouldn't we see something like this where gold
| and the stock market inflate because that's where the
| cash is going?
| [deleted]
| roenxi wrote:
| At a given instant in time, each unit of currency has to
| be owned by someone. So if the money supply increases by
| 10%, by the pigeonhole principle, there is at least one
| entity with 10% more money in one of their accounts.
|
| Now I'll buy the idea that isn't necessarily going to
| cause shortages and price rises in consumer goods, but
| the idea that it doesn't cause changes in asset prices is
| too much. Are these rich people supposed to be idiots?
| There is no return on cash and new money is being created
| at a fast clip.
| Der_Einzige wrote:
| Not only is inflation extremely low, but we were at
| serious risk of a deflationary spiral without all the
| funny-money that the feds are pumping into the economy.
| Central banks introduced liqudity to make sure deflation
| did not happen.
|
| Foreign demand for the dollar is at all time highs.
| People forget this and don't think about the impact that
| this has on currency prices.
|
| Also, the "inflation is actually happening they just
| don't measure it right" crowd are delusional. Maybe they
| were right before covid, but they're extremely wrong now.
| dlp211 wrote:
| What inflation?
| Rury wrote:
| The inflation in asset values (e.g. equities / real
| estate / gold).
|
| People incorrectly assume inflation means "the price of
| _everything_ goes up ". The problem word here being
| _everything_.
|
| Why? Well because prices aren't merely dictated by
| supply, but rather supply & _demand_. Simply comparing
| inflated money supply to the good supply is naive, as it
| ignores factor in the demand for different goods.
|
| As so, for a dumb example, it's entirely possible to have
| inflated stock prices but not see inflated sock prices,
| if all the extra money is chasing stocks, and not
| socks...
| layoric wrote:
| This makes a lot of sense, thanks for the explanation!
| onlyrealcuzzo wrote:
| CPI conveniently doesn't measure asset prices.
|
| Inflation has been "stubbornly low" for 20 years while
| asset prices have outperformed historical averages the
| entire time.
|
| Asset prices seem to have diverged from the real economy
| because assets are primarily funded with debt (real
| estate, corporate investment) which has been artificially
| priced lower, while goods are paid with earned income
| which hasn't been manipulated.
| MiroF wrote:
| But why is general asset inflation problematic? There's a
| pretty clear reason consumer good inflation is bad.
|
| > Asset prices seem to have diverged from the real
| economy because assets are primarily funded with debt
|
| Or maybe it's because with rising productivity, capital
| has become more valuable over time.
| maerF0x0 wrote:
| Monetary inflation leading to shifts in trading rates for
| other assets. USD is down against many other currencies
| lately (ie I checked CAD, EURO, GBP)
| MiroF wrote:
| > Monetary inflation
|
| It's incorrect to refer to monetary inflation as just
| "inflation." If you're talking about price inflation,
| we're not seeing that yet - although 5 year inflation
| expectations are popping back up again [0]
|
| So far, it's looking like the Fed is doing as best as
| could be expected.
|
| [0]: https://fred.stlouisfed.org/series/T5YIE
| microcolonel wrote:
| FWIW the GDP decline may have been overblown, and it
| seems at least plausible that it will be followed by GDP
| spike, as production fills in unmet demand at higher
| prices.
| maerF0x0 wrote:
| Somethings will get filled later, eg: a rush on wedding
| venues when folks catch up with delayed plans...
|
| Somethings are lost opportunities, eg: _today's_ lunch
| being provided by safeway + my kitchen vs a restaurant.
| bxparks wrote:
| Great quote. Aside: I thought it originated from John
| Keynes, but it looks like that earliest written record goes
| back to 1983 to a financial analyst named Gary Shilling:
|
| https://quoteinvestigator.com/2011/08/09/remain-solvent/
|
| "Addendum: A small number of libraries apparently hold a
| transcript from a 1983 seminar during which Shilling
| reportedly employed the adage."
| hinkley wrote:
| You can find plenty of people who will argue vehemently that
| it isn't legalized gambling on top of a pyramid scheme. One
| that can collapse faster than you can say "bank run".
|
| We were talking about banks 'making money' by giving out
| loans the other day. The banks actually have collateral and
| the fractional reserve. The only 'money' in the stock market
| is during active trading. Every penny of it leaves after the
| last trade is settled. At night the Dow is only worth the
| liquidation value of the companies (and that's if there are
| only common shares, otherwise forget it), and that's a
| smaller fraction than either the collateral or the fractional
| reserve banks maintain. Let alone both together.
| jayd16 wrote:
| Do people not realize the market can be easily manipulated?
| Do they just think all the regulation was made up for no
| reason?
| arcticbull wrote:
| I've been making a solid salary selling near the money 0.3
| delta S&P futures options (puts) 3X weekly. Let's see if the
| party continues :)
| esdfasdf wrote:
| How did this strategy fare during the last couple days
| though? Wouldn't weeks or months of profit have been wiped
| out? Though I guess if it's done for a long enough time it's
| probably ok
| coffeemaniac wrote:
| This will work for a while until it blows up your whole
| account! Be careful.
| naveen99 wrote:
| Options are crucial for price discovery. naturally their value
| goes up in the face of uncertainty. As a mm you don't have to
| buy the underlying to cover short calls, you can also buy less
| far out calls, as long as the black scholes price for the
| spread is favorable.
| smallnamespace wrote:
| A particular MM might lay off the call risk by purchasing a
| call, but all they're doing is passing the risk on to a
| different MM.
|
| There aren't that many natural vol sellers (hedge funds,
| mostly? and implicitly the Fed), so MMs as a group have the
| function of converting implied vol into realized vol via
| their delta hedging activities.
| mam2 wrote:
| But are their influence really more than retail investors ?
| Especially the ones from wallstreetbets / robinhood who came
| after / during the pandemic. At the end of the day all these
| people only bought options, nothing special.
| fakedang wrote:
| I think it's safe to say that SoftBank was the trigger, by
| buying up the meme stocks that are relatively safe bets
| (Tesla, Amazon, etc), which WSB/Robinhood traders had their
| eyes on. The Tesla/Amazon traders amplified the signal, and
| their gains posted everywhere on Twitter, Insta, Reddit, etc.
| encouraged people to plow more money into the markets,
| especially in the direction of the meme stocks. Then as S&P
| started gaining, people noticed and just continued plowing
| money into the index. Which is why outside of Nasdaq, tech
| and S&P, there are hardly any movements in the market.
|
| Buying options is still visibility, encouraging would-be
| traders to register on Robinhood and buy some amount of
| stock. For instance, my old college mate, a current PhD
| candidate, joined Robinhood and started trading around March.
| And of course, when he asked me for recommendations, I told
| him to play safe and go with the S&P stocks and resilient
| tech stocks. Then of course, he went full on WSB mode, and
| now he's "eating tendies while his wife is hanging out with
| her boyfriend".
| vkou wrote:
| I wouldn't put both Tesla and Amazon in the category of
| "Meme stocks that are relatively safe bets".
|
| Amazon's not a meme, and Tesla's not a safe bet.
| fakedang wrote:
| From a value perspective, apart from the price, they do
| have everything one would expect from a "quality" firm -
| significant brand moats, strong management, recent
| developments, etc.
| e_dv1 wrote:
| They both have in common that they are a technology stock
| with a familiar name, particularly ones that have had a
| very good stock market run in the last 10 years.
|
| I agree though that due to what appears to be a bubble,
| these investments aren't that safe at the moment. It
| appears that these type of stocks have benefited recently
| by retail investors entering the market and piling in. (
| https://thehill.com/policy/finance/510796-are-trading-
| apps-p... -- though, as the article points out, the
| Robinhood investor bubble is smaller than the effect of
| the Fed's QE etc. ) Under normal valuation, Tesla at this
| point I don't think would be considered "speculative" --
| risky, but not as risky as some. But a P/E ratio of 1000+
| even after this recent dip is IMHO pretty difficult to
| justify.
