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qirex posted:I wonder if it would be possible to reverse that so employees and vendors got paid first and money people last but that would probably destroy our entire business lending model ultimately the employees and vendors need to know when the business is taking on a bunch of secured loans just to keep the lights on, so that they can say "gently caress that, declare bankruptcy while you still have money so at least we get paid".
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May 10, 2019 17:51
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Pretty much any newfangled financial instruments (including vanilla options) were created for the purpose of limiting and hedging risk. However, if you create something that limits risk, the reverse position is then increasing risk - hence you just do the opposite if you wanna gamble. There is nothing inherently "bad" in a credit default swap, even if they cratered the world in 08. A bank in a small town in Michigan that consists of a GM plant and a plant that supplies parts to the GM plant, will disproportionately be exposed to GM, but cannot really reject their business. So they buy CDS to cover GM corporate bonds to limit their risk. That some dipshits in Manhatten then decides to use them to gamble and the entire regulatory system is so utterly captured that it is incapable of recognizing this as gambling is a bad thing...
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May 10, 2019 18:02
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qirex posted:oh here's a fun one: now bankrupt startup munchery, the one that was running a fleet of rental refrigerator trucks 24/7 outside their soma warehouse, is in proceedings and the ceo is still paying himself a salary and wants a 250 grand "success fee" for finding someone to buy the leftover flaming wreckage for $5 million. And who ends up holding the bag? the small businesses who bought into their plan that guy will probably get sued by the unsecured creditor's committee that said, there's a giant problem of executives of bankrupt companies getting themselves paid handsomely in bankruptcy because they're "so important" that you "need to keep them". congress specifically banned retention bonuses, so now they just propose to give themselves success fees for how well the bankruptcy goes instead. and a lot of the time people don't object too much because those executives control the company in bankruptcy and the company has a ton of power in bankruptcy and you don't want to piss off the company unless you have to, and going after the exec's wallet is the best way to piss the company off. potentially more so than suing the executive, cause the exec has D&O insurance. the only time i've seen those "success fee" bonuses actually disallowed was when the company was so loving dumb they actually titled it a retention bonus, forcing the judge (who would have been happy to approve it otherwise) to tell them come on, you've hosed this up too badly to get it, congress specifically disallowed these. why do the law firms running the bankruptcy allow the companies pay those bonuses? well, who do you think hired the law firm running the bankruptcy? evilweasel fucked around with this message at 18:09 on May 10, 2019 |
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May 10, 2019 18:06
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Jabor posted:puts are relatively safe, since your maximum loss is whatever you spent buying the option. shorting has unlimited downside - if you're shorting an overhyped tech stock and don't have an unlimited bankroll, you're basically gambling that nobody in the world is going to be a big enough idiot to massively buy into it, which is a real bad bet. puts are relatively safe - but they're still relatively safe in the sense that the money you laid down on red is "relatively safe", it's still a bet with negative expected return. it's just one without the possibility of infinite negative return  qirex posted:I worked on a product with support for options for like a year, including designing interfaces for setting them up, and I admit I still don't completely understand them the price of an option depends on how far the price is from the current price (obviously, an option to buy uber stock at $45 is worth more than one to buy at $55), how "volitile" the price is which basically means how much the stock price moves (if the stock price swings wildly, an option is worth more because it's more likely to swing to 'in the money', if the stock price is usually very steady the option is worth less), and how long the term of the option is (if you can exercise the option anytime in the next five years, it's worth more than if you can exercise it anytime in the next year, because it's more likely it will be in the money at some point) how you go from those inputs to the price is complicated math, but the inputs themselves aren't really. for something like uber you'd probably pay quite a lot for a put option because people would assume the volatility is going to be very high evilweasel fucked around with this message at 18:16 on May 10, 2019 |
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May 10, 2019 18:07
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the market can remain irrational longer than you can remain solvent
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May 10, 2019 18:14
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Luigi Thirty posted:the market can remain irrational longer than you can remain solvent
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May 10, 2019 18:14
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plus you can generally unload puts for only a partial loss if they're going too far out of the money
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May 10, 2019 18:16
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refleks posted:Pretty much any newfangled financial instruments (including vanilla options) were created for the purpose of limiting and hedging risk. financial calculus was also developed with the intention of making money more efficiently, based on being better able to gauge the price over time. i think all of those securities and such are a considerable hazard due to how the pricing is defined; losses are essentially unlimited in some cases, as the size of the cash pool in the futures and derivative market is much larger that the net present value of the market. i think there are insufficient controls against catastrophic price crashes that lead to unnecessary market shocks. look at what happened when long term capital management crashed. that can still happen any day of the week. there was a frontline on that after the market collapse, it's still online even https://www.pbs.org/wgbh/frontline/film/warning credit swaps are probably okay, but in general there's too much rent and profit seeking over ethics in finance, too much systemic risk
