4 ms·

It is indeed surprising because the profit motive is there and it is not limited to just rival billionaires. Any random guy with enough capital can short the c

by zawerf 8y ago

It is indeed surprising because the profit motive is there and it is not limited to just rival billionaires. Any random guy with enough capital can short the company stock and then place a hit on the CEO. I would expect stuff like that to happen super often but I don't think I have even heard of one real case like this.

kasey_junk 8y ago
Can you explain that trade precisely? Like with example orders/prices? I’d also be curious about how one gets reliable hitmen & deniability and the like.
- stevewodil 8y ago
  Explain what trade? If the CEO dies the stock will go down due to the uncertainty of the future for the company.
  - kasey_junk 8y ago
    Right. Give me literally the orders you put in, with a timeline for the hit. Then explain the price points, liquid capital & risk stats you need to make a particular profit. This is basic stuff for actual short sell trades so I presume it is easy to produce in the “hit a CEO” fund space.
    - jjoonathan 8y ago
      I'm no trader, so I couldn't confidently craft a good strategy to exploit an opportunity even if there was a good one. How about you explain why you don't expect this to be workable instead?
      - kasey_junk 8y ago
        Sure. The first rule is that no trade is a good one without specific entrance & exit points. Saying “I can predict a share will go up/down” independent of that specificity & risk profile is a classic example of someone who isn’t realistic in their trading behavior. The second rule is that shorting is much much harder to get right than going long. Small procedural errors or day long mistimes of the market turn trades unprofitable. Third, the market for this trade is exceptionally non-desperate people. If you have the money to make this trade happen you have virtually risk free access to trades that keep you fat & happy. Finally, the riskiest part of this trade is the most hand wavy “hit a ceo” is not a thing I can get a counter party to hedge. It’s quite literally impossible for the vast majority market participants. Even before we talk about the very real likelihood of going to jail let’s talk about the risk of not being successful. See above about short timing. All told the answer to “why don’t rich guys hit other rich guys to short their assets” can easily boil down to “cause that’s stupid”
      - thatcat 8y ago
        It could work, but it would be easier and cheaper to introduce uncertainty in other ways.
    - pathseeker 8y ago
      The problem is not the difficulty of the trade, the issue is that the SEC watches for people who profit off of unexpected events like this and unless you have a large track record of trading against companies it's going to put you right at the top of the suspect list. In your other comments you try to make it seem difficult but when you are in control of a hit at a specific time the risks can be heavily mitigated. The bet is not that the stock will fall, it's that it will underperform it's historic correlated stocks during that time frame. So the trade looks like this, find a stock with a very high correlation to the target (usually a competitor in the same space). At 9:55AM go long that stock equal dollar value you go short the target stock. This eliminates most risks induced by market-wide or even sector-wide price appreciation. Schedule assassination at 10:00AM. Close out the position when news breaks at 10:15AM or whatever. Even if the attempt fails, you will likely be close to even. Use margin or options to lever up. The trade is not the hard part of these schemes at all. The hard part is not getting caught because the trades are so easy that the SEC knows exactly what to look for.
      - kasey_junk 8y ago
        Well that and you are scheduling a murder for hire at a specific time & also the price movements of a share price at a specific time. While also managing the risk of either of those times being off even a little & not accounting for the risks of the criminality of the trade. Let me make this easier for you. Pick a share price now. A range of share prices post news event. A % chance each of those prices happen given the outcome you know will happen and an optimal execution path. Show your work on the Greeks. What does that look like for shorts? What happens when you add the risk pricing of “go to prison forever for being stupid” to the mix?
        pathseeker 8y ago
