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A 28-year-old with no degree becomes a must read on the economy
- ixvvqktiwl 6y agoAlso check out r/investing or r/wallstreetbets, lots of free opinions on what's happening in the world.
- HenryKissinger 6y ago> check out ... r/wallstreetbets Don't. At least not for anything other than the memes.
- ixvvqktiwl 6y agoHonestly I think the average IQ on WSB is pretty high, you just have to learn to sift through the junk. There are plenty of gold nuggets to be found. Also the memes are great. What's the point in life if you aren't having fun?
- ashtonkem 6y agoThat sub is for the lulz; it’s not a serious analysis of the market. The best description I’ve heard of it was “a jackass for finance, made all the funnier because you realize that people actually got hurt”
- HenryKissinger 6y ago4chan with a Bloomberg terminal.
- hoka-one-one 6y agoIQ has inherently racist origins...I think as a society we'd do better to remove it from our lexicon, as it's simply racialist pseudoscience meant to preserve the status quo.
- danieltillett 6y agoCan we please have one discussion that isn’t about race.
- deleted 6y ago[deleted]
- lipstone 6y agoLol, I suggest you don't visit WSB.
- deleted 6y ago[deleted]
- acwan93 6y agoSerious question: does anyone know when/why that subreddit became what is is today? I used to follow it in the early 2010s and it actually provided some reasonable insights.
- joshmn 6y agoI can tell you for sure that Robinhood hasn't contributed positively the quality of content.
- ForHackernews 6y agoI have to beg to differ. The Robinhood "infinite money cheat code" was WSB's finest hour.
- OGWhales 6y ago“It literally can’t go tits up”
- StavrosK 6y agoWhat was that, for those of us out of the loop?
- 0xcde4c3db 6y agoI don't remember (and maybe never read) the exact details, but as I recall it wasn't so much "infinite money" as "infinite leverage". You could somehow buy assets leveraged, then make the system "forget" that those assets were already leveraged, so it lets you leverage them again to buy something else.
- ForHackernews 6y agoDecent article here: https://banyanhill.com/robinhood-infinite-leverage-money-cheat-code/ https://banyanhill.com/robinhood-infinite-leverage-money-che... Amusing video here: https://www.youtube.com/watch?v=qKXrVriacUM https://www.youtube.com/watch?v=qKXrVriacUM
- stopping 6y agoThere may be lots of free opinions, but I don't believe they have much value to the novice investor. I'll admit there are some hidden gems, but separating the wheat from the chaff requires more insight than these subreddits provide on average.
- StavrosK 6y agoThey're free and worth every penny.
- DevKoala 6y agoHis piece challenging Frank Partnoy’s fear mongering comparison between CDO’s and CLO’s is great. https://nathantankus.substack.com/p/worst-case-scenario-or-inconsistent https://nathantankus.substack.com/p/worst-case-scenario-or-i...
- FabHK 6y agoThat article was my first introduction to Tankus's writings, and I must say that I disagree - it's not great. I found Partnoy's article quite persuasive, and Tankus's response [1] not convincing. For example, this is confused, in my opinion: > Remember that collateralized loan obligations are simpler instruments than collateralized debt obligations. There is one layer between individual loans to corporations and CLOs whereas CDOs were two layers away from individual mortgages. Second, because CDOs were made up of mortgage backed securities, what mortgage backed securities were in them mattered. It's important in this context to know what the purpose of CDOs were. They were the equivalent of kitchen leftovers thrown into a lunch special the next day and cooked in such a way as to hide that they aren’t fresh. CDOs generally took the riskier and lower rated portions of mortgage backed securities and made up entire securities out of them. I disagree. They are quite similar. Mortgages are wrapped into Mortgage Backed Securities, yes, but they are typically not tranched. So it's basically more or less like one big "average" mortgage. Those then are put into a CDO, and tranched. (Two levels of tranching are normally called CDO-squared.) Next, house values are somewhat floored - a house can loose 30% value, maybe 40 or 50%, but that's really quite unlikely. Debt, per se, will normally also have some significant recovery value if equity goes to zero. However, a comparatively junior loan might easily go to zero if a company goes bad. Partnoy mentions this explicitly and highlights that many underlying loans are fairly junior: > > We already know that a significant majority of the loans in CLOs have weak covenants that offer investors only minimal legal protection; in industry parlance, they are “cov lite.” The holders of leveraged loans will thus be fortunate to get pennies on the dollar as companies default—nothing close to the 70 cents that has been standard in the past. Thus, it is CLOs that have something akin to double-tranching, more so than CDOs, contra Tankus's assertion. > The point is, a proper comparison between mortgage securities and syndicated corporate loan securities would compare the value of outstanding “subprime” Mortgage Backed Securities to outstanding Collateralized Loan Obligations, not to Collateralized Debt Obligations. No. Compare the CLOs