|
| r/wallstreetbets is pretty unreal to me -- many people
| are focusing on high-risk _options_ on these heavily
| valued stocks, and (by the comments) appear to be putting
| a lot of their "eggs" in only one or two "baskets", to
| use the popular phrase. It's not ending well for some of
| them, judging from some of the posts.
| edoceo wrote:
| And the feedback loop for loss porn doesn't help either.
| Oops, I lost 10k, can I have karma pls?
| fakedang wrote:
| Tesla was growing before the crisis. Largely due to their
| Chinese gigafactory, which is a pretty big deal, since it
| shows a.) They will be in the good books of China for the
| time being. Till their eventual tech ripoff at least. b.)
| They have the potential to gain the same brand value that
| Apple accrued in China. Definitely don't deserve the
| current valuation though - I was lucky I happened to be
| holding some when we bought some after buying my first
| car.
|
| The kind of options plays on WSB are insane tbh. I don't
| mind putting my eggs in one or two baskets, as long as
| they are stocks of steady companies, but options? No way.
| DarmokJalad1701 wrote:
| I doubt they care much about the "eventual ripoff". Their
| strategy is to out-pace competitors through innovation.
| It is the same reason they open sourced almost all their
| patents.
| Mayzie wrote:
| I really wish I knew enough about the stock market to
| understand your comment, but no matter how much I try, it still
| seems to convoluted and messy.
|
| Is there a good resource out there to help people like me who
| are an absolute beginner?
| MiroF wrote:
| These people are gambling and these comments are full of
| survivorship bias. Just passive invest, don't try to time it.
| ra7 wrote:
| This article is mostly about options trading. If you take a
| basic options course and learn about greeks, some of it will
| start to make sense. Tasty Trade and TD Ameritrade offer free
| courses, though you might need to open an account for the
| latter.
| antoineMoPa wrote:
| You mean like investopedia?
| redorb wrote:
| Tasty trade can teach you a lot of the basics... Start slow
| (please) with money you're prepared to lose
| youeseh wrote:
| They must have not poured any money into Slack calls.
| fullshark wrote:
| Assuming they actually have this ability to pump the markets,
| what stops them from doing it over and over again infinitely?
| Market makers NEED to hedge right? Would people catch on and
| they couldn't sell their inflated calls at the end of the ride?
| yesplorer wrote:
| That will be illegal because that's market manipulation.
| fullshark wrote:
| So you can do it once? Or do you believe the SEC is going
| to come down on SoftBank here?
| nuclearnice1 wrote:
| Valuation? At some point the other holders of TSLA & GAFA
| sell.
| morpheos137 wrote:
| So much of the financial "froth" could be elimanated by a law
| that taxed taking speculative positions in a punitive way and
| relatively rewarded buying and holding. If you compare the
| function of the market 100 years ago (owning significant stock
| mean't you had some degree of interest in the long term
| prospects of a company) versus today you can see the problem.
| Financialization of the economy actually doesn't produce much.
| It mostly transfers money from productive uses or away from
| more equitably income distribution in the population to
| speculators and irresponsible parties like Softbank and the
| harebrained ideas they invested in.
| RhysU wrote:
| You mean like short vs long term capital gains being taxed at
| different rates?
| MiroF wrote:
| > taking speculative positions
|
| It's hard to define what a speculative position is.
| Incentivizing buying and holding would just be intentionally
| make markets illiquid, which a. let's bigger players take
| larger profits more easily and b. leads to inefficient
| pricing
| manigandham wrote:
| Why is the froth/volatility bad though? You're not forced to
| participate and there are other investments for every risk
| level.
| dharma1 wrote:
| So what popped the bubble?
| [deleted]
| techdevangelist wrote:
| I think it's interesting it popped 24 hours prior to this
| story, like reporters reaching out for comment triggered a
| change of strategy. Pure speculation of course, the holiday
| weekend tends to cause sell offs as well.
| davedx wrote:
| Time to load on up SQQQ!
| elevenoh wrote:
| >but it's basically been free money for the last several
| months.
|
| What does that even mean... lol
|
| Rise != 'free money'.
| jb775 wrote:
| Isn't this considered market manipulation?
| hinkley wrote:
| Buffet has complained about how he has to be subtle to move in
| or out of positions because he is so big he creates his own
| weather. He seems to care whether he makes money from making
| good choices versus brand recognition. It sounds like he has to
| use third parties to do big moves and of course they are going
| to want to take a bite. Nobody is going to move millions of
| dollars of inventory for you out of the goodness of their
| hearts.
|
| Someone who does not give a shit can do a lot of damage without
| technically breaking the law.
| esoterica wrote:
| > He seems to care whether he makes money from making good
| choices versus brand recognition.
|
| No, no, no he doesn't. He has to be subtle so people don't
| realize what he's doing and pile in ahead of him and drive up
| the price before he has a chance to build up a position. It
| has nothing to do with "caring" about how he makes his money.
| ramzyo wrote:
| Genuinely curious, has Buffett said this before in an
| interview somewhere or have you asked him personally? OP
| wrote "seems to," but your response suggests more
| confidence.
| valuearb wrote:
| He has been quoted numerous times about avoiding having
| people front-run him over the last 50+ years. He
| negotiated special disclosure rules with the SEC at one
| point to avoid disclosing new positions quickly, IIRC.
| Red_Leaves_Flyy wrote:
| Would love a source on buffets disclosure rules.
| itsoktocry wrote:
| > _SoftBank is responsible for the spike in gamma across the
| board, dumping massive amounts of money into OTM calls._
|
| Lots of speculation that they aren't the only ones. The recent
| run up in TSLA looks suspicious as well; huge volume on way OTM
| call buying.
|
| Here's a random reddit thread from months ago:
|
| https://old.reddit.com/r/stocks/comments/hk7y1o/tesla_infini...
| siruncledrew wrote:
| TSLA calls have been ridiculous the last few months. Buy >50%
| OTM calls with expirations 1-2 months out and still make
| money. No wonder it looks like free money.
| missedthecue wrote:
| Looks like SoftBank bought $4 billion in options over the
| summer. Retail accounts purchase $34 billion per month in
| options so I'm not buying into the theory that SoftBank is to
| blame for this.
| mylons wrote:
| source on retail investors? I also believe retail is having
| a larger effect, I just haven't seen this number before.
| arcticbull wrote:
| If that's true, that's 34B in the total options market,
| this 4B is targeted at like 5 companies.
| mightytravels wrote:
| Keep in mind that 4 billion (likely Softbank invested more)
| means 100x in stocks. i.e. a 10 billion investment in call
| options 'generates' 1 trillion in extra market cap (because
| of dealers hedging). That is 1/3 of AMZN or 2x TSLA and so
| on at current (not March) valuations. Such concentrated
| volume CAN move big stocks and in turn indexes.
|
| Even if the market let go a bit now - Softbank has
| literally cornered the market for so long - they still make
| a killing in the process.
| unwoundmouse wrote:
| how are retail options different from softbanks options.
| if there are 34 b of retail calls purchased that would
| dwarf softbank if done in the same time period
| foota wrote:
| I don't think the retail purchases were as concentrated.
| ganonm wrote:
| This is totally incorrect. Individual options contracts
| are indeed written against 100x of the underlying asset
| but this has absolutely nothing to do with the
| relationship between the price (premium) paid per
| contract and that of the underlying share. To given an
| example, you could find a put option whose premium is
| actually equal to the current market value of the
| underlying (i.e. a merely 1 to 1 relationship) or one
| that's so far out of the money that it's a 1 to 1000
| relationship. Without knowing more details about the
| precise options SoftBank bought, we cannot infer how much
| market cap in underlying shares the $4bil corresponds to.
| encoderer wrote:
| The concept of notional value is more complicated than
| that. Dealers don't hedge the full notional value they
| hedge only enough to cover the delta and gamma on the
| option.
| mightytravels wrote:
| True but at the current high implied volatility of the
| affected symbols the delta/ gamma has been high --> lots
| of hedging needed. Big loop.
| arcticbull wrote:
| Correct, but not 100:1 hedging.
