Hedge fund apologist

[writser]

I assume that you already have strong answers to the questions you ask and that you look for better ones which makes it a hard undertaking.

 

No, not at all. When I worked on the trading floor (and when I invest) I try to squeeze every trade to the last penny and I'd be super pissed off if, for example, the exchange calls me to cancel a trade because somebody entered an idiotic order. That's the game. However, I'm a bit of a lefty and from a societal perspective I think it would be better if people were somehow persuaded to not do anything stupid with their money and to have recourse if they did something stupid.

 

I used to play a lot of poker. If you see in a live game somebody is a terrible gambling addict and is throwing away money he/she cannot miss, what is the right thing to do? Tell them to stop playing? Should the dealer or floor manager warn this person? Should the government monitor casino's and ban these people? I.e. does anybody have an obligation to do anything? Or should you basically say: "free will, free market" and ruthlessly try to take all his/her money and encourage him/her with a few kind words to go back to the ATM?

 

Same thing in the financial market. In the case of Nate's grandmother I strongly feel that she was probably talked into a product she should never have had. I personally think the broker is a deceiving asshole charging enormous amounts of commission and I'd be happy if Nate's grandmother could claw back at least the commission. However, are there a moral / judicial grounds for that? Should there be? She probably willingly signed the prospectus and was dutifully informed there 'were risks and past results do not guarantee future results'.

 

To me it's a very grey area and an interesting subject on which I don't have a definitive opinion. Thanks for the read, will take a look.

[oddballstocks]

I assume that you already have strong answers to the questions you ask and that you look for better ones which makes it a hard undertaking.

 

 

Same thing in the financial market. In the case of Nate's grandmother I strongly feel that she was probably talked into a product she should never have had. I personally think the broker is a deceiving asshole charging enormous amounts of commission and I'd be happy if Nate's grandmother could claw back at least the commission. However, are there a moral / judicial grounds for that? Should there be? She probably willingly signed the prospectus and was dutifully informed there 'were risks and past results do not guarantee future results'.

 

To me it's a very grey area and an interesting subject on which I don't have a definitive opinion. Thanks for the read, will take a look.

 

It is interesting. And yes, while it would have been nice to get money back we all handled it from your perspective.  She is an adult, she never asked for advice, she signed something.  She owned up to it as well, essentially "I shouldn't have done something I never understood."

 

The world is littered with these types.  My mother-in-law and her husband just had a weird run-in. They purchased some subscription for anti-virus and the company tried to scam them.  Guy got on the phone, asked for bank info, tried to rush them etc.  Typical scammer stuff.  My MIL realized something was up, hung up the phone called the bank, locked everything down.  These sort of things happen fast and catch you off guard.  You think you're purchasing a product and then there is a "problem" and they rush you to pay some other way.  It exploits every human weakness.

 

I wish there were a way to eliminate this stuff, but I think the best way to eliminate it is education.  Make sure people know what they're doing, why they're doing it, and if they stay informed they can avoid traps.  In a lot of cases nanny regulation can help, but there are still issues, you need regulation coupled with education.

 

On a spectrum I think you'd find the most egregious examples on the low/high end.  Low end because of lack of education, this is check cashing, small time scams on the poor.  And on the high end hedge funds because investors have told themselves they're rich, smart and exclusive and there are fund managers who are happy to exploit this.  In the middle most are smart enough to avoid the low end scams, and don't have enough coin to be in the high end scams.

[randomep]

You guys should do a quick search on Google: natural gas widow maker.

 

This has happened every time that natural gas made a big spike up or down. Always some fund playing the futures. For a long, long time nothing happens, then bang, a "x" standard deviation move.

 

Cardboard

 

A once-every-hundred year storm that happens every decade :))

 

[Jurgis]

I really hope that at some point humanity will grow up and stop scamming/killing/exploiting/screwing each other.

 

How much productive would the society be if we did not have to spend time/money/effort/braincells to prevent all this crap.

 

 

 

Oh well, it's all communist childish dreams perhaps.  ::)

[randomep]

I really hope that at some point humanity will grow up and stop scamming/killing/exploiting/screwing each other.

 

How much productive would the society be if we did not have to spend time/money/effort/braincells to prevent all this crap.

 

 

 

Oh well, it's all communist childish dreams perhaps.  ::)

 

Ya our politics is fundamentally based on a premise that if we just do so-and-so or if things were just so-and-so, that we would collectively be so much better off.  Is there a philosophy that says things are shit because we are just selfish pricks and it isn't getting any better.  And we should just be glad we aren't in Rawanda or something? or am I the only one that thinks this way.

 

[constructive]

I really hope the owner of optionbuyers.com is working on his own letter and video, telling his clients they’re all miraculously rich because of bets in the opposite direction.

[SHDL]

Some good discussions above. 

 

I personally used be pretty critical of things like Social Security (“Why on earth should the government be making saving/investing decisions on our behalf?”), but now I prefer having such policies in place to an alternative where we don’t and as a result we have all these senior citizens who are completely impoverished because of their bad financial decisions.

 

I do agree with oddballstocks that education is probably the best long term solution.  I never really quite understood why basic finance is not taught in K-12 — I mean it’s not that difficult to learn and it’s a pretty fundamental skill for doing well later in life.

