3 ms·

Investors should steer clear of this, leave this for the speculators who have money to throw away. You're investing in an instrument that is leveraged against a

by d2viant 16y ago

Investors should steer clear of this, leave this for the speculators who have money to throw away. You're investing in an instrument that is leveraged against a company who's financial details are not public knowledge. This is a very dangerous situation as you're unable to make an objective assessment of the underlying value.

almond 16y ago
Your comment makes me nostalgic for the times when much of anything was traded based on an objective assessment of its underlying value. Despite the crash of 08 and subsequent deleveraging, we are still several generations removed from trading on fundamentals. Trading today is more about AI trader bots battling each other for a fraction of a cent of spread in the millisecond timescale than making a rational projection about the future profit potential of the company at the year or decade timescale. Like most other derivatives, this is a side bet, and Wall Street loves offering side bets on anything. You can even buy weather derivatives to hedge against rainy days, if that matters to you.
- noname123 16y ago
  I hate to defend the Street because most people in the industry are self-righteous duches. But then again so are most people who think that their latest RoR Web2.0 project are going to change the world, just poorer duches. Just facts, 1) Creating a derivative market on Facebook employee options creates value for the Facebook employees because it means that they can now sell their options in a more liquid and better-priced market for cash (to potentially finance their kids education, help buy for a house or for hookers). 2) High frequency/automated trading tightens the bid-ask spread of stocks and does away with the "old boys" network of market-makers; making the purchase of stocks for both mutual funds/retail investors cheaper by $0.02/share-$0.05/share; at a volume of 4+ billion shares daily average volume. These cents add up to savings for market participants. But these machines could also turn around and manipulate the market and help save for hookers for traders/programmers who run them. 3) Weather derivatives, like other derivatives do have intrinsic values. For hedgers (such as hotels/ski slopes/airline industry/agriculture harvest that could be severely affected by inclement weather), they are insurance policies against risk that they are not willing to bear and help ensure that these businesses stay in business. However, if you have an army of Physics PhD who could model the risk/probability in weather derivatives; you could sell these insurance policies and make money to get hookers.
  - deleted 16y ago
    [deleted]
  - roel_v 16y ago
    Your ideas on using financial markets to pay for hookers are intriguing to me and I wish to subscribe to your newsletter.
  - arethuza 16y ago
    That's the surprising thing I took away from reading quite a lot about the financial crisis - most of the trading makes perfect sense, and seems quite reasonable, when looked at in isolation. In "A Colossal Failure of Common Sense" there is a description of trading in distressed corporate bonds - I always wondered how you actually make money in bond markets and this was an interesting (to me) example of a scenario where what they were doing was obviously profitable and useful.
  - adw 16y ago
    3) http://weatherbill.com/ http://weatherbill.com/ (army of ex-Googlers, no direct business relationship but we have investors in common)
cturner 16y ago
Investing is often dangerous. If you invest in a mining exploration company, you're investing in minerals which may or may not be in the ground, and a management which may or may not have the acumen to extract them. People who think they have edge will invest, and so will some people who don't have a clue what they're doing. Some people will fit into both categories. I think that's true of investing generally. you're unable to make an objective assessment of the underlying value I'm not contradicting you here, but developing this idea. I'm always interested to hear the justification that people give for investing in blue-chip technology stocks like Apple and Google. They rarely deliver a dividend and some companies have a stated policy of not doing so. What's an objective assessment for the value of a company that's too big to be acquired, and which has committed to not delivering a dividend?
- philwelch 16y ago
  After decades of growth, they will grow old and fat and give up and pay dividends, like Microsoft. And when that day comes, the decades of not paying dividends will finally pay off in terms of the stratospheric heights the company has grown to. Which would be a far more convincing argument if it wasn't the fashionable thing in the tech industry to try as hard as possible to never grow old and fat.

by d2viant 16y ago

almond 16y ago

Your comment makes me nostalgic for the times when much of anything was traded based on an objective assessment of its underlying value. Despite the crash of 08 and subsequent deleveraging, we are still several generations removed from trading on fundamentals. Trading today is more about AI trader bots battling each other for a fraction of a cent of spread in the millisecond timescale than making a rational projection about the future profit potential of the company at the year or decade timescale. Like most other derivatives, this is a side bet, and Wall Street loves offering side bets on anything. You can even buy weather derivatives to hedge against rainy days, if that matters to you.

noname123 16y ago
I hate to defend the Street because most people in the industry are self-righteous duches. But then again so are most people who think that their latest RoR Web2.0 project are going to change the world, just poorer duches. Just facts, 1) Creating a derivative market on Facebook employee options creates value for the Facebook employees because it means that they can now sell their options in a more liquid and better-priced market for cash (to potentially finance their kids education, help buy for a house or for hookers). 2) High frequency/automated trading tightens the bid-ask spread of stocks and does away with the "old boys" network of market-makers; making the purchase of stocks for both mutual funds/retail investors cheaper by $0.02/share-$0.05/share; at a volume of 4+ billion shares daily average volume. These cents add up to savings for market participants. But these machines could also turn around and manipulate the market and help save for hookers for traders/programmers who run them. 3) Weather derivatives, like other derivatives do have intrinsic values. For hedgers (such as hotels/ski slopes/airline industry/agriculture harvest that could be severely affected by inclement weather), they are insurance policies against risk that they are not willing to bear and help ensure that these businesses stay in business. However, if you have an army of Physics PhD who could model the risk/probability in weather derivatives; you could sell these insurance policies and make money to get hookers.
- deleted 16y ago
  [deleted]
- roel_v 16y ago
  Your ideas on using financial markets to pay for hookers are intriguing to me and I wish to subscribe to your newsletter.
- arethuza 16y ago
  That's the surprising thing I took away from reading quite a lot about the financial crisis - most of the trading makes perfect sense, and seems quite reasonable, when looked at in isolation. In "A Colossal Failure of Common Sense" there is a description of trading in distressed corporate bonds - I always wondered how you actually make money in bond markets and this was an interesting (to me) example of a scenario where what they were doing was obviously profitable and useful.
- adw 16y ago
  3) http://weatherbill.com/ http://weatherbill.com/ (army of ex-Googlers, no direct business relationship but we have investors in common)

cturner 16y ago

Investing is often dangerous. If you invest in a mining exploration company, you're investing in minerals which may or may not be in the ground, and a management which may or may not have the acumen to extract them. People who think they have edge will invest, and so will some people who don't have a clue what they're doing. Some people will fit into both categories. I think that's true of investing generally. you're unable to make an objective assessment of the underlying value I'm not contradicting you here, but developing this idea. I'm always interested to hear the justification that people give for investing in blue-chip technology stocks like Apple and Google. They rarely deliver a dividend and some companies have a stated policy of not doing so. What's an objective assessment for the value of a company that's too big to be acquired, and which has committed to not delivering a dividend?

philwelch 16y ago
After decades of growth, they will grow old and fat and give up and pay dividends, like Microsoft. And when that day comes, the decades of not paying dividends will finally pay off in terms of the stratospheric heights the company has grown to. Which would be a far more convincing argument if it wasn't the fashionable thing in the tech industry to try as hard as possible to never grow old and fat.