| kolbe wrote:
| Retail buys that much total, not net. And retail mostly
| buys puts as a hedge to their existing position. SoftBank
| introduced $4b of premium directed in the same direction
| for new deltas.
| hinkley wrote:
| Hasn't Elon been complaining about short sellers for a long
| time? Shorts can do fucked up things to trade volumes when it
| comes time to pay up.
| maest wrote:
| Every public company CEO complains about shorts. It's
| because short sellers depreciate the stock value by
|
| a. creating more supply
|
| b. signaling the stock price is overvalued.
|
| Both of these things annoy those whose compensation is
| strongly tied to stock price performance.
|
| > time to pay up.
|
| I'm not sure what you mean by this. Are you talking about
| short squeezes?
| hinkley wrote:
| Squeezing is what happens to short sellers who are wrong.
| I suppose "when they get squeezed" would have been more
| accurate, but I was failing to put that into words.
| maest wrote:
| "wrong" is a very loaded word to use in this context and
| it's not clear what you mean.
|
| Wirecard short sellers were "right" (as in their thesis
| was corect) for many years before the stock price
| reflected their beliefs. Some of them probably got
| squeezed (and quite a few got in trouble with various
| financial authorities).
| samatman wrote:
| It's either a bad bet or it isn't.
|
| This encompasses both direction and duration, so getting
| one of them wrong, is still wrong.
| paulpauper wrote:
| Entertaining and wrong. confuses cause and effect. The surging
| stock market leads to the rise in implied volatility, not the
| other way around. This s a common occurrence and not indicative
| of manipulation. This pattern happened in 1997-2000 too. The
| S&P 500 and volatility rose together for 3 years strait.
| marketgod wrote:
| Yeah seriously. If someone knew why stocks are failing they
| would be rich. Similarly, why they are rising. The only
| reason is someone is buying and someone is selling, any other
| reason is to get clicks.
|
| Yesterday's drop you could see it coming 5-days ago but if
| you had gone in 5-days ago you would not be making money
| today, so it's hard to just time it that well. RSI was high,
| volume was drying, many other indicators.
|
| Edit: To add let's not forget there was a huge run on Tech so
| everyone is re balancing. This is a BTD opportunity.
| abduhl wrote:
| The standard response to anyone who posts something like
| this is still "post positions or stfu," correct?
| edoceo wrote:
| Not here. And if you try that on WSB you'll need more
| name-calling.
| marketgod wrote:
| Here were my positions yesterday. I got hit up on
| AAPL/TSLA which were being held from a day earlier.
| However, during the market this is what I did:
|
| executed: BTO SPY 2020-Sep-09 340 Put @ 2.39 DAY
| executed: BTO SPY 2020-Sep-09 340 Put @ 2.72 DAY
| executed: STC SPY 2020-Sep-09 340 Put @ 2.90 DAY
|
| At peak it was 40%, but I just needed the 10% to make up
| all my losses. Then I got onto calls:
|
| executed: BTO SPY 2020-Sep-09 350 Call @ 1.82 DAY
|
| Were up 25% today but I held them as the market is still
| strong.
| brendawalsh wrote:
| Are your Puts naked?
| DarmokJalad1701 wrote:
| Long puts don't need collateral. Since he said "BTO"
| instead of "STO", naked or not is not applicable.
| edoceo wrote:
| BTO = Buy to Open (open the position)
|
| STO = Sell to Open
|
| When selling calls, you want to hold the underlying, else
| you're naked. When selling puts your coverage is cash
| marketgod wrote:
| All my positions are always posted. My Discord is open.If
| you read my post, I did not say I made money on this
| drop, but I did see it coming, however, I am bullish, so
| I am not going to flip a switch on a whim. Look at all my
| posts in my #updates channel the last 2-days. I have
| called this is a fake out and a rebound.
|
| Think about this when you read a news article and they
| make a statement, what are this person's credentials?
| Since they are useless, go look at fundamental/technical
| analysis instead of media noise.
|
| Edit: New TSLA position taken: executed: BTO TSLA
| 2020-Sep-11 490 Call @ 8.09 DAY
| brendawalsh wrote:
| Interesting position. I like it.
|
| It took me a bit of time to realize you can make money
| "out of the money" with options.
| barney54 wrote:
| I'm sympathetic to your argument, but what's the evidence one
| way or the other?
| arcticbull wrote:
| A rising stock market almost always leads to a drop in
| implied volatility. A falling stock market leads to an
| increase in implied volatility. The spot VIX is inversely
| correlated with the S&P.
|
| I mean just look at the spot VIX. It hit 38 at the peak of
| the crashing yesterday, and settled around 30 today. [1] 0.3
| delta option premium on S&P 500 index futures (/ES) is up 50%
| from a few days ago.
|
| [1] https://www.investing.com/indices/volatility-s-p-500
| paulpauper wrote:
| up to a certain point it does. but not when the gains
| become too steep. Imagine if the S&P 500 was to go up 100%
| in a single day. now the range of potential price movement
| has been increased dramatically, so instead of the annual
| volatility parameter being around .15 or so for option
| pricing formulas, it is a much higher value, hence higher
| implied volatility.
| arcticbull wrote:
| In a sense, I suppose. A simultaneous rise in the VIX and
| the S&P usually precedes a crash. That's why I bought
| puts 2 days ago.
| z3ncyberpunk wrote:
| No one has any delusions as to how broken it is. The stock
| market is a racket to make those with wealth and power more
| wealthy and powerful. It's what happens when we feed capitalism
| and make money our worshipped idol. The YComb crowd is more
| often than not far too blind to or care about that though, too
| busy chasing shiney startups
| 0898 wrote:
| What does "gamma" mean in this context?
| freefal wrote:
| In the context of options, delta is the change in the option
| price divided by the change in the price of the underlying
| stock (i.e., the first derivative w.r.t. the stock price).
|
| Gamma is how much the delta changes for a change in the
| underlying stock (i.e., the second derivative w.r.t. the
| stock price).
|
| Market makers hedge their options positions by buying or
| selling the underlying stock so that they have no exposure to
| moves in the underlying stock (they are "delta neutral"). So
| if the delta at the current stock price is 0.50 and the
| market maker is short 100 call options, he will buy 50
| shares. But options are non-linear and the delta changes with
| the stock price (again, this is what gamma is). If the stock
| moves up so that the delta increases to 0.60, the market
| maker will need to buy another 10 shares so that he owns 60
| shares and is again delta neutral.
|
| In this way, buying begets more buying and this is what
| people mean when they talk about a gamma "meltup".
| beagle3 wrote:
| It's the second derivative of option price w.r.t asset price.
|
| The first derivative "delta" is the speed at which the option
| price moves w.r.t the asset price. If the option is "deep in
| the money", it's almost 1 - any move is the asset price is
| essentially also the same move in the option price. If it's
| deep out of the money, it is almost 0 - the probability of
| the option being worth anything is almost zero, so it's value
| doesn't change with price moves. It is 0.5 at the money (but
| i don't have a one line intuitive explanation)
|
| Gamma is the acceleration of option price with respect to the
| asset price. If the asset price grows, how will the delta
| (speed) change?
| encoderer wrote:
| https://www.investopedia.com/terms/g/greeks.asp
| oarfish wrote:
| 404
| encoderer wrote:
| Works for me? Maybe they have some terrible geosniffing.
| edoceo wrote:
| It's something odd, on that site I've follow some links
| (all on domain) then used the browser back button and
| land on a 404
| srtjstjsj wrote:
| The server is flaky. You can also try
|
| https://www.investopedia.com/trading/using-the-greeks-to-
| und...
| iso8859-1 wrote:
| https://archive.is/Dj6Od
| mumblemumble wrote:
| It comes from the Black-Scholes equation for pricing
| derivatives. It's a partial differential equation that's
| defined in terms of the price of the derivative, the price of
| the underlying asset, volatility, and time.
|
| From the equation, you can derive a series of rates of change
| one one variable with respect to another, often colloquially
| known as "the greeks", since they're all denoted with greek
| letters.