        >While also managing the risk of either of those times being off even a little The correlation trade buys you a big enough window to easily coordinate that. We're not talking about seconds, more on the order of hours. >not accounting for the risks of the criminality of the trade. Yes, I already told you that. >Let me make this easier for you. Pick a share price now. A range of share prices post news event. A % chance each of those prices happen given the outcome you know will happen and an optimal execution path. Show your work on the Greeks. I'm not sure what your issue is. The trade is trivial and I already gave it to you. You can't assign percentage chances to the prices after the event because there isn't enough data on reactions to unexpected deaths to assign any meaningful volatility values to them. There is no optimal execution path in an event like that because it's predicting the size of what will be an emotional reaction programmed into headline analysis traders. Headline hits, stock price dumps from automated trading, close position 5 mins later and be happy with the money you make. > What happens when you add the risk pricing of “go to prison forever for being stupid” to the mix? This is what I already told you the actual problem is. The trade is trivial to make money on but it's going to be impossible not to get caught unless you do something a lot more clever to have it hidden in someone's constant trading pattern of shorts. But the trade that makes money itself is trivial. It's the same thing with any insider information really. If you know an announcement is going to come out at 10:00AM that a company is being investigated for fraud by the SEC, you just short it immediately before 10:00AM and then close the position 5 minutes after the headline or whatever. Any % chances you assign to various prices will be a meaningless exercise because price declines are all about the public's perception for that particular company.
- flerchin 8y ago
  Bad skynet.
patio11 8y ago
I would expect stuff like that to happen super often but I don't think I have even heard of one real case like this. At the risk of stating the obvious: did this realization that reality fails to match your predictions cause you to question your model or your predictions?
- zawerf 8y ago
  Yea it did but editing the original comment makes it boring. I looked up the percentage swings caused by CEO deaths and it's actually not that big and not always a definite drop. So it wasn't as surely profitable as I thought. A murderous whitecollar sociopath probably has tons of other lower risk crimes he can commit instead. A typical insider trade would probably make him more. Also I am not really sure hitmen exist outside of movies... I can't verify this without putting myself on some list though. (Hello FBI! This is just morbid hypotheticals. I am not advocating serially murdering CEOs for profit)
tlb 8y ago
One factor is that it’s really hard to find loyal henchmen to perform hits who won’t later blackmail you or squeal to the police in return for a plea bargain. You need an organization to enforce loyalty down a chain of command, like any crime syndicate, and it’s hard to keep that a secret. It’s better to apply your energies to creating things.
- jacobush 8y ago
  Which boils down to that there must be a police worth squeling to.
throwaway352352 8y ago
If you want to go with a more Marxist interpretation, it's because they all know they can squeeze the lower classes for now. Once capitalism eats up all the growth they will turn on each other and capitalism will eat itself.
- adventured 8y ago
  Three centuries and seven billion people later, we're all still waiting for that day the market-based systems run out of growth. Any century now. And that's after the Marxists were forced to abandon their original premise: that it would deliver superior materialist results for the masses. When that spectacularly, entirely failed to come true and Marxism proved to be an economic and social disaster in every instance it has ever been attempted, the goal posts had to be endlessly shifted, decade after decade. Now it's nothing more than a fairytale, its adherents are told to patiently wait in faith until Capitalism finally dies off. Generation after generation of Marxists have come and gone, waiting for the market system to collapse globally. Instead, it has gradually spread all over the planet, resulting in the greatest uplifting of the global average and median standard of living the planet has ever seen.
abakker 8y ago
https://www.bloomberg.com/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.bloomberg.com/opinion/articles/2018-08-12/the-10... Law number 5. not a hit on the CEO, but close. Those trades are hard to pull off. the SEC is looking for successful out of the money options trades.
vlovich123 8y ago
How does this theory fit when this company was privately held?
antaviana 8y ago
Not a CEO, but the Borussia Dortmund bus attack with a bomb on the way to a Champions League game was made by a shorter. Certainly killing a few players would have made the stock fall a whole lot.

