A Fool and His Money Are Soon Parted!

[Parsad]

You eff up because you are greedy, so you sue the bank and tax advisers!  Cheers!

 

https://finance.yahoo.com/news/carpenter-claims-made-306-million-171427732.html

[Saluki]

46 minutes ago, Parsad said:

You eff up because you are greedy, so you sue the bank and tax advisers!  Cheers!

 

https://finance.yahoo.com/news/carpenter-claims-made-306-million-171427732.html

 

This is interesting because if you look at the payoff for something using the Kelly criterion, something below a full kelly bet isn't as profitable. But once you go beyond a full kelly bet, your returns start to decline. 

 

But with a half Kelly bet, your return is less, but you won't be wiped out. When you over bet, not only is your return lower than a right sized bet, but your odds of being wiped out go up a lot.

 

Rather than realize that he got lucky winning the lottery and taking some chips off the table, he just kept doubling down until math caught up with him.

 

https://youtu.be/qfX35o7v6XY?si=mgYxVPIngvqD2MY-

[brobro777]

Haha this kind of story reminds me of daytraders in the late 1990s

 

The thing that was scary was how these guys could be running hotter than the surface of the sun, sometimes for a long time, and then out of nowhere become cold as ice

 

I still remember that surprise rate cut by Greenspan in Jan 2001 like yesterday...

[UK]

"Some people would have cashed out. DeVocht didn’t."

[nwoodman]

DeVocht now claims that the advice he received, geared mainly toward minimizing taxes, was negligent and failed to take into account his level of financial sophistication. His Tesla investment strategy involved loans from a Royal Bank margin account.

 

Not sure about Canada but but by Australian standards he would have crossed over into “Sophisticatd Investor” status at around around $2.5m mark.  To qualify for margin and play the game at the level he was to get to $460m he would have had to be qualified as an SI.  I doubt RBC will be losing much sleep unless there was there was some shenanigans with the IHC angle or the ” charitable donation”. 

 

An asset test for investment sophistication is a useless proxy that  is self evident.

Edited October 5 by nwoodman

[flesh]

The advice, if true, for a holding company concentrated in Tesla for tax purposes is pretty heinous. Maybe not according to law, but who would do that?

[Spekulatius]

He has to be ultimate hero of WSB.

[nwoodman]

52 minutes ago, flesh said:

The advice, if true, for a holding company concentrated in Tesla for tax purposes is pretty heinous. Maybe not according to law, but who would do that?

Agree.  A feeding frenzy of “advice” does spring to mind

[dwy000]

It always amazes me how people confuse luck with skill - and then get angry when their luck runs out

[Blugolds]

How in the world you can get to 100MM + and not simply take a small chunk and park it in something stable as insurance (say even "just $10 Mil") blows my mind. You only have to get rich once. especially since he started with a pot under $100k, so he was never loaded starting out, you would think that he would have realized he was in the big leagues and secured his future, hell he could have secured future generations, then continued with his "put it all on black" strategy LOL. But this really isnt anything new, the rags to riches to rags story has been told 1k times by professional athletes, musicians, actors. lottery winners etc. The particularly egregious point is the lack of personal accountability. 

 

I think there is also something to be said about someone hustling, grinding a slow steady climb from the bottom to the top, that "slower" rise conditions and tempers the individual to value the milestones along the way, and the memory of the "before" times is always there. It tempers the individual to risk. Although the sums may differ among the above mentioned examples, its all life changing money, and it comes relatively quickly with arguably little effort and that seems like it contributes to a lack of awareness. 

 

To the "fool and his money soon parted" I'll add another by the late Kenny Rogers, " You gotta know when to hold em, and know when to fold em".

[brobro777]

2 hours ago, Spekulatius said:

He has to be ultimate hero of WSB.

 

I love those guys on Reddit WSB

 

The way they go all in with 0DTE options over and over again gives me hope that I can continue to make money even as an average schmoe

 

 

[Spekulatius]

28 minutes ago, brobro777 said:

 

I love those guys on Reddit WSB

 

The way they go all in with 0DTE options over and over again gives me hope that I can continue to make money even as an average schmoe

 

 

I do think these option plays change the structure of the market as they have to increase short term volatility around earnings etc.

I think in general  you want to be counterparty to the 0dte option retail players. My guess is that Renaissance and other quants feast on them.

 

[aws]

Reminds me of Archie Karas who was in the news again since he just died last week. Went to Vegas with $50 and went on a crazy run in craps and poker and turned it into $40 million. Then gambled it all back. Later he tried cheating and was put in the black book barring him from all casinos.

 

The people that make the kind of bets that can win so much so quickly don't suddenly realize they should put some aside for retirement.

[nsx5200]

1 hour ago, Spekulatius said:

I think in general  you want to be counterparty to the 0dte option retail players. My guess is that Renaissance and other quants feast on them.

Those quants should spend a few millions to fund people like RoaringKittie to keep the funnel wide open.  Think of it as their marketing budget.

[brobro777]

10 hours ago, Spekulatius said:

I do think these option plays change the structure of the market as they have to increase short term volatility around earnings etc.

I think in general  you want to be counterparty to the 0dte option retail players. My guess is that Renaissance and other quants feast on them.

 

 

this is a completely subjective observation backed up by no data or verified analysis but the markets nowadays seem to run one way, hard, relentlessly (without a counter move) way more than it used to in the past, like the 90s for example. Maybe it's because there's more action in the derivatives now or more algorithms but whether it's stock index futures or individual stocks, it seems that things turn hard and when they turn they keep running and running. 
 