|
| The first one to know is delta. It's the rate of change in
| the option's price with respect to the underlying asset's
| price.
|
| Delta generally follows a curve, not a straight line. Gamma
| is the rate at which delta changes with respect to the
| underlying asset's price.
|
| The reason why these are a big deal are because options
| traders often try to remain "delta-neutral" - they want the
| overall delta of their options portfolio to remain close to
| zero, which limits the effect of fluctuations in the
| underlying asset's price on the overall value of their
| portfolio. But that's a constant balancing act, because
| changes in the underlying asset price also change the delta
| of their position. A low gamma means that it changes slowly,
| and it's easy to keep things balanced. A high gamma means
| that they're sitting on an unstable equilibrium, and they're
| going to have to buy and sell more aggressively in order to
| maintain their position.
| aapppwe wrote:
| why do they want delta neutral, if you are buying option
| don't you want delta as high as possible and if you are
| selling option don't you want delta as low as possible ?
| hpkuarg wrote:
| I think the GP misspoke when they said "option traders".
| Market makers want to be delta-neutral -- they don't want
| to care whether the underlying goes up or down, since
| they buy and sell both puts and calls and profit from the
| bid/ask spread.
|
| Your description is right(-ish) for directional traders.
| itsoktocry wrote:
| The basic mechanism of this, in my understanding is:
| 1. Buy underlying shares. 2. Buy calls on those
| shares. 3. Market makers who sell you those calls
| have to buy shares in the underlying stock to hedge (they run
| balanced books) 4. Demand for stock rises, stock
| price and calls increase in value 5. Use proceeds to
| buy more stock and options. Rinse, repeat.
|
| The "gamma squeeze" (which is how much the option value
| changes in relation to underlying stock price) refers to the
| part where options sellers have to hedge by buying stock.
| Essentially, the very act of buying calls in volume increases
| their value, allowing you to buy more and drive the price
| upwards.
| srtjstjsj wrote:
| This is a crime, right?
| xenospn wrote:
| I don't see how. The people buying the shares are not
| related to the market makers so as far as I can tell
| there's nothing illegal about that.
| itsoktocry wrote:
| > _This is a crime, right?_
|
| Good question.
|
| On one hand, it's purely mechanical; it just _works_ that
| way. On the other, it 's hard to imagine doing it
| deliberately wouldn't be considered manipulation.
| corin_ wrote:
| The purpose of buying call options is to to make a
| profit. It's hard to imagine that buying them and doing
| nothing other than buying them could be considered
| illegal. That's not manipulating the system any more than
| Buffet manipulates the system every time he buys stock
| (by also sending out the message that he thinks the stock
| is worth buying, just because he bought it without even
| needing to say anything about it).
| mumblemumble wrote:
| It would come down to intent. If the intent of buying a
| lot of options is, "I want a big position," or, "I want
| to hedge a big position," sure, that's probably fine. If
| the intent is, "I want to influence the market in some
| way," not so much.
| pfortuny wrote:
| As long as there is no inside information, buying or
| selling should be perfectly legal, if done inside the
| legal limits.
| valuearb wrote:
| Trading on inside information shouldn't be illegal
| either, it actually benefits even market participants who
| don't have access to it.
| oarsinsync wrote:
| > it actually benefits even market participants who don't
| have access to it
|
| How?
| mumblemumble wrote:
| That last "if" is the crux. Intent is a huge factor in
| what is and is not considered legal market behavior. For
| example, consider banging the close. Buying lots of
| futures at a certain time of day is not illegal in and of
| itself. But it's quite illegal if regulators show that
| your purpose in doing so was to influence the settlement
| price of some other asset in which you hold a position.
| WrtCdEvrydy wrote:
| Wouldn't banging the close be priced into the market?
|
| Can you leverage buying a lot of calls or puts into
| making profit for yourself?
| tw600040 wrote:
| How are they going to prove intent?
| mumblemumble wrote:
| It tends to involve things like subpoenas and
| depositions.
| tw600040 wrote:
| Can't imagine any way one can prove intent one way or
| another here..
| [deleted]
| itsoktocry wrote:
| > _It 's hard to imagine that buying them and doing
| nothing other than buying them could be considered
| illegal._
|
| In the purest sense, sure.
|
| I bet there will be more to this story, and I think if
| insiders or associated holding companies are found to be
| doing so, it's at _least_ a grey area.
| pmiller2 wrote:
| The sheer magnitude of it is what makes it seem like a
| pump and dump, however. The mechanics are broadly
| similar: send a signal that should cause people to bid up
| securities you own, then drop the bottom out by selling
| when the price goes up enough.
|
| I'm not saying it's illegal _per se_ , but financial
| misdeeds don't tend to get punished in the US, unless the
| victims are wealthy enough. See, for instance, the global
| financial crisis of 2008 vs Bernie Madoff.
| [deleted]
| quickthrowman wrote:
| Why would buying derivatives be a crime? That doesn't
| make any sense.
|
| If I buy 10 calls, the MM has to hedge. If SoftBank buys
| 100,000 calls, they just hedge more. How do you figure
| this is in any way remotely illegal?
|
| Buying shares also raises the price of shares, should
| that be illegal too?
| alextheparrot wrote:
| It depends on the context? Wash trades, for example, use
| only basic primitives but are regulated and we have seen
| SEC action over them.
| edoceo wrote:
| Wash Trades: https://en.m.wikipedia.org/wiki/Wash_trade
|
| "investor simultaneously sells and buys the same
| financial instruments to create misleading, artificial
| activity"
| itsoktocry wrote:
| > _Buying shares also raises the price of shares_
|
| No it doesn't.
|
| Shares prices are falling today. People are selling. That
| means people are also _buying_. Every transaction has a
| buyer and a seller. Yet prices still fall.
| gunshai wrote:
| What he's saying is that there is only so much liquidity
| at a given price point.
|
| Given low enough liquidity even tiny volume purchases
| relative to the liquidity can increase the price of a
| share.
| quickthrowman wrote:
| Let me rephrase: Buying a huge volume of shares
| equivalent to SoftBanks option delta exposure would raise
| the share price of whatever underlying the options were
| for.
| astura wrote:
| Well, market manipulation is illegal. I don't know enough
| about finance to know if this sort of activity is market
| manipulation or not though.
|
| There's a bunch of examples here;
|
| https://en.wikipedia.org/wiki/Market_manipulation
|
| The US Securities Exchange Act defines market
| manipulation as "transactions which create an artificial
| price or maintain an artificial price for a tradable
| security".
| quickthrowman wrote:
| > I don't know enough...
|
| Well, I do.
|
| Buying and holding call options is not market
| manipulation, full stop. Please provide an example of
| someone being penalized by the SEC for buying and holding
| call options without using insider information. You
| won't, because buying call options is not market
| manipulation.
|
| Is it market manipulation when Buffett announces BH
| bought shares of a company and then the shares skyrocket?
| pmiller2 wrote:
| Part of the difference here is that BH is legally
| obligated to disclose when they buy shares of companies.
| At least, they are under certain circumstances, which I
| can't remember off the top of my head. You can't punish
| someone for something they're legally obligated to do,
| because one can't be legally obligated to commit a crime.
| quickthrowman wrote:
| True, they are obligated to disclose their positions in a
| quarterly report.
|
| That doesn't change the fact that buying and holding
| options is not illegal...
| ivalm wrote:
| Legally it depends on intent, which would be very hard to
| prove. Unless senior execs wrote emails saying "let's buy
| option to manipulate the market" or colluded with other
| market participants, it is safe. However, it is not
| "always" safe.
| [deleted]
| Rury wrote:
| Who cares if it is or isn't legal currently.
|
| Lots of things where once legal, which the majority of
| society came to deem as bad (slavery, child labor) -
| which we then came to make illegal.
|
| But the problem here isn't just simply buying stocks, or
| holding options. It's the repeated process of buying both
| a stock and its options at the same time by a whale - and
| it seemingly does allow for manipulation of stock price.
| As so, why _shouldn 't_ such a pattern of activity be
| made illegal?