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May 10, 2019 18:18
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Broken Machine posted:ethics in finance no honor among thieves
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May 10, 2019 18:20
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Munkeymon posted:plus you can generally unload puts for only a partial loss if they're going too far out of the money i mean yeah, but that partial loss is going to be like 95% or more and the market for those options may be illiquid enough you're getting only a fraction of even that small amount its "worth". don't trade futures or options, unless you'd be going to vegas with that money instead, and even then vegas will give you a free drink while you gamble and the casino is probably more effectively regulated
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May 10, 2019 18:21
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https://www.bloomberg.com/news/articles/2019-05-10/billions-in-dirty-cash-helped-fuel-vancouver-s-housing-boomquote:Billions in Dirty Cash Helped Fuel Vancouver's Housing Boom
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May 10, 2019 18:23
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DELETE CASCADE posted:no honor among thieves that is a big part of it; up to the 70s or so finance was much simpler and more ethical. then quantitative finance became a thing and ethics went out the door
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May 10, 2019 18:23
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prisoner of waffles posted:https://www.bloomberg.com/news/articles/2019-05-10/billions-in-dirty-cash-helped-fuel-vancouver-s-housing-boom it's a big club and you're not in it etc
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May 10, 2019 18:24
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quote:While public scrutiny until now has focused on the role of Chinese money -- both legal and illicit -- particularly in the Vancouver area, the latest investigation shows the region has been open to all.
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May 10, 2019 18:24
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Broken Machine posted:that is a big part of it; up to the 70s or so finance was much simpler and more ethical. then quantitative finance became a thing and ethics went out the door the biggest change is that investment banks used to be partnerships; i.e. the people running them had their money on the line too. so if the client, or the bank, took a big hit they too were out a lot of money. it didn't make sense to run huge future risks because you'd still be on the hook for them years later. now they've all shifted to a model where none of the people running this poo poo actually have any money on the line and their goal is to funnel as much money out as possible. if you run huge risks that pay out this year and get paid millions, then they go to poo poo next year, well lol all your millions are in your bank account, see you later suckers. if you were sensible this year such that you didn't make as much but won't lose a ton next year you maybe got a small bonus or more likely, you got fired and another guy like the one who got paid millions got hired.
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May 10, 2019 18:27
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prisoner of waffles posted:https://www.bloomberg.com/news/articles/2019-05-10/billions-in-dirty-cash-helped-fuel-vancouver-s-housing-boom quote:In real estate alone, an estimated C$5 billion may have been laundered last year in the province -- equivalent to 4.6% of all transactions by value in that period, according to one of the reports. In the Vancouver region, where housing prices rose more than 70% in five years, “I certainly believe that money laundering played a part,” James said. "a part" ye friggin busted duplo block
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May 10, 2019 18:29
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evilweasel posted:the biggest change is that investment banks used to be partnerships; i.e. the people running them had their money on the line too. so if the client, or the bank, took a big hit they too were out a lot of money. it didn't make sense to run huge future risks because you'd still be on the hook for them years later. there's essentially only goldman sachs left in their bracket of investment banking, other than perhaps chase. somewhere around two thirds of all dollars in the us pass through four banks at some point
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May 10, 2019 18:30
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Broken Machine posted:there's essentially only goldman sachs left in their bracket of investment banking, other than perhaps chase. somewhere around two thirds of all dollars in the us pass through four banks at some point yeah whoops that model didn't work out too well for merrill lynch, lehman brothers, or bear stearns goldman grabbed the only lifejacket and lifeboat in the cdo collapse and laughed as it watched the rest drown still though, now you see a ton of hedge funds which are basically set up in the same way; you pay the people running it a percentage of assets under management, and a cut of the profits...but they're not taking a cut of the losses.
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May 10, 2019 18:33
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also another big change is that there's no fiduciary responsibility as far as legal liability. goldman for example will structure deals so they make money whatever happens, they don't care
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May 10, 2019 18:36
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Jabor posted:the whole point of an ipo is to pay out vcs by looting pension funds that your buddy from college happens to run, so i'm not sure why people talk about the lyft ipo plummeting as a bad thing. they still got the money, didn't they?
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May 10, 2019 18:37
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it should be loving criminal that the people taking management fees for 401ks don't have a fiduciary duty to their clients
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May 10, 2019 18:39
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H.P. Hovercraft posted:it should be loving criminal that the people taking management fees for 401ks don't have a fiduciary duty to their clients in some cases fiduciary responsibility still applies, such as 401ks. if your company is negligent you can sue. but read the fine print and avoid management fees and such, pay attention to it.