to CDOs, or corporate debt to mortgages, or corporate bonds to MBS. > In other words, in nominal dollar terms the current CLO market is ⅓ of the size of the subprime mortgage backed securities market then. This actually understates how relatively paltry Collateralized Loan Obligations are. That's not paltry. A big problem with CDOs was that it was very intransparent where the losses would accrue. The underlying mortgage market went down, say, 10%. If every bank took a 10% hit, fine. But given the opaqueness, it could be that one bank would take a 5% hit, the other a 25% hit. Nobody could tell, and that made every bank suspect. CLOs pose the same problem. > The key here is to understand that the problems with CDOs were not because of losses on the underlying mortgages. They were dynamite, engineered to explode. The nitroglycerin was not the mortgages but credit default swaps, a type of unregulated insurance that let purchasers bet on whether a specific security was going to fail or not. Dynamite is engineered to be stable and less explosive than nitroglycerin, and most CDOs were not engineered to explode either. Towards the end, when smart money wanted to short the market, some products were built and sold to long investors so that the smart money could short it, sure. But Tankus doesn't provide evidence about the relative size of that. > Many of these collateralized debt obligations were filled with credit default swaps tied to the riskier and lower rated tranches of Mortgage Backed Securities which I discussed earlier, which were guaranteed to fail. Again, CDOs are tranched, MBS aren't generally (except in the sense that a CDO is an MBS in the wider sense). CDOs based on CDS are synthetic CDOs, and yeah, they were constructed and sold. > One way of recognizing how fundamentally different circumstances are is by examining what happened to AAA rated mortgage backed securities. If, as Partnoy implies, the losses on CDOs were simply a matter of defaults on the underlying mortgages, triple A rated Residential Mortgage backed Securities should have taken losses comparable to CDOs. That's nonsense. The whole point is that the expected loss of an MBS is independent of correlation, while the expected loss of a CDO tranche depends on correlation. That's really the basic feature - if you have a non-linear payoffs of an underlying, vol enters, and if you have an underlying consisting of many other underliers, the vol depends on the correlation. And really, that's what this is about. Higher tranches of CDOs or CLOs are safe when correlation is low, but when one massive black swan hits, namely a pandemic, then correlation is not low, and tranches considered safe before might fail. And one still has the opacity of CDOs. > In fact, it’s likely that collateralized loan obligations made up of the top portion of a portfolio of loans will do the best of any of the Bank’s corporate loans [note: presumably he means the top tranches of such a CLO]. When a bank originates and holds a loan, it immediately takes losses if the borrower defaults. In contrast, it takes very substantial levels of defaults before holders of the top portion, or “senior tranche” of a collateralized loan obligation realize any losses. For any given portfolio of loans, given the same overall default rate and the same loan modifications, senior tranche holders will experience less losses than outright holders of a portfolio of loans. This structure may encourage originating lower quality loans and investors may overpay as a result of tranches being mis-rated by credit rating agencies. Indeed! That's the problem. Correlation, again. > However, it can’t be said that this structure, in and of itself, magnifies losses for investors in the senior tranche. In fact, it works as intended- other investors bear the bulk of the risks. Not the structure in and of itself... but the problem remains: you construct a AAA security out of worse quality loans assuming low correlation, and then a pandemic hits... Finally, Tankus imputes ulterior motives on Partnoy without any warrant. To sum up, using Tankus summary: 1. No, collateralized loan obligations are not a major systematic risk to the banking system. - well, he hasn't refuted that claim though. 2. No, collateralized loan obligations are not like Collateralized Debt Obligations. - well, they are somewhat. It's the correlation, baby. 3. The Great Financial Crisis was a credit default swap crisis, not a mortgage crisis. - CDS (like all derivatives) are in net zero supply. So, they just redistribute the wins and losses. The losses came from mortgages. CDS redistributed them, CDOs made them very opaque. CLOs can do the same. 4. Credit Default Swaps are not threatening another banking crisis. - Hopefully. CLOs neither, hopefully. 