| quickthrowman wrote:
| Eventually the "manipulation" will push the price to a
| point where other actors sell, and then more people sell
| and the price corrects (see yesterday and today's
| charts). Buying equities and options in large amounts is
| not market manipulation. There are lots of institutional
| actors placing large orders all the time.
| Rury wrote:
| >Eventually the "manipulation" will push the price to a
| point where other actors sell, and then more people sell
| and the price corrects (see yesterday and today's
| charts).
|
| Not sure how this statement helps your argument. The same
| happens in pump and dumps. The people who artificially
| manipulated the price up in the first place sell in
| large, duping the latecomers out of their money, and the
| price corrects.
|
| >Buying equities and options in large amounts is not
| market manipulation.
|
| No it is not, but this isn't a simple matter of buying of
| equities and options. It's a _pattern_ of repeatedly
| buying equities and options by one large party in a way
| which allows for potential manipulation. As so, even if
| such a pattern isn 't illegal now, why shouldn't such a
| pattern be made illegal? Wash trades used to be legal
| before 1936, but we made them illegal for similar
| reasons...
| gunshai wrote:
| Ought vs Is, my friend. You are making a moral/ethical
| claim about how the world OUGHT be while he is making the
| distinction about how the world IS today.
|
| Some patterns are illegal by the way. However proof is
| still quite difficult to come by.
|
| For instance, it's market manipulation to place large
| orders continuously and then cancel those orders
| continuously.
|
| It's also market manipulation to place both LARGE buy and
| SELL orders at the same time in order to fake volume for
| a particular stock.
|
| However me as an individual or private entity can at any
| time go place an a LARGE as fuck order for what ever I
| want.
|
| In fact if you look back and study old stock floors ect.
| traders started to learn what the people at the large
| banks/intuitions looked like. When they saw them walk up
| with their stack of PHYSICAL orders, they'd try and step
| in front of them because they knew the market was about
| to move as a large order was about to be placed.
| astura wrote:
| ??
|
| I never claimed someone was ever penalized by the SEC for
| buying and holding call options, just that buying
| derivatives can be a crime if it's done for the purpose
| of market manipulation.
| sanderjd wrote:
| I understand your surprise here, but just to note: lay
| people intuitively think that "stock manipulation" is a
| crime. This is because their retirement savings relies on
| stock prices being fairly stable due to attachment to
| actual business value. Intuitively, people that put that
| system at risk are doing something wrong, and things that
| are wrong should potentially be illegal.
|
| Essentially: most people intuitively think the stock
| market should be more heavily regulated than it actually
| is.
| [deleted]
| AndrewBissell wrote:
| Also, gamma has a kind of self-reinforcing feedback loop.
| When the options are initially way OTM the market makers
| only need to hedge with a small amount of the underlying.
| But as the price runs closer to the option strikes the
| delta impact of a given move becomes larger and larger, so
| MMs have to hedge with more and more of the underlying,
| which can itself push the price farther in the same
| direction.
| quickthrowman wrote:
| And then the options expire, MMs unwind their hedges and
| gamma comes back down. There's no infinite gamma trick
| AndrewBissell wrote:
| Yes, obviously the reflexivity does not proceed ad
| infinitum, but these dynamics are often responsible for
| extremely violent moves in the short term. The effects
| can be even more pronounced right before expiration.
|
| http://m.koreatimes.co.kr/pages/article.amp.asp?newsIdx=7
| 768...
| quickthrowman wrote:
| Indeed, gamma squeezes can produce lots of volatility
| near OpEx. And call rolling can just push the gamma
| further out for another squeeze come the next OpEx.
| tobtoh wrote:
| So that would imply that for Softbank, high gamma stocks
| are desirable for this scheme? As in they want the maximum
| 'reaction' from each purchase they make?
|
| Also, this works in reverse right? So Softbank is literally
| just creating a stock market bubble since the price rises
| are not built on anything fundamental?
| omgwtfbyobbq wrote:
| I think how much of a bubble depends on the specifics of
| the stocks they're doing this with.
|
| If the stocks they're choosing have high gamma because
| there's a lot of short interest, then some of this
| increase could be shorts transferring equity to longs
| when they cover, which wouldn't be a bubble per say.
|
| Historically low interest rates could also fuel this
| directly by providing extremely low interest capital and
| indirectly by pushing investors in general to chase
| yields in equities. That would be more bubble-like, but
| it also applies to other asset classes, and it's
| ultimately a function of central bank policy.
| fluffything wrote:
| You forgot "6. Sell all underlying shares and calls before
| everything collapses". At some point, market makers
| shouldn't be able to sell you more calls. That's when you
| dump.
| colinmhayes wrote:
| gamma is the derivative of how much option values change in
| relation to underlying stock price.
| stygiansonic wrote:
| To clarify it's actually the second derivative of the
| options price w.r.t the underlying price, whereas "delta"
| is the first derivative of the same. (So gamma is the
| rate of change of delay w.r.t the options price since
| delta is not constant)
| stygiansonic wrote:
| Sorry, I had a few typos and can't edit.
|
| Gamma is the rate of change of delta w.r.t the underlying
| price. For example OTM calls have a delta close to 0. As
| the underlying price increases the delta will increase.
| When the underlying price reaches the call strike price
| (ATM) the delta will typically be 0.5. As the underlying
| price continues to rise and the call becomes deep ITM the
| delta will approach 1.0.
| mrlala wrote:
| >The financial system is far more broken than people realize.
|
| >I'm guilty of taking advantage of this myself, but it's
| basically been free money for the last several months. Up until
| yesterday at least...
|
| I choose not to participate. It's broken as all fuck and I'm
| not going to be a part of it.
| cdiamand wrote:
| The last few months have been pretty crazy. I've been tracking
| WSB's most commented stocks as a sideproject -
| https://topstonks.com
|
| Up until yesterday you could reliably hop on whatever the
| hivemind was interested and make some money. They even
| foreshadowed the market drop by mentioning the VXX before the
| correction.
|
| It'll be interesting to see what happens in the next few days.
| xmprt wrote:
| That's surprising given the conventional wisdom that you're
| supposed to inverse WSB. If inverse WSB isn't working then
| that means something really weird is happening.
| thrav wrote:
| Inverse the gain porn --- Don't buy TSLA on the day
| everyone is posting screenshots of their $4M accounts ---
| Ride the wave of the self-fulfilling DD.
| arcticbull wrote:
| That was terrible advice until, well, yesterday. It's
| been a straight line rocket ship to the moon. Each and
| every gain porn post would have been a solid entry until
| yesterday.
| resist_futility wrote:
| a broken clock is always right twice a day
| hbosch wrote:
| Ah yes, but the pros know you always inverse the inverse.
| Red_Leaves_Flyy wrote:
| Is that the conventional wisdom of an actual day trader or
| just a wsb lurker?
|
| Not trying to be snarky, just honestly curious as I have
| seen very similar comments on wsb.
|
| I've no dog in these fights btw. I don't actively manage my
| portfolio and have little interest in ever doing so. Though
| I do enjoy reading about the failures of those who do day
| trade with millions.
| manigandham wrote:
| It's nothing more than a joke. You have no way of knowing
| what the true majority opinion, nor does that translate
| to real trades which involve a lot more parties and
| money.
|
| And being the contrarian isn't profitable except in rare
| scenarios. The dips this week were a minor pullback.
| Anyone who kept going short while waiting for this
| would've been insolvent by now.
| [deleted]
| DenseComet wrote:
| What change happened yesterday? I've seen something about
| changes made yesterday a couple times now and I'm not really
| sure what to search for.
| TedDoesntTalk wrote:
| Nasdaq dropped 5%, s&p dropped 3.something
| trevor-e wrote:
| Amazing work, I've been doing something similar in my free
| time and it's a lot of fun.
| ramoz wrote:
| Zero Hedge has been deemed controversial, but their reporting
| here is... wow.
|
| https://www.zerohedge.com/markets/one-day-after-zero-hedge-f...
| vajrabum wrote:
| The reason for the controversy is there are indications that
| Zero Hedge may be an outlet for a state level actor. See here
| for one perspective.
