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I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the

I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but even they were critizising the quality of their report, EY could not find the missing money and the public prosecutor in Munich started a criminal investigation. They still invested. One of them is a computer scientist and CEO of a small business, the other one has a PHD in business administration and works at a big three consulting firm. Even highly educated people seem think of investments inherently as pyramid schemes. "It fell, so it has to go up again next!" "It cannot rise further, it's already at its all-time-high." No consideration for the actual value being created. At some level, you cannot blame them, TINA and monetary policy actually make it true. Auditing and rating companies, who are supposed to help here are a joke, making it all seem like a game. It digusts me. On one end of the spectrum, money is something real and valuable. It decides, for how long you have to work, whether you have to live in your car or what you can afford to eat that day. On the other end, it's a a surreal thing. The direction it goes is controlled by private (!) instutions with enourmous amounts of power. I hope that more people, who did not need the money lost it, than those who needed it. I also hope, that not only Wirecard staff will get prosecuted, but auditors have to pay for this in some way. Why do we allow auditors to be private institutions with a profit motive, who are also doing business consulting on top of it?

dr_faustus 6y ago
The motivation of your friends to put many in Wirecard stock probably less about investment and more about gamblng. I guess, they didnt invest their life's savings but just some money the had not better use for right now. In these times of zero risk free returns (and even low returns on junk bonds), investing in distressed assets can be a good strategy if you have the stomach to lose it all.
- allendoerfer 6y ago
  Probably true. But to me that's still disgusting. I belong to a social class, which can put an amount of money you could use to feed a family in the first world for an entire year into a company that's probably a pyramid scheme without even blinking an eye. Just makes you think, what kind of stuff people above us could do.
zpeti 6y ago
Unfortunately the same reasoning could be applied to Hertz selling stock in a bankrupt company, which would have been impossible 5-10 years ago, but maybe even a few months ago. I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse. Governments are buying company bonds for gods sake. Stocks aren't about market pricing any more. They are some vanity metric that governments are obsessed about now to keep from falling (just like house prices).
- bildung 6y ago
  > I think the markets have been completely messed up by stimulus since 2008 Maybe, but OTOH the stock market returns are actually no different from pre 2008 (S&P500 in this case): https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...
  - fennecfoxen 6y ago
    That's a symptom of the problem GP is alleging, though: of companies obtaining returns by mooching off the free capital provided at taxpayer expense to grow your market share at the expense of others... rather earning them them by doing hard work to build businesses that earn their profits, while paying the real costs that your unsubsidized competitors have to pay themselves. There's been real disruption since 2008. Stock market returns don't show it, and they should. The efficient allocation of society's capital depends on honesty and fairness here, and instead this gap is papered over by government intervention, meant first and foremost to prop up politicians' careers, in an unsustainable sham. It will go better for society if we are honest about it than if we wait for everything to collapse when we are truly put to a test and find there is nothing to our prosperity but a mirage.
  - _curious_ 6y ago
    I concur with zpeti’s sentiment that “I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse.” And as you, Qasaur, say: “this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.” I think society has reached that breaking point and starting to show the cracks. Digging underneath the protests/riots/violence/standoffs in cities like Minneapolis or Seattle, as they have revealed, what you'll find is rooted in socioeconomics.
erfgh 6y ago
You're inferring way too much from a couple of failed investments.
- allendoerfer 6y ago
  Wirecard was the biggest bank of the 4th biggest economy. So I inferred some systemic issues here.
  - LunaSea 6y ago
    Isn't Deutsche Bank the largest bank in Germany?
    - allendoerfer 6y ago
      Right now it is again. Deutsche Bank has a market cap of around € 17 billion, Wirecard has (as of writing this) around € 3 billion.
      - blibble 6y ago
        for size comparisons: banks are typically compared by the sum of their assets (not market cap)
  - sveme 6y ago
    Biggest by market value - and that‘s because it was considered a tech company rather than a bank.
deleuze 6y ago
I mean, yeah, as you point out with TINA, can you really blame them? When the Federal Reserve essentially states that it will engage in any amount of QE to keep equities afloat, how is that not a pyramid scheme?
- mrep 6y ago
  How do you get that? The FED is mostly just buying our own governments debt through treasury securities and citizens home debt through mortgage back securities [0]. They haven't touched equities and have barely purchased any corporate bonds. [0]: https://www.federalreserve.gov/releases/h41/current/h41.htm https://www.federalreserve.gov/releases/h41/current/h41.htm
  - deleuze 6y ago
    I never said they were buying equities. Buying bonds and pushing rates to 0 still has an impact on the TINA attitude. of the market. And, in more direct ways, if you buy junk bonds from me, then I go turn around and buy equities, it's just the Fed buying equities with a few more steps in the middle.
    - mrep 6y ago
      Or they could sit on the cash which many people do in a recession. And again, they've barely touched junk bonds. They are mostly just buying our own governments debt through US treasury securities, the same kind that the US government has created and sold 3 trillion dollars worth this year [0], mainly to fund the CARES act. [0]: https://www.treasurydirect.gov/govt/reports/pd/pd_debttothepenny.htm https://www.treasurydirect.gov/govt/reports/pd/pd_debttothep...