5. Even the leveraged loan market is only somewhat important macroeconomically. - Ok. 6. Liquidity and capital issues are being handled differently today. - Hopefully. But we also have an unprecedented crisis at hand. 7. Leveraged loan issuance is not the major cause of financial distress among businesses. - Not yet. In the response to Partnoy's response, Tankus reiterates his misunderstanding: > I do not think that popular press pieces should present Collateralized Loan Obligations as similar to Collateralized Debt Obligations when the unique and dangerous feature of Collateralized Debt Obligations is that they were securitizations of already structured products and not securitizations of underlying loans directly. That's not the unique and dangerous feature. The unique feature of a CDO is the tranching, which it does have in common with a CLO. > Mortgage Backed Securities are the proper analogue to Collateralized Debt Obligations and if Partnoy’s piece were edited to reflect this, a large degree of its rhetorical force would be weakened and the premise of the article may not even hold up to scrutiny. Same same. Or: > However, a major overarching point of my piece is that that extreme scenario is only plausible when it is implied that top tranche CLOs are like subprime top tranche CDOs. I’m claiming that this is an apples to oranges comparison. Same same. It's a valid comparison, in my view. > Further, it’s important to grasp that to the extent to which the top tranches of CLOs are threatened on the scale that Partnoy speculates about, no other portfolio of loans would be safe. Correct. But the portfolio of loans wouldn't be rated AAA, while the CLO senior tranches are. That's the problem. So, I haven't read much of Tankus, but from this one piece (and the reply to the reply), I am not that impressed. [1] https://nathantankus.substack.com/p/is-there-really-a-looming-bank-collapse https://nathantankus.substack.com/p/is-there-really-a-loomin...
- viburnum 6y agoTankus has been studying economics full time for twelve years! He's earned it. His posts used to be not good but he's paid his dues.
- melling 6y agoWhat’s the famous saying about the best way to get the right answer? Something about posting it to the Internet and having the crowd correct you?
- gen220 6y agoCunningham’s Law! It is great and has many applications, when you’re trying to squeeze good information out of a system that doesn’t circulate it naturally.
- swyx 6y agoI have a fun anecdote about this one. I once misattributed this on a podcast and called it Godwin's Law. A listener pinged me about it to correct me on the next day. Cunningham's Law is self-healing.
- donw 6y agoUniversities, in their current incarnation, offer a poor return on investment. When a degree was scarce, it was valuable. As was when a degree guaranteed a certain level of knowledge and skill. But that really isn't the case nowadays. The vast majority of degree programs exist simply to collect tuition dollars, and the students that undertake these programs would be better-served by a vocational or professional education system. The standard counter-argument here is that you gain social skills in university... but the same is true when you join the workforce. Germany gets this one right, by the way. That is not to say that the idea of a university has outlived its utility! We need spaces where curious minds can seek answers from and challenge themselves against well-practiced experts. That's part of how you set a country up for future success. But that's not what we have now, not from my experience in the United States. What we need are Schools of Athens, but what we have are Temples of Amun. So it's not all that surprising that, in the information age, curious people look to both the cost of a degree, and to the legions of unemployed graduates, and figure they can do better.
- kiba 6y agoCollege offers a "poor" return on investment because students focused on passing their exams and their classes, with no thought on application or any plan to retain the knowledge they acquired. Thus, any skills or knowledge they gained are only temporary, to be forgotten as soon as they graduate. In this perspective, college can teach as much as they want, but 80% will evaporate.
- akudha 6y agoYup. I was a shitty student (I used to read novels on my way to the exam hall) and still got a masters degree without breaking a sweat (with decent grades). And this is from a good institution with a fairly tough entrance exam. Everything I learned, I learned outside school. Sometimes I wonder if the only things that schools provide are friendships and connections, and in some cases brand recognition. Something is not right about the way we teach youngsters.
- vesche 6y agoPaywall bypass: wget -U "Mozilla/4.0" "https://www.bloomberg.com/news/articles/2020-07-02/nathan-tankus-s-newsletter-subscribers-don-t-care-about-diplomas" && firefox nathan-tankus-s-newsletter-subscribers-don-t-care-about-diplomas I don't really like when non-formal education is highlighted as surprising in a talented individual. At least in the US, a college education will often put you in serious debt and seems to currently be teaching all sorts of non-technical inaccuracies while ill-preparing people for the real world. With so much knowledge & resources being available for free online: why would any smart, independent young person want to go to college in the US? The only reason I can think of is to become something that you actually _need_ to go to college for like a doctor or lawyer. It's pretty crazy when people like Jordan Peterson, who used to teach at Harvard, is suggesting that young people go to trade schools. The college system in the US needs to be restructured or die.
- runawaybottle 6y agoIt’s starting to become an unspoken understanding. The same way we all know just because you got a HS Diploma doesn’t mean anything.