| https://newrepublic.com/article/156788/zero-hedge-russian-tr...
| kaycebasques wrote:
| Wow, back when I visited ZH I would always be in this
| cognitively dissonant place where I was getting a lot of
| value out of the market-related articles and cringing at all
| the conspiratorial political stuff. I can't believe I never
| considered the idea that it's sponsored by the Kremlin.
| rapsey wrote:
| Or maybe they are being framed for calling out the bullshit
| in other mainstream media.
| vkou wrote:
| Some of their work is, indeed, calling out bullshit.
|
| Much of it is bonkers-insane, ah, bullshit of a different
| flavour.
|
| People wouldn't be reading the second, if they didn't print
| the first.
| opportune wrote:
| This is a really good article. I guess the best way to get
| top-notch investigative journalism is to personally threaten
| a journalist
| Natsu wrote:
| > Zero Hedge may be an outlet for a state level actor.
|
| So is the NPR and the BBC, so I'm not sure how much this
| means.
|
| It's best to take what everyone says with a grain of salt and
| piece things together from the evidence presented. I
| certainly don't believe everything posted by any of the
| outlets.
|
| ZH definitely plays more fast and loose with things, though.
| dlp211 wrote:
| How is NPR an outlet for state level actors? Which state
| level actors?
| Natsu wrote:
| They're an arm of the US Government. If that's not a
| state, I don't know what is.
| blahblah3737 wrote:
| read the article, it's not very convincing to be honest. it's
| a long winded biography of the owner of the site who is
| bulgarian. the evidence is that the reporting content is
| right-leaning/conspiratorial and that he is bulgarian
| basically.
| QuesnayJr wrote:
| Zero Hedge prints a lot of rumors and gossip. Sometimes rumors
| and gossip turn out to be true.
| markus_zhang wrote:
| I keep reading ZH just because of these occasional gems. They
| have some sources in the market and can be a bit quicker than
| main stream reporters.
| beepboopbeep wrote:
| I feel like that's fishing for quarters in a sewage tank now.
| markus_zhang wrote:
| I do agree. I usually just browse the topics and see if
| there is anything interesting. Usually there is nothing to
| see, but sometimes these gems turn out.
|
| But TBH maybe they are gems just because I'm an outsider.
| cs702 wrote:
| In summary:
|
| 1. Softbank has been paying up to buy a mountain of call options
| on big cap tech stocks.
|
| 2. Lots of inexperienced traders have been piling on, buying
| those same call options, e.g., on Robinhood.
|
| 3. The brokers/hedge funds selling those call options have been
| hedging by... buying big cap tech stocks.
|
| 4. Passive funds have been mindlessly following along, "copying
| the market," getting more and more concentrated on big cap tech.
|
| What happens if (i.e., when) 1, 2, and 3 unwind?
| Andrex wrote:
| > What happens if (i.e., when) 1, 2, and 3 unwind?
|
| Pop.
| qeternity wrote:
| 1) Shorted dated options have lots of gamma which amplifies the
| effects of this exponentially.
|
| 2) There are very few discretionary investors left, most are
| index funds. They targeted a few names which have outsized
| influence on indices. This in turn forces passives to buy those
| same names in order to keep tracking error low. Which then
| amplifies the effects from point 1, giving SB pnl which they
| can lever to repeat the cycle.
|
| Source: hf head of quant trading
| KKKKkkkk1 wrote:
| The vibe I'm getting from the FT and the WSJ is that SoftBank and
| Masayoshi Son are colossal idiots. That was the case since the
| WeWork IPO and even earlier (when the story about SoftBank
| funding competing startups came out). Does this mean that
| SoftBank is much worse than the rest of the finance industry? Or
| is it simply because they're based in Tokyo and don't have a PR
| team in New York and London that's as strong as their
| competitors?
| alpb wrote:
| Don't even mention their investment in WireCard
| https://en.wikipedia.org/wiki/Wirecard_scandal.
| fspeech wrote:
| Softbank is not financial neophyte for sure. See their long
| term option deal with Citi to sell their Yahoo stake a decade
| ago. Their investment in BABA is probably the most successful
| passive investment ever. But they are very aggressive so will
| also have a lot of failures. I get the feeling that they tried
| too hard to replicate their BABA success.
| Daishiman wrote:
| The good ole regression to the mean.
| curiousllama wrote:
| Masayoshi Son has made more money than any single individual in
| history... But only because he has lost so much, and just made
| it back. He's just volatility personified.
| jeffreyrogers wrote:
| SoftBank seems to have an uncanny ability to lose money. Just
| taking the opposite position of SoftBank would probably get you a
| pretty good return. (I realize that's not possible since a lot of
| their investments are in the private markets).
| xmprt wrote:
| If you bought puts for the last few months then you probably
| lost a lot of money. I don't think inversing them would
| actually work.
| oh_sigh wrote:
| The opposite of a call is a neutral or short position, not
| just a short position.
| [deleted]
| cced wrote:
| Can some ELI5 what this means? Is this the explanation for why
| the markets have been exploding in such turbulent times?
| ryanbberger wrote:
| The short answer: yes, this is partially the reason.
|
| Options trading is making a bet that a stock will go up or
| down. To accomplish this, you buy the rights to sell/buy stock
| at a given stock price (we call this a strike price). You do
| not OWN the stock, you borrow it, with the guarantee you can
| exercise your right to the buy/sell the stock once it hits the
| strike price.
|
| When you trade options, you typically don't buy the right to
| buy/sell individual stocks, you buy the right to sell 100 at a
| time. This means if Softbank buys 4bil in options in companies,
| they now have the risk/reward of 400bil in the market. In order
| to give Softbank the rights to the stock if they were to
| exercise their options, banks must back those options with
| shares. You may see where this is going. By making 4bil in
| options orders, Softbank has caused banks to be forced to buy
| 400bil in stocks, pumping the price.
|
| TLDR; Softbank forced banks to buy 400bil in stocks,
| effectively pumping the market
| mgh2 wrote:
| Is there a non-paywalled version of this article?
| mgh2 wrote:
| https://financialpost.com/financial-times/softbank-unmasked-...
| paulpauper wrote:
| This is not the reason. As usual, hype and bad reporting from FT
| and ZeroHedge. So when the market makes new highs again who will
| be blamed next? Softbank again? It has to do with companies
| moving their workforce away from the offices. It has to with
| amazon and Facebook being so dominant The usual factors that are
| to blame for the past decade or so. It came fromzeorhedg.e go
| figure.
|
| it is not uncommon for surging stock prices to lead to implied
| volatility to rise. The reason is, as the price goes up very
| steeply, the cross sectional area becomes smaller so less volume
| is required to move the price a a lot either way.
| qeternity wrote:
| This is absolutely the reason. Go look at AAPL skew. Skew
| doesn't go negative in response to strong underlying, it goes
| negative when you have a relentless gamma bid. Go look at the
| massive volume in single name flows. It's not the only reason
| we rallied, but it's the reason we went parabolic. Would NQs
| have printed 12500 without SoftBank? Yes. But it wouldn't have
| been so aggressive.
| logicslave wrote:
| Hard to imagine what their end goal for this could have been
| [deleted]
| gwd wrote:
| Money laundering / plausibly deniable embezzlement?
|
| 1. Inform people to whom you want to transfer money that you're
| about to push the market up. They buy a wide range of tech
| stocks (or other derivatives that rely on tech stocks)
|
| 2. Make some insane trades that push up tech stocks for a few
| days
|
| 3. Your targets sell, taking a hefty profit
|
| You've effectively transferred money out of your hedge fund to
| these other people; if the "area of effect" is large enough, it
| should be difficult to tell who was the target. Don't know if
| this is efficient or plausible.
| srtjstjsj wrote:
| If it's that easy, just do it for yourself to profit.
| dllthomas wrote:
| I doubt gwd has access to a tremendous pile of other
| people's money to experiment with, other considerations
| aside.