This probably means more opportunities for guys who like action, unlike nerds who sit there and read books and industry reports 

 

Ha  haha

 

 

 

 

[UK]

44 minutes ago, brobro777 said:

 

this is a completely subjective observation backed up by no data or verified analysis but the markets nowadays seem to run one way, hard, relentlessly (without a counter move) way more than it used to in the past, like the 90s for example. Maybe it's because there's more action in the derivatives now or more algorithms but whether it's stock index futures or individual stocks, it seems that things turn hard and when they turn they keep running and running. 
 

This probably means more opportunities for guys who like action, unlike nerds who sit there and read books and industry reports 

 

Ha  haha

 

 

 

 

 

The more of this, the better:))

[brobro777]

4 minutes ago, UK said:

 

The more of this, the better:))

 
This is obviously pure bragging and shit talking but let's just say "someone" bought some NQ at 17500 last month when da VIX 65 for some good gains baby, good gains

 

of course it could have continued to run past 17500 down the toilet, in which case I'd be posting on Reddit WSB with my loss porn

 

haha

 

[UK]

1 hour ago, brobro777 said:

 
This is obviously pure bragging and shit talking but let's just say "someone" bought some NQ at 17500 last month when da VIX 65 for some good gains baby, good gains

 

of course it could have continued to run past 17500 down the toilet, in which case I'd be posting on Reddit WSB with my loss porn

 

haha

 

 

For me personally it is much more clear what to do in a toilet situations, than the other, and I am starting to long for being in a really good (or should I say shitty?) one again:))

[Blugolds]

3 hours ago, UK said:

 

For me personally it is much more clear what to do in a toilet situations, than the other, and I am starting to long for being in a really good (or should I say shitty?) one again:))

 

I miss those times when everything is so cheap and looks sexy you have to really focus on what you think has the most room. Like going to the dessert buffet and you want to try everything. Maybe that is me being lazy, as I think there is always opportunity, you just have to do a little more work to find it when valuations are high/optimistic, but when there is blood in the streets, I agree, its much more clear/easier. Inevitably it will happen again.

[Spekulatius]

11 hours ago, brobro777 said:

 

this is a completely subjective observation backed up by no data or verified analysis but the markets nowadays seem to run one way, hard, relentlessly (without a counter move) way more than it used to in the past, like the 90s for example. Maybe it's because there's more action in the derivatives now or more algorithms but whether it's stock index futures or individual stocks, it seems that things turn hard and when they turn they keep running and running. 
 

This probably means more opportunities for guys who like action, unlike nerds who sit there and read books and industry reports 

 

Ha  haha

 

 

 

 

I think you are onto something and I think it boils down to momentum strategies (and derivatives of them) becoming more prevalent. For example, index investing is a strategy that is really a derivative or at least synergistic with momentum investing.  Momentum is a strategy that has been working well for quite some time, but there have been times when it didn’t work, as I understand it

 

The Meb Faber podcast on and off has talked about this and he himself likes strategies with a momentum factor.

[nsx5200]

8 hours ago, Blugolds said:

I miss those times when everything is so cheap and looks sexy you have to really focus on what you think has the most room...

You live long enough, you'll get the chance.  The hardest part is probably living long enough (and long enough to enjoy the outcome as well), which reminds me to keep up with my weekly exercises...

[brobro777]

6 hours ago, Spekulatius said:

I think you are onto something and I think it boils down to momentum strategies (and derivatives of them) becoming more prevalent. For example, index investing is a strategy that is really a derivative or at least synergistic with momentum investing.  Momentum is a strategy that has been working well for quite some time, but there have been times when it didn’t work, as I understand it

 

The Meb Faber podcast on and off has talked about this and he himself likes strategies with a momentum factor.

The grad students are probably doing it already but there's probably good amount of PhD level research that could be done on volatility and extreme moves in the markets caused/correlated with algorithm trading and explosion in derivatives.

 

i mean dude look at Bill Hwang and them "swaps" - $20Bil gone in a flash! 

[Sweet]

If your at 306 million, why oh why wouldn’t you put even 30 million aside and say this never gets traded?  Greed killed his account and it seems he may not have been intelligent enough to override that greed and do the smart thing.

[bizaro86]

1 hour ago, Sweet said:

If your at 306 million, why oh why wouldn’t you put even 30 million aside and say this never gets traded?  Greed killed his account and it seems he may not have been intelligent enough to override that greed and do the smart thing.

 

The type of person who would pull 30mm to the side would never have yolo'd from 80k to 300mm in the first place. Because it was also insane not to dial back the risk everywhere along the way, including at the 80k level.

[UK]

7 hours ago, nsx5200 said:

You live long enough, you'll get the chance.  The hardest part is probably living long enough (and long enough to enjoy the outcome as well), which reminds me to keep up with my weekly exercises...

 

This is true:). But at the same time I think 2008-2009 was the last time markets and even economy was left for its own, at least for a while:). I am afraid  (or should I say happy?) we now live in a newly discovered central bank put and very understanding government era and I am not sure economy and markets would be put in a very shitty toilet for long (though maybe currencies will be, one day, as a concequence). And these interventions worked, more or less, so expect this to continue. Just like in China currently, loans for buybacks, who would have thought:)? I am not sure that it means much for concentrated stockpicking, but i think it could be a mistake to wait to invest only after market prices halves or something, as likelly this has way less chances if at all to occur in the new era:). And perhaps to be not too greedy and to start buying big after smaller market drop:)