- beenBoutIT 6y agoIn America a having a HS degree won't get you very far or impress most people but not having one is a terrible thing. The amount of work required to pass through four years of public school is a joke, 'D' grades across the board will do the job.
- melling 6y agoShouldn’t we be willing to reward his effort? It has been a long road. Does anyone subscribe to his newsletter?
- kelexander 6y agoYeah that's right
- deleted 6y ago[deleted]
- neonate 6y agohttps://archive.is/THHp4 https://archive.is/THHp4
- WalterBright 6y agoAnyone who has actually read Monetary History is going to be way, way more interesting than those that get their economics from internet memes, slogans, and journalists.
- deleted 6y ago[deleted]
- rmrfstar 6y agoYou've got to be careful with Friedman's work. He's highly persuasive, but presents an incomplete picture. For example, he dogmatically asserts that "market power" is not an obstacle to market efficiency. According to Friedman, monopolists are only problematic to the extent that they corrupt government to their ends. The book's central thesis is that Fed monetary policy made the depression worse. That is widely accepted by economists of all stripes. However, Friedman also argues that the Fed should boldly step in as a lender of last resort. He ignores the fact that no institution can make a realistic solvency determination during a crisis. What that means in practice is he supports things like TARP. This amounts to a statement that the cost of financial panics (which are an inherent characteristic of all systems with maturity transformation) should be born by the public rather than the financial sector. That is a political decision, not a technical economic one. A lot of economics from the Friedman era is about clothing political choices in technical jargon.
- nikivi 6y agoNathan made a thread as a reply to this piece on him https://twitter.com/NathanTankus/status/1278777095670370304 https://twitter.com/NathanTankus/status/1278777095670370304
- eganist 6y agoThank you for linking this. Arguments will be made that Nathan is politicizing his spotlight, but he's simply seizing the moment to cast light on a dark and apolitical truth most of us take for granted. I hope HNers can take the time to read this with an open and introspective heart and mind. Unrolled: https://threadreaderapp.com/thread/1278777095670370304.html https://threadreaderapp.com/thread/1278777095670370304.html
- dkdk8283 6y agoIt absolutely is politicized and I find this to minimize his accomplishments.
- eganist 6y agoCan you help me understand why you believe that highlighting privilege arising from one's innate characteristics is political?
- smeeth 6y agoNot OP but I’d be curious to hear why you think it isn’t. As best I can tell the distinguishing characteristic between people who believe in the existence of white/male privilege and those who do not is political affiliation.
- eganist 6y ago> As best I can tell the distinguishing characteristic between people who believe in the existence of white/male privilege and those who do not is political affiliation. The people who are not white, not cis-male, or not straight are the people who have encountered consistent barriers as a result of these negations. These are all immutable parameters, not political affiliations. No one chooses to be white (or not). No one chooses to be male (or not). No one chooses to be straight (or not). Women? Barriers. Trans? Barriers. Black? Barriers. Middle Eastern? Even though we're classified as white by tax code? Barriers. Gay? Barriers. Jewish? Muslim? Even Catholic? (Considering the mental trauma that often arises with rapid disillusionment from religion, this is largely considered immutable) Barriers. Hispanic? Asian? Aboriginal? Native American? Barriers. I get that it's uncomfortable to hackernews because we like to think that every startup operates in a meritocratic manner, but that's been consistently proven false just with the sheer volume of white straight cis-men managing and leading companies in the US, Australia, the EU, wherever you look. tl;dr: it's not political because the people who understand that it's an issue overwhelmingly tend to be the victims, and the people who don't understand that it's an issue mostly tend not to be victims, and the victims tend to be victimized because of immutable traits rather than ideologies.
- CivBase 6y agoThis article puts a lot of emphasis on his lack of degree. Have we forgotten what a "degree" actually means? When you receive a diploma, it just means some institution is willing to attest that you have achieved some sort of qualification. You can learn something without approval from an institution. Diplomas are typically expensive, so it's not always worth it to get one. Why is this such a foreign concept?
- deleted 6y ago[deleted]
- brighton36 6y agoAuthority bias is systemic.
- mrfusion 6y agoI worked at a research institution for several years and you couldn’t be promoted above a certain level without a PHD.
- rurban 6y agoDepends. I tought for over 10 years at three universities without any degree. Never managed to finish, because I didn't need to. But this works only in liberal countries where qualification trumps buerocrazy. Would never work in Germany.