dr_faustus 6y ago

The motivation of your friends to put many in Wirecard stock probably less about investment and more about gamblng. I guess, they didnt invest their life's savings but just some money the had not better use for right now. In these times of zero risk free returns (and even low returns on junk bonds), investing in distressed assets can be a good strategy if you have the stomach to lose it all.

allendoerfer 6y ago
Probably true. But to me that's still disgusting. I belong to a social class, which can put an amount of money you could use to feed a family in the first world for an entire year into a company that's probably a pyramid scheme without even blinking an eye. Just makes you think, what kind of stuff people above us could do.

zpeti 6y ago

Unfortunately the same reasoning could be applied to Hertz selling stock in a bankrupt company, which would have been impossible 5-10 years ago, but maybe even a few months ago. I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse. Governments are buying company bonds for gods sake. Stocks aren't about market pricing any more. They are some vanity metric that governments are obsessed about now to keep from falling (just like house prices).

bildung 6y ago
> I think the markets have been completely messed up by stimulus since 2008 Maybe, but OTOH the stock market returns are actually no different from pre 2008 (S&P500 in this case): https://www.macrotrends.net/2526/sp-500-historical-annual-returns https://www.macrotrends.net/2526/sp-500-historical-annual-re...
- fennecfoxen 6y ago
  That's a symptom of the problem GP is alleging, though: of companies obtaining returns by mooching off the free capital provided at taxpayer expense to grow your market share at the expense of others... rather earning them them by doing hard work to build businesses that earn their profits, while paying the real costs that your unsubsidized competitors have to pay themselves. There's been real disruption since 2008. Stock market returns don't show it, and they should. The efficient allocation of society's capital depends on honesty and fairness here, and instead this gap is papered over by government intervention, meant first and foremost to prop up politicians' careers, in an unsustainable sham. It will go better for society if we are honest about it than if we wait for everything to collapse when we are truly put to a test and find there is nothing to our prosperity but a mirage.
- _curious_ 6y ago
  I concur with zpeti’s sentiment that “I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse.” And as you, Qasaur, say: “this erroneous monetary policy will only stop if politicians and central bankers are willing to stomach a harsh market recalibration, but seeing as they seem to not be willing to do that judging from their recent actions so I fear that this systemic malinvestment and inequality will just get worse and worse until something breaks.” I think society has reached that breaking point and starting to show the cracks. Digging underneath the protests/riots/violence/standoffs in cities like Minneapolis or Seattle, as they have revealed, what you'll find is rooted in socioeconomics.

erfgh 6y ago

You're inferring way too much from a couple of failed investments.

allendoerfer 6y ago
Wirecard was the biggest bank of the 4th biggest economy. So I inferred some systemic issues here.
- LunaSea 6y ago
  Isn't Deutsche Bank the largest bank in Germany?
  - allendoerfer 6y ago
    Right now it is again. Deutsche Bank has a market cap of around € 17 billion, Wirecard has (as of writing this) around € 3 billion.
    - blibble 6y ago
      for size comparisons: banks are typically compared by the sum of their assets (not market cap)
- sveme 6y ago
  Biggest by market value - and that‘s because it was considered a tech company rather than a bank.

deleuze 6y ago

I mean, yeah, as you point out with TINA, can you really blame them? When the Federal Reserve essentially states that it will engage in any amount of QE to keep equities afloat, how is that not a pyramid scheme?

mrep 6y ago
How do you get that? The FED is mostly just buying our own governments debt through treasury securities and citizens home debt through mortgage back securities [0]. They haven't touched equities and have barely purchased any corporate bonds. [0]: https://www.federalreserve.gov/releases/h41/current/h41.htm https://www.federalreserve.gov/releases/h41/current/h41.htm
- deleuze 6y ago
  I never said they were buying equities. Buying bonds and pushing rates to 0 still has an impact on the TINA attitude. of the market. And, in more direct ways, if you buy junk bonds from me, then I go turn around and buy equities, it's just the Fed buying equities with a few more steps in the middle.
  - mrep 6y ago
    Or they could sit on the cash which many people do in a recession. And again, they've barely touched junk bonds. They are mostly just buying our own governments debt through US treasury securities, the same kind that the US government has created and sold 3 trillion dollars worth this year [0], mainly to fund the CARES act. [0]: https://www.treasurydirect.gov/govt/reports/pd/pd_debttothepenny.htm https://www.treasurydirect.gov/govt/reports/pd/pd_debttothep...