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May 10, 2019 18:42
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flakeloaf posted:so as someone who knows nothing about investing, living on a planet where uber stock is most unquestionably never going up in value, what do i have to fear from burning a few hundos at the altar and shorting uber for six months everyone already answered this, but i have to stress that reality has no connection to the market, none, zip, nada. like look at teslsa, every single goon here knows its a flaming dumpster fire with no future and never will have a future. tesla knows that, most investors know that, etc. that does not matter. it's a gambling and perception to the average rube retail investors and pension funds used to soak it up while institutional investors slyly pretend its great before dumping when the time comes  if you had shorted say, really anytime in 2017 with options expiring in like early 2018, you would have lost mega buckaroos. likewise you could say "well now it has nowhere to go but down!" but then another 2018 could happen and boom lost many buckaroos. likewise the volatility at most anypoint in 2018 is just so much you could have your options excised when they're most inconvenient for you and woops now you lost a lot of bucks. honestly if you want to get your feet wet and have some funbucks, Robinhood is decent enoguh at just dipping $100 into it to mess around, but uh, definitely do not do shorts. you can buy some put options with a spread but it's still not a great idea. people already gave the best answer: go blow it on weed, booze, hookers, n blow in vegas instead. but i think it's also not a bad idea if you truly have some income just to research and understand how utterly loving stupid the markets are, it seems really incomprehensible and that's by design.
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May 10, 2019 18:55
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Broken Machine posted:financial calculus was also developed with the intention of making money more efficiently, based on being better able to gauge the price over time. i think all of those securities and such are a considerable hazard due to how the pricing is defined; losses are essentially unlimited in some cases, as the size of the cash pool in the futures and derivative market is much larger that the net present value of the market. i think there are insufficient controls against catastrophic price crashes that lead to unnecessary market shocks. look at what happened when long term capital management crashed. that can still happen any day of the week. Oh absolutely. There is no doubt that all those instruments are completely hosed due to the implementation of their markets, regulation and the complete lack of ethics of any kind within finance.
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May 10, 2019 19:24
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Uber IPO lol
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May 10, 2019 19:25
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being a retail investor as a Normal Person has and always will be nothing more than gambling; at best a more socially acceptable form of gambling
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May 10, 2019 19:39
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lancemantis posted:being a retail investor as a Normal Person has and always will be nothing more than gambling; at best a more socially acceptable form of gambling the stock market has a positive expected return and to the extent it's gambling it's the good form of gambling: the kind where the odds are in your favor that said things like stock picking, trying to time the market, etc, that's all just lowering your expected return yep. low-cost index funds are the only way to go.
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May 10, 2019 19:42
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click the friendly button, buy a fund someone else is managing with a low mer, hope there's a civilization left standing when it's pension time, and between now and then drink the beer and hug your spouse gotcha
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May 10, 2019 19:46
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well, the first step is just having a plan/goals in general and then pursuing options to meet those goals like signing up for some fintech startup when you have an employer supported investment retirement plan that you're not taking full advantage of or a need to plan for your childs education expenses is just kind of buying into marketing and cultural pressure to do something
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May 10, 2019 20:00
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https://www.youtube.com/watch?v=QNznD9hMEh0
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May 10, 2019 20:27
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uber almost below $42 
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May 10, 2019 20:37
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still mad that that emote isn't
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May 10, 2019 20:39
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haveblue posted:still mad that that emote isn't  aardvaard posted:uber almost below $42 $41.64
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May 10, 2019 20:50
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just buy vanguard funds market goes down? buy more vanguard funds
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May 10, 2019 21:14
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DELETE CASCADE posted:just buy vanguard funds can I buy into the vanguard "whole market minus companies that have never turned a profit" fund
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May 10, 2019 21:17
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prisoner of waffles posted:can I buy into the vanguard "whole market minus companies that have never turned a profit" fund vanguard 500 index fund
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May 10, 2019 21:29
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now if your concern is that a small handful of (profitable) tech companies are bigfooting the market, well....
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May 10, 2019 21:29
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Sure it’s called vanguard funds
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May 10, 2019 21:32
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prisoner of waffles posted:can I buy into the vanguard "whole market minus companies that have never turned a profit" fund you can do specific fields, like VHT is vanguard health care industries. VNQ is vanguard REIT investments, there's one for oil n mining, another for technology, and a bunch other specific sectors. you could build a profile excludes 'never turned a profit bullshit vc companies'
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May 10, 2019 21:51
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nice hit off the bubel bong for this friday afternoonhttps://www.sfgate.com/bayarea/article/billionaires-San-Francisco-world-report-wealth-x-13832316.php posted:[San Francisco] boasts more billionaires per capita than any other city in the world including Dubai and Hong Kong.
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May 10, 2019 23:20
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