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Those of you fascinated with the #GameStopRebellion should understand why I find this all so completely delicious.
I am, by nature, a skeptic.
Investments were one area of the economy that I expected to be rational - buy low, sell high, put money in solid companies.
I am, by nature, a skeptic.
Investments were one area of the economy that I expected to be rational - buy low, sell high, put money in solid companies.
Never bet more than you can afford to lose - all that stuff.
But when I started learning how investment actually functions, I realized there is a LOT of quackery and charlatanism - and our high-speed networks have made it all so much worse - and inherently unequal.
But when I started learning how investment actually functions, I realized there is a LOT of quackery and charlatanism - and our high-speed networks have made it all so much worse - and inherently unequal.
Take the famous trader (or WAS he?) W.D. Gann ( https://www.investopedia.com/articles/investing/091615/mysterious-life-trading-legend-wd-gann.asp )
Gann was clearly a fraudster - selling courses and books on how to invest - but dying with barely $100,000 to his name - and that from selling his "training."
Gann was clearly a fraudster - selling courses and books on how to invest - but dying with barely $100,000 to his name - and that from selling his "training."
Gann supposedly could use Astrology - things like the orbit of Mercury - to predict stock trades.
Of course, that's stupid, and you would have to be insane to believe it - except there are real people who do. ( https://www.elearnmarkets.com/blog/principles-of-wd-gann-discipline-trading/ )
Of course, that's stupid, and you would have to be insane to believe it - except there are real people who do. ( https://www.elearnmarkets.com/blog/principles-of-wd-gann-discipline-trading/ )
But wouldn't these morons just lose all of their money?
In a word, no.
Because our economy is hopelessly unequal. When you are betting with millions or billions of dollars, it's (usually) impossible to get swamped by losses before regression to the mean allows them to recover.
In a word, no.
Because our economy is hopelessly unequal. When you are betting with millions or billions of dollars, it's (usually) impossible to get swamped by losses before regression to the mean allows them to recover.
And, of course, when the market swings up, the investors (and their suckers - I mean *clients*) take credit for the upswing, while blaming outside events for the decline.
"The markets fell on jobs reports, but we moved your money to a set of stocks that is labor-report-proof."
"The markets fell on jobs reports, but we moved your money to a set of stocks that is labor-report-proof."
These reassurances (in criminal court, we called them "lulling statements") are so well-crafted, that clients almost universally trust their brokers - even when losing lots of money.
And since some of these aggressive firms have access to high-frequency trading, they can use algorithms that use *anything* - even the orbit of Mercury - to make trades: and because they do this, those cycles *can become reality*
The impact of these high-speed trades cannot be overstated. SEC investigators had to look at hundreds of millions moving in microseconds - and even understand that information must travel no faster than the speed of light. https://www.theverge.com/2013/10/3/4798542/whats-faster-than-a-light-speed-trade-inside-the-sketchy-world-of
These strategies and technologies have - by and large - shut out the average Joe. You simply have *no ability* to make more off the market than they can.
And they knew this.
So they kept trying riskier and riskier strategies, and believing their own nonsense.
Even for shorts.
And they knew this.
So they kept trying riskier and riskier strategies, and believing their own nonsense.
Even for shorts.
And so, while I don't think people should invest based on Reddit posts, this whole experience has made it clear that crowd-sourcing a weakness in the scams (that have helped wealth condense into a smaller and smaller population for decades) is now completely possible.
And they're going to keep doing it. The Genie is out of the bottle. And the risky, stupid practices will cost the Uber-rich (who have been exploiting these systems irrationally for decades) a LOT of money.
And I'm ROTFLMAO with a lot of others who've been warning of this...
And I'm ROTFLMAO with a lot of others who've been warning of this...