| raesene9 wrote:
| I'll take a wild assed guess at it, what follows is pure
| speculation. Many of Softbank's portfolio companies are not
| doing well (e.g. Uber, WeWork), and they're starting to get a
| bit anxious about whether they'll be able to show the returns
| that investors are looking for.
|
| So they've turned to risky strategies which, in the short term,
| could show a high return on investment to keep their investors
| happy. Of course, when/if this unwinds, they could be in
| serious trouble, but that falls into "problems for another day"
|
| I'd usually say that no serious investment company could be
| this shortsighted, but after seeing what Wirecard did, I'm no
| longer so sure :)
| pestkranker wrote:
| Paywalled.
| [deleted]
| incomplete wrote:
| https://archive.is
| speeder wrote:
| Risky solution of the day but...
| https://www.zerohedge.com/markets/one-day-after-zero-hedge-f...
| seemack wrote:
| Anyone familiar with zerohedge?
|
| I'm not going to make any real judgements but they certainly
| don't make a good first impression. They repeatedly claim
| that they reported this a day earlier than FT but don't even
| provide a link to this supposed report, spelling mistakes
| throughout...
|
| They do make it more tempting to pay for FT though!
| processing wrote:
| https://www.zerohedge.com/markets/speculation-emerges-
| over-i...
| seemack wrote:
| Thank you!
| bobo_legos wrote:
| https://www.wsj.com/articles/softbanks-bet-on-tech-giants-fu...
|
| WSJ confirming that report. Doesn't have a ton of details.
| awinder wrote:
| Not positive but this appears to be coverage of the same story
| https://www.google.com/amp/s/www.wsj.com/amp/articles/softba...
| [deleted]
| dionian wrote:
| I dont trust news sources that aren't deemed controversial, these
| days.
| Proziam wrote:
| I'm struggling to bring to mind a 'reputable' source that I
| haven't caught in some heinous misinformation in the past
| couple of years. Potentially worse is that social media
| companies are censoring opinions they disagree with.
|
| I am genuinely concerned about how people will stay informed in
| the future.
| lorsting wrote:
| From the amount of downvotes you got two things are clear:
|
| - some people really want to make others believe that news
| are news.
|
| - some people are truly brainwashed.
| pokstad wrote:
| Try out https://www.allsides.com/unbiased-balanced-news. I
| find it to be a decent evaluator of accuracy and bias.
| Proziam wrote:
| It's a useful aggregator to be sure. Unfortunately, it
| doesn't solve censorship.
|
| Example:
|
| I was trying to research the current events in Kenosha.
| Naturally, there's a 'diverse' set of views on the subject
| matter, so I tried to just watch the videos of what
| happened and judge for myself. When I tried to send what I
| found to someone else, some of the videos magically
| disappeared. Of course, the (very) edited versions of those
| videos with commentary added on top are still available.
| Answerawake wrote:
| You should set up youtube-dl on your machine so you can
| at least download the videos before they disappear. This
| tool can handle hundreds of websites and has come in
| handy so many times. One of the many projects I started
| and never finished was an auto Youtube downloader that
| you automatically detect when I watch a new Youtube video
| and archive it to a local NAS. I got tired of going back
| to an old bookmarked video only to find that it has been
| deleted either by the author or due to a copyright claim.
| Proziam wrote:
| You know, I've considered it so many times but have never
| done it. Laziness. I'll make that change today. Cheers.
| nitrogen wrote:
| Something similar would happen years ago if you posted
| something from Wikileaks to Facebook (long before
| Wikileaks lost its reputation). You'd get a mysterious
| error after a delay, when any other site would post fine.
| I think HN does the same thing for different reasons --
| mysterious error for suspected spam from new users or
| something like that.
| 6gvONxR4sf7o wrote:
| Thanks for sharing this!
| pstuart wrote:
| That misinformation comes in different flavors. The NYT's
| reporting on "WMD" to legitimize the Iraq Invasion is a stain
| on their reputation, but I still consider them to be "as
| reliable as one could hope for".
|
| That vs. Fox News, which was designed from the start as arm
| of the GOP and is a fount of _intentional_ misinformation.
|
| I think the path forward is curated collections of sources
| with trusted reviewers.
|
| Edit: defenders can question my assertion of intention
| regarding Fox News, but its origin and goals are
| indisputable:
|
| https://www.businessinsider.com/roger-ailes-blueprint-fox-
| ne...
| P-ala-din wrote:
| Another stain on NYT's history is this:
| https://skeptics.stackexchange.com/questions/43144/did-an-
| un...
| pstuart wrote:
| There's plenty more for sure :-)
|
| I don't trust _any_ source to be 100% accurate, but I
| prefer those that ostensibly _try_ to be so.
| [deleted]
| disown wrote:
| > That vs. Fox News, which was designed from the start as
| arm of the GOP and is a fount of intentional
| misinformation.
|
| What do you think the NYT was designed from the start as?
| Charitable saints interested in the truth didn't create the
| NYT.
|
| The preference for fox news or nyt is a reflection on the
| individual rather than the merits/bias/objectivity of the
| news organizations. People support the news that reflect
| their "values" which incidentally was created by the
| news/media organizations themselves. It becomes a vicious,
| certainly not virtuous, cycle.
| andreilys wrote:
| NYT also tried to doxx Scott Alexander to drive more
| clicks. So yea my faith in NYT is pretty low if I'm going
| to be honest.
| Proziam wrote:
| > The NYT's reporting on "WMD" to legitimize the Iraq
| Invasion is a stain on their reputation, but I still
| consider them to be "as reliable as one could hope for".
|
| If the best we can hope for from major news organizations
| is that they'll spread misinformation to get people in
| favor of going to war then I'm honestly not sure what to
| think.
| jjk166 wrote:
| The real issue is that we shouldn't just trust _any_ news
| source. It doesn 't matter how many times I've correctly
| told you that fire is hot, you should still be skeptical
| when I tell you this fire is not.
|
| It's becoming rarer and rarer nowadays but you still come
| across pieces of real investigative journalism where
| claims are backed up by evidence. For example, a great
| piece of reporting from the Atlantic sometime a year or
| two ago was on truck drivers being abused by their
| employer. Of course it had plenty of anonymous interviews
| with some of the victims, but they went beyond that. One
| of the claims was that the employer was changing the log
| of when trucks were returning at night, so the authors
| sat outside and recorded when the trucks were actually
| arriving for a few nights and compared it with the
| employer's statement. They included their data in an
| excel sheet. Could they have filled that sheet with
| fictional data? Sure, but no one ever published the data
| from their own stakeout which contradicted it.
|
| When journalists include verifiable evidence in their
| stories, it takes their reporting to another level where
| you no longer rely on their trustworthiness and
| everything that doesn't looks like a tabloid in
| comparison. Rather than maintain those high journalistic
| standards, many traditional media organizations have
| rested on their laurels and relied on their reputation to
| distinguish them from their competitors whose reporting
| is otherwise indistinguishable. Calling their competitors
| fake news is just an extreme form of competing on brand
| awareness instead of quality.
|
| Now obviously in the modern world with instantaneous
| communication a lot of stories are going to break before
| someone has had the time to thoroughly dot all the i's
| and cross all the t's - that a rumor exists is newsworthy
| regardless of whether the rumor is true, and the full
| details of many stories will not become clear until
| months or years after the fact. If the white house claims
| there are WMDs in Iraq, the NYT should tell us that the
| white house is claiming that. The difference between a
| good source and a bad one is that a good source will
| publish the evidence they were shown or include
| prominently that the white house made those claims
| despite offering no evidence.
|
| Trust no one, especially those asking for blind trust.
| azinman2 wrote:
| That's a pretty dangerous belief, as it is inclusive to a
| growing amount of propaganda and misinformation.
| dang wrote:
| We detached this subthread from
| https://news.ycombinator.com/item?id=24375923.
| btian wrote:
| You don't trust the reporting from FT to be accurate?
| manacit wrote:
| To be fair, FT is at least controversial in Germany. Until
| very recently there was investigation into some of their
| journalists around Wireguard-related reporting.