- pcvarmint 6y agoI once worked at a national lab, advising postdocs on compilers and optimization, even though I don't have a degree. Is 20 years of experience worth less than a degree? Most people I worked with were Ph.D.s who didn't care about their degree or title. They were focused on technical problems and solutions. There was never a statement like "But (s)he doesn't have a degree in this-or-that." Only insecure managers have ever raised the "degree" issue with me. One manager who stymied my career because I didn't have a degree, was later fired for making a commitment for which a Ph.D. was committed to do the work. The project was late or never completed. The Ph.D. was demoted, but the manager who committed to his work, and who hurt me earlier because I didn't have a degree, was fired. I thought that was Karma.
- Thorentis 6y ago(From Nathan's Twitter after this: https://mobile.twitter.com/NathanTankus/status/1278777095670370304 https://mobile.twitter.com/NathanTankus/status/1278777095670...) > I do have a credential- the intersection of my whiteness, maleness and cisness. Wow, wasn't it just yesterday a post blew up about political correctness gone mad? I suppose Nathan wanted to get in first and "apologise" for his whiteness, before his rise to fame (which has coincided with the rise of a... particular socio-political movement) punishes him for it. Isn't it enough to just say "if you're good at something, you don't need a degree"?. But no. He took to Twitter to perpetuate the woke, self-denigrating culture of white Twitter to ensure that his success wasn't hampered by the mob. PC culture has reduced people to snivelling, grovelling shadows of themselves that can't think for themselves. Forget blind-hiring practices! Should we be putting disclaimers on our resumes that points out if we're a white cis-male so that a company can appropriately punish us for the sin of being born a particular sex and race?
- whymauri 6y agoOr - get this - he genuinely believes that and isn't playing some three-dimensional career chess contrivance.
- Thorentis 6y agoThat's very likely. Nobody is immune from this trend. Despite his great accomplishments in a field in which you usually need a degree, he is now feeling guilty about how maybe he only achieved success because he was white. This is the 2020 version of imposter syndrome. Everybody feels imposter syndrome when they have unexpected success. This is the woke Twitter version of it.
- soared 6y agoOr he recognizes that part of his success came down to skin color alone. That a black person who took the exact same actions as him would’ve come out less successful.
- 6y ago
- lukev 6y agoInteresting article, but it feels like it's grinding some weird axes. Like the way it harps on his lack of a degree, and awkwardly mentions the political alignment of people Tankus learned from (like "[he read a book] by the liberal John Maynard Keynes" or "[he studied with] with the leftist economist J.W. Mason"). Is this standard for Bloomberg?
- Miner49er 6y agoIsn't that important when talking economics? Liberalism as a political philosophy has a lot to say on economics (very pro capitalist and pro markets) and "leftism" informs the reader that Mason isn't a capitalist. It shows that he's learned from people with very different theories/opinions on economics.
- motohagiography 6y agoHe shouldn't be so humble, he's not that great. The headline and the article were incredibly patronizing. I'd argue his response was undignified, as the implication is that due to his privilege, he might have otherwise earned his success if only he had in fact finished his degree. It was a smug gesture that betrays the legitimacy of every other person who has also succeeded without one. The phrase "unctuous git," sprung to mind. Good on him for succeeding, and one hopes he isn't just being elevated because he can be relied upon to toe the party line, but as someone with a similar background, Tankus is not representative.
- ohgreatwtf 6y agoIn summary: Young man who has spent his entire life studying pro-system dogma and pro-system logic runs a blog and a newsletter where he writes optimistic, windy expositions on why what the government is doing is right, and gets paid by a multitude of liberal journos and government officials who need talking points and arguments that enrich their position. He's literally a yes man for money printer go brr
- unethical_ban 6y agoThis sounds like a reddit comment, and not in a good way. Please explain your issues with their content in a way that frames your opinion and the differences with his, rather than simply attacking him and his character with sophomoric language.
- viklove 6y agoIronic, how you disparage the original comment by attacking him and his character through a comparison to reddit. Please attack the content of the comment rather than its tone. Using big words does not make your perspective more valid.
- unethical_ban 6y agoThere is nothing ironic about it. I was aggressive, but made my point: His comment did not address any substance, or state is own beliefs. My content is my criticism of his tone. There was little substance in his comment in the first place - that's the point.
- viklove 6y ago> Young man who has spent his entire life studying pro-system dogma and pro-system logic runs a blog and a newsletter where he writes optimistic, windy expositions on why what the government is doing is right, and gets paid by a multitude of liberal journos and government officials who need talking points and arguments that enrich their position. There's quite a bit of content here, but you instead focused on this: > He's literally a yes man for money printer go brr I think your comment is actually more ad-hominem and juvenile than his, to be honest.