by zawerf 8y ago

kasey_junk 8y ago

Can you explain that trade precisely? Like with example orders/prices? I’d also be curious about how one gets reliable hitmen & deniability and the like.

stevewodil 8y ago
Explain what trade? If the CEO dies the stock will go down due to the uncertainty of the future for the company.
- kasey_junk 8y ago
  Right. Give me literally the orders you put in, with a timeline for the hit. Then explain the price points, liquid capital & risk stats you need to make a particular profit. This is basic stuff for actual short sell trades so I presume it is easy to produce in the “hit a CEO” fund space.
  - jjoonathan 8y ago
    I'm no trader, so I couldn't confidently craft a good strategy to exploit an opportunity even if there was a good one. How about you explain why you don't expect this to be workable instead?
    - kasey_junk 8y ago
      Sure. The first rule is that no trade is a good one without specific entrance & exit points. Saying “I can predict a share will go up/down” independent of that specificity & risk profile is a classic example of someone who isn’t realistic in their trading behavior. The second rule is that shorting is much much harder to get right than going long. Small procedural errors or day long mistimes of the market turn trades unprofitable. Third, the market for this trade is exceptionally non-desperate people. If you have the money to make this trade happen you have virtually risk free access to trades that keep you fat & happy. Finally, the riskiest part of this trade is the most hand wavy “hit a ceo” is not a thing I can get a counter party to hedge. It’s quite literally impossible for the vast majority market participants. Even before we talk about the very real likelihood of going to jail let’s talk about the risk of not being successful. See above about short timing. All told the answer to “why don’t rich guys hit other rich guys to short their assets” can easily boil down to “cause that’s stupid”
    - thatcat 8y ago
      It could work, but it would be easier and cheaper to introduce uncertainty in other ways.
  - pathseeker 8y ago
    The problem is not the difficulty of the trade, the issue is that the SEC watches for people who profit off of unexpected events like this and unless you have a large track record of trading against companies it's going to put you right at the top of the suspect list. In your other comments you try to make it seem difficult but when you are in control of a hit at a specific time the risks can be heavily mitigated. The bet is not that the stock will fall, it's that it will underperform it's historic correlated stocks during that time frame. So the trade looks like this, find a stock with a very high correlation to the target (usually a competitor in the same space). At 9:55AM go long that stock equal dollar value you go short the target stock. This eliminates most risks induced by market-wide or even sector-wide price appreciation. Schedule assassination at 10:00AM. Close out the position when news breaks at 10:15AM or whatever. Even if the attempt fails, you will likely be close to even. Use margin or options to lever up. The trade is not the hard part of these schemes at all. The hard part is not getting caught because the trades are so easy that the SEC knows exactly what to look for.
    - kasey_junk 8y ago
      Well that and you are scheduling a murder for hire at a specific time & also the price movements of a share price at a specific time. While also managing the risk of either of those times being off even a little & not accounting for the risks of the criminality of the trade. Let me make this easier for you. Pick a share price now. A range of share prices post news event. A % chance each of those prices happen given the outcome you know will happen and an optimal execution path. Show your work on the Greeks. What does that look like for shorts? What happens when you add the risk pricing of “go to prison forever for being stupid” to the mix?
      - pathseeker 8y ago
        >While also managing the risk of either of those times being off even a little The correlation trade buys you a big enough window to easily coordinate that. We're not talking about seconds, more on the order of hours. >not accounting for the risks of the criminality of the trade. Yes, I already told you that. >Let me make this easier for you. Pick a share price now. A range of share prices post news event. A % chance each of those prices happen given the outcome you know will happen and an optimal execution path. Show your work on the Greeks. I'm not sure what your issue is. The trade is trivial and I already gave it to you. You can't assign percentage chances to the prices after the event because there isn't enough data on reactions to unexpected deaths to assign any meaningful volatility values to them. There is no optimal execution path in an event like that because it's predicting the size of what will be an emotional reaction programmed into headline analysis traders. Headline hits, stock price dumps from automated trading, close position 5 mins later and be happy with the money you make. > What happens when you add the risk pricing of “go to prison forever for being stupid” to the mix? This is what I already told you the actual problem is. The trade is trivial to make money on but it's going to be impossible not to get caught unless you do something a lot more clever to have it hidden in someone's constant trading pattern of shorts. But the trade that makes money itself is trivial. It's the same thing with any insider information really. If you know an announcement is going to come out at 10:00AM that a company is being investigated for fraud by the SEC, you just short it immediately before 10:00AM and then close the position 5 minutes after the headline or whatever. Any % chances you assign to various prices will be a meaningless exercise because price declines are all about the public's perception for that particular company.
flerchin 8y ago
Bad skynet.

patio11 8y ago

I would expect stuff like that to happen super often but I don't think I have even heard of one real case like this. At the risk of stating the obvious: did this realization that reality fails to match your predictions cause you to question your model or your predictions?

zawerf 8y ago
Yea it did but editing the original comment makes it boring. I looked up the percentage swings caused by CEO deaths and it's actually not that big and not always a definite drop. So it wasn't as surely profitable as I thought. A murderous whitecollar sociopath probably has tons of other lower risk crimes he can commit instead. A typical insider trade would probably make him more. Also I am not really sure hitmen exist outside of movies... I can't verify this without putting myself on some list though. (Hello FBI! This is just morbid hypotheticals. I am not advocating serially murdering CEOs for profit)

tlb 8y ago

One factor is that it’s really hard to find loyal henchmen to perform hits who won’t later blackmail you or squeal to the police in return for a plea bargain. You need an organization to enforce loyalty down a chain of command, like any crime syndicate, and it’s hard to keep that a secret. It’s better to apply your energies to creating things.

jacobush 8y ago
Which boils down to that there must be a police worth squeling to.

throwaway352352 8y ago

If you want to go with a more Marxist interpretation, it's because they all know they can squeeze the lower classes for now. Once capitalism eats up all the growth they will turn on each other and capitalism will eat itself.

adventured 8y ago
Three centuries and seven billion people later, we're all still waiting for that day the market-based systems run out of growth. Any century now. And that's after the Marxists were forced to abandon their original premise: that it would deliver superior materialist results for the masses. When that spectacularly, entirely failed to come true and Marxism proved to be an economic and social disaster in every instance it has ever been attempted, the goal posts had to be endlessly shifted, decade after decade. Now it's nothing more than a fairytale, its adherents are told to patiently wait in faith until Capitalism finally dies off. Generation after generation of Marxists have come and gone, waiting for the market system to collapse globally. Instead, it has gradually spread all over the planet, resulting in the greatest uplifting of the global average and median standard of living the planet has ever seen.

abakker 8y ago

https://www.bloomberg.com/opinion/articles/2018-08-12/the-10-laws-of-insider-trading https://www.bloomberg.com/opinion/articles/2018-08-12/the-10... Law number 5. not a hit on the CEO, but close. Those trades are hard to pull off. the SEC is looking for successful out of the money options trades.

vlovich123 8y ago

How does this theory fit when this company was privately held?

antaviana 8y ago

Not a CEO, but the Borussia Dortmund bus attack with a bomb on the way to a Champions League game was made by a shorter. Certainly killing a few players would have made the stock fall a whole lot.