| dgellow wrote:
| Wirecard
| hckrnrd wrote:
| Wirefraud
| trhway wrote:
| cool, so using $2B i buy TSLA and using another $2B i buy a
| planet scale truckload of TSLA $10K calls, and the MMs would buy
| at least some shares to hedge it - and even some small percentage
| of that planet scale truckload number is really a large number of
| shares thus moving the stock high, which in turn increases the
| MMs' risks associated with the calls, and forces the MMs to buy
| even more shares to cover that increased risk which naturally
| drives the price even higher - positive feedback loop! - and now
| i dump the TSLA i have. Even without the herd of retail and
| passives amplifying the effect, it is already a wonderful play...
| Yep, it is great to be a big guy, ie. to have those $Bs to play
| at that scale. Though i wonder whether it falls under market
| manipulation and thus prohibited.
| marketgod wrote:
| With TSLA it may not work so well because TSLA has had a high
| short interest rate historically. So actually, after the split,
| if we see more shorts come in to drive TSLA down, we may get
| another substantial move up, hence I have $1000 targets for
| December.
| brandmeyer wrote:
| Some fraction of the short interest will choose to cut their
| losses on the way up. Since that is yet another entry on the
| buy side of the books, that would act to drive prices up even
| higher, no?
| Radle wrote:
| That's a surprise. I thought markets are to big for a single
| actor to make such moves.
| jeffbee wrote:
| The options market is relatively small and many of the market
| participants are trading on the greeks, basically betting on
| what the rest of the market is doing rather than on the
| fundamentals of the underlying economic activities, so it's
| easier to trigger a thundering herd with options activity.
| Guest42 wrote:
| I think the analysis is so granular (and sometimes desperate
| for signal) that individual movers can have plenty of
| influence.
|
| Also, the volume of non-retail trades is low which amplifies
| larger trades.
|
| (My theories at least)
| elliekelly wrote:
| The end of August is also the time when trading volume tends
| to be at its absolute lowest, even among institutional
| investors.
| MiroF wrote:
| > Also, the volume of non-retail trades is low which
| amplifies larger trades.
|
| Source? I thought most volume was non-retail.
| Guest42 wrote:
| Lower than usual. I should've been more specific.
| xt00 wrote:
| The volumes on options are not all that large typically. So
| many people will put a sell to open at a high price to see if
| somebody really wants the option.. sometimes people will bite
| and it causes a big jump in the option price.. once that
| happens it starts other people jumping in as well (and
| algorithms). But you can sometimes see options that have
| volumes of less than 10 contracts in a day -- sometimes 0 for
| non popular stocks. So if softbank was buying big quantities
| daily that could easily run up the price. And the wild thing is
| that if you see a big jump in call option interest way out of
| the money, then people who are wondering about the underlying
| stock think, hmm, maybe people are aware of some upside on this
| stock.. I think I'll buy some more shares of tesla or whatever
| because the call option behavior is so bullish. So basically if
| you want a stock to move one direction or another you probably
| could manipulate most easily by buying large quantities of
| options on one side or the other in such a way that people
| think you know something that you don't.
| bitxbit wrote:
| Not really true considering that moves were tied to very short-
| dated OTM calls starting late April. I don't think even Softbank
| is that irresponsible. Regardless, we'll likely see another
| market crash before election. Stay tuned.
| jennyyang wrote:
| How is this legal? If they are buying options to force the
| markets to rise like this, isn't this blatant market
| manipulation? Or is this okay because they have a lot of money?
| pfortuny wrote:
| Do they have inside information? If not, they can buy and sell
| without having to have a specific intent.
| jennyyang wrote:
| Inside information doesn't have anything to do with market
| manipulation. The trader who caused the Flash Crash in 2010
| was similarly prosecuted for artificially manipulating the
| markets. If Softbank was buying options to somehow manipulate
| the rest of their trades, I can't see how this isn't illegal.
| strstr wrote:
| Market manipulation is also separately illegal. Though
| classic pump and dump doesn't seem possible with amzn.
| valuearb wrote:
| Their purchases were a tiny fraction of all market calls. How
| is that manipulative?
| kyle_morris_ wrote:
| https://archive.is/h8zfx
|
| _SoftBank is the "Nasdaq whale" that has bought billions of
| dollars' worth of US equity derivatives in a move that stoked the
| fevered rally in big tech stocks before a sharp pullback on
| Thursday, according to people familiar with the matter._
| fakedang wrote:
| I'm surprised it took so long to find out that SoftBank was a
| whale. When Buffett makes a move, usually the market catches on
| pretty fast.
| toss1 wrote:
| This is largely due to required SEC filings such as 10Q [1] and
| 13F [2] reports, etc.
|
| The 13F shows the list of stocks they own, down to the share.
| Successive reports will show bought/sold differences, but this
| is only a rear-view-mirror view, after the quarter is over, so
| the actual buy/sell may have been almost 4 months prior
|
| [1] https://www.berkshirehathaway.com/qtrly/2ndqtr20.pdf [2]
| https://sec.report/Document/0000950123-20-005345/
| fakedang wrote:
| But that's expected, except in Buffett's case, you get his
| positions on the next day itself due to the filing.
|
| I wonder if it's because SoftBank is a foreign entity, hence
| only required to report quarterly results optionally.
| disown wrote:
| I'd be interested in proof/data (if it is even possible) rather
| than "some investment banker claims", etc.
|
| The finance industry is huge and even softbank with their $100
| billion is a tiny player in the market especially one as large
| and liquid as the nasdaq.
|
| What about the nasdaq rally from 2009 to 2020? What that softbank
| as well?
|
| The world flush with cheap capital, money flooding to the US
| because of tensions around the world, election year rally, etc
| seem far more plausible cause than softbank.
|
| Softbank by itself isn't remotely big enough to move markets for
| such a long period of time to set a trend.
| FiReaNG3L wrote:
| Stock market feels like a big whole gambling machine at the
| moment, between QE and manipulation of this sort...
| johnwheeler wrote:
| "at the moment"?
| lotsofpulp wrote:
| I feel the opposite. US politicians across both parties have an
| incentive to keep the market indices going up and to the right.
| And so it will since politicians have control of the money
| supply.
| duxup wrote:
| " US politicians across both parties have an incentive to
| keep the market indices going up and to the right"
|
| Isn't that always the case?
|
| And does it make a difference?
|
| I feel like we see plenty of situations where politicians
| would not want to see the market crash, it still does...
|
| I don't doubt politics plays a part, but I'm not at all sure
| they've got switches that work exactly as desired all the
| time either...
| lotsofpulp wrote:
| If your time horizon is more than a couple years, then it
| has worked. They have the ability to create money and
| purchase bonds, equity, and simply give companies cash if
| needed. And they have. The biggest variable they don't have
| control over is the best value or expected future value is
| the USD.
|
| Also, the invested-ness of US politicians is not just due
| to them owning stocks, but due to the people voting for
| them being invested in them by way of invested retirement
| funds and indirect exposure via government employee
| pensions.
| duxup wrote:
| >Also, the invested-ness of US politicians is not just
| due to them owning stocks, but due to the people voting
| for them being invested in them by way of invested
| retirement funds and indirect exposure via government
| employee pensions.
|
| That's also a permanent thing ...
| MiroF wrote:
| > since politicians have control of the money supply.
|
| But politicians don't have control of the money supply...
| Nasrudith wrote:
| >> And so it will since politicians have control of the money
| supply.
|
| The Federal reserve is criticized as "undemocratic" but that
| is why it is independent. Of course by the very nature a
| government can have sizable influnce on the economy without
| direct control.
| duxup wrote:
| I get what you're saying but I would say that's kinda how it
| is, but just a question of how much it looks like gambling from
| moment to moment... and how much you know / is reality.
| simonpure wrote:
| Matt Levine covered this same strategy back in February wrt WSB
| [0].
|
| Too bad he's on paternity leave at the moment so we won't get his
| take this time around.
|
| [0]
| https://www.bloomberg.com/opinion/articles/2020-02-26/reddit...
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