[Cardboard]

"Ya our politics is fundamentally based on a premise that if we just do so-and-so or if things were just so-and-so, that we would collectively be so much better off.  Is there a philosophy that says things are shit because we are just selfish pricks and it isn't getting any better.  And we should just be glad we aren't in Rawanda or something? or am I the only one that thinks this way."

 

I am totally in your camp!

 

We are "civilized" because we are rich. Just cut off electricity for 2 weeks and see what happens.

 

People take things for granted and they should not. Nor should they feel entitled to anything. People look at me crazy when I say that it is a jungle out there competing for everything but, it is the truth. There is always somebody looking to wipe you out clean: money, wife, you name it.

 

Cardboard

[DooDiligence]

"Ya our politics is fundamentally based on a premise that if we just do so-and-so or if things were just so-and-so, that we would collectively be so much better off.  Is there a philosophy that says things are shit because we are just selfish pricks and it isn't getting any better.  And we should just be glad we aren't in Rawanda or something? or am I the only one that thinks this way."

 

I am totally in your camp!

 

We are "civilized" because we are rich. Just cut off electricity for 2 weeks and see what happens.

 

People take things for granted and they should not. Nor should they feel entitled to anything. People look at me crazy when I say that it is a jungle out there competing for everything but, it is the truth. There is always somebody looking to wipe you out clean: money, wife, you name it.

 

Cardboard

 

A year of working between Abidjan & Takoradi showed me this.

I'd seen it before but these areas really hammered it home.

 

It disgusts me to see students whining & making excuses for barely putting out any effort.

It reassures me to know that they will be no competition in the work place.

Unless, of course, they're great political operators.

Fortunately you can't fake music.

 

I keep the disgust to myself & like to believe that 1 or 2 see an old guy shining & are motivated to get their asses in gear.

(The competition doesn't really scare me...)

 

Here's to mediocrity & the social programs that stand between it & dog eat dog chaos.

 

BTW, I'm doing a literature essay about Harrison Bergeron & will post it later for anyone who's interested in my take, on Vonneguts take, on forced equality legislation.

[Cigarbutt]

"Ya our politics is fundamentally based on a premise that if we just do so-and-so or if things were just so-and-so, that we would collectively be so much better off.  Is there a philosophy that says things are shit because we are just selfish pricks and it isn't getting any better.  And we should just be glad we aren't in Rawanda or something? or am I the only one that thinks this way."

...

People take things for granted and they should not. Nor should they feel entitled to anything. People look at me crazy when I say that it is a jungle out there competing for everything but, it is the truth. There is always somebody looking to wipe you out clean: money, wife, you name it.

Cardboard

A year of working between Abidjan & Takoradi showed me this.

I'd seen it before but these areas really hammered it home.

 

It disgusts me to see students whining & making excuses for barely putting out any effort.

It reassures me to know that they will be no competition in the work place.

Unless, of course, they're great political operators.

Fortunately you can't fake music.

 

I keep the disgust to myself & like to believe that 1 or 2 see an old guy shining & are motivated to get their asses in gear.

(The competition doesn't really scare me...)

 

Here's to mediocrity & the social programs that stand between it & dog eat dog chaos.

 

BTW, I'm doing a literature essay about Harrison Bergeron & will post it later for anyone who's interested in my take, on Vonneguts take, on forced equality legislation.

This a general discussion topic and may be taken from the following angle:

Should there be a safety net for the apparently repenting money manager? for the participating investors?

 

An underlying assumption may be that the tightness of the mesh of the safety net will be inversely proportional to the capacity, for the able and talented, to achieve their full potential.

 

But what do you do for the "truly" disadvantaged?

 

-----

"Gee - I could tell that one was a doozy," said Hazel.

"You can say that again," said George.

"Gee-" said Hazel, "I could tell that one was a doozy."

-----

 

"To me it's a very grey area and an interesting subject on which I don't have a definitive opinion."

[Spekulatius]

I never know what to think about the clients in situations like this.

 

1. Greedy idiots willingly invested their money with another idiot, never asked questions when they were earning 28% p.a., they deserve to lose their money. Sue them to make them pay the margin calls.

2. My grandparents were suckered into something they didn't understand by an evil person, they probably didn't even know they could be on the hook for more than they deposited .. These poor souls deserve clemency.

 

Probably something in the middle. Can you rip off stupid people in a fair society? Should the government / somebody else protect them in some way?

I assume that you already have strong answers to the questions you ask and that you look for better ones which makes it a hard undertaking.

Few thoughts:

-a stupid person is more dangerous than a bandit.

-a challenge is how to protect the helpless from the bandit.

-a bigger challenge though is how to deal with the super-stupids: "people who by their improbable actions not only cause damages to other people but in addition hurt themselves."

 

If you allow yourself to think only under two dimensions, you may find the following interesting:

http://advanced.jhu.edu/wp-content/uploads/2013/07/The-Basic-Laws-of-Human-Stupidity.pdf

 

Most of the people that fall for a fraud or bad  investments are not stupid. They are gullible, sometimes greedy and/or financially illiterate.