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Hedge funds aren't run like they were in the early 2000s. It's not about individual traders posting PnL, it's about entire teams working together. In the past,

by smabie 6y ago

Hedge funds aren't run like they were in the early 2000s. It's not about individual traders posting PnL, it's about entire teams working together. In the past, individual traders would try and get inside information in order to post good returns. It's not like everyone at the hedge fund worked together to insider trade, that'd be too risky. As a result of the individual book model dying, inside information isn't worth much. You can't trade on your own, and you can't share it with others. Moreover, with outflows from discretionary to quantitative strategies, there's not that many hedge funds (by capital at least) that could even do anything with inside information. It's not like if some guy at Bridgewater got a hot merger tip he would even be able to do anything with it. tl:dr: lots of things have changed, and the industry is no longer conducive to exploiting insider information. I'm sure it still happens, but at an individual or informal kind of level. It's not an institutionalized accpeted thing like at SAC or Gallion, for example.

strbean 6y ago
> Hedge funds aren't run like they were in the early 2000s. It appears that they changed how they were run the instant Trump was elected. Funny how that works!
- SpicyLemonZest 6y ago
  Total SEC enforcement actions are still dancing around their peak, so a hypothesis that the administration has become more friendly to financial misconduct seems disconfirmed.
  - tehjoker 6y ago
    I would be extremely interested to know what that total is comprised of. If it's, for example, tons of warning letters with nothing further, that would be a great way to look busy doing something while doing nothing.
- Nightshaxx 6y ago
  I saw you post this comment multiple times. Correlation does not equal causation my friend.
  - strbean 6y ago
    Correlation more often is the result of causation than it is of "handy wavy arguments about human nature".
    - Nightshaxx 6y ago
      "Correlation does not mean causation" has nothing to do with the amount that correlation is the result of causation. It means that the former does not directly imply the latter, you need to add more to your argument than just the correlation argument. There could be other factors at play that were the actual cause of the change. These factors could be the underlying causes for both events, or the events may be completely separate. The only thing you said was "because X and Y happened at the same time, they seem to be connected". You did not make any other arguments about how X could cause Y. Within the past hour, I went to the bathroom, and also at least one person on earth died. As you can see, to say my bathroom trip caused that persons death is illogical without any other facts or evidence to back it up. This is a really funny site btw: https://www.tylervigen.com/spurious-correlations https://www.tylervigen.com/spurious-correlations
momokoko 6y ago
How is this down voted? It’s exactly how things have changed
- yborg 6y ago
  Because hedge funds aren't the only entities that trade in the market.
jimmySixDOF 6y ago
The Kodak Affair was barely two weeks ago so maybe getting caught is a thing of the past but the practice is right in front of our noses.
- Ziggy_Zaggy 6y ago
  Great example! Who committed the indsider trading?
  - jtsiskin 6y ago
    Trading activity the day before the public announcement was 8x higher than the yearly average. https://www.cnbc.com/2020/07/29/kodak-executive-chairman-addresses-jump-in-trading-activity-before-government-deal-was-announced.html https://www.cnbc.com/2020/07/29/kodak-executive-chairman-add...
    - fluffy87 6y ago
      Because the information leaked to the public 2 days before. The moment that happened, the information became public, and then it wasn’t insider trading anymore.
      - jandrese 6y ago
        So insider trading is impossible because as soon as the information is released to a select group of people they are automatically the public?
        jtsiskin 6y ago
        Yes the line between "information leak" and "insider trading" sounds thin. Information leak sounds like a convenient excuse. The fact that the price jumped when the announcement was made, not when the leak first happened, shows the leak wasn't certain proof.
boomboomsubban 6y ago
>It's not like everyone at the hedge fund worked together to insider trade, that'd be too risky. If the Libor scandal can happen, it's not difficult to imagine a hedge fund working together for this purpose.

by smabie 6y ago

strbean 6y ago

> Hedge funds aren't run like they were in the early 2000s. It appears that they changed how they were run the instant Trump was elected. Funny how that works!

SpicyLemonZest 6y ago
Total SEC enforcement actions are still dancing around their peak, so a hypothesis that the administration has become more friendly to financial misconduct seems disconfirmed.
- tehjoker 6y ago
  I would be extremely interested to know what that total is comprised of. If it's, for example, tons of warning letters with nothing further, that would be a great way to look busy doing something while doing nothing.
Nightshaxx 6y ago
I saw you post this comment multiple times. Correlation does not equal causation my friend.
- strbean 6y ago
  Correlation more often is the result of causation than it is of "handy wavy arguments about human nature".
  - Nightshaxx 6y ago
    "Correlation does not mean causation" has nothing to do with the amount that correlation is the result of causation. It means that the former does not directly imply the latter, you need to add more to your argument than just the correlation argument. There could be other factors at play that were the actual cause of the change. These factors could be the underlying causes for both events, or the events may be completely separate. The only thing you said was "because X and Y happened at the same time, they seem to be connected". You did not make any other arguments about how X could cause Y. Within the past hour, I went to the bathroom, and also at least one person on earth died. As you can see, to say my bathroom trip caused that persons death is illogical without any other facts or evidence to back it up. This is a really funny site btw: https://www.tylervigen.com/spurious-correlations https://www.tylervigen.com/spurious-correlations

momokoko 6y ago

How is this down voted? It’s exactly how things have changed

yborg 6y ago
Because hedge funds aren't the only entities that trade in the market.

jimmySixDOF 6y ago

The Kodak Affair was barely two weeks ago so maybe getting caught is a thing of the past but the practice is right in front of our noses.

Ziggy_Zaggy 6y ago
Great example! Who committed the indsider trading?
- jtsiskin 6y ago
  Trading activity the day before the public announcement was 8x higher than the yearly average. https://www.cnbc.com/2020/07/29/kodak-executive-chairman-addresses-jump-in-trading-activity-before-government-deal-was-announced.html https://www.cnbc.com/2020/07/29/kodak-executive-chairman-add...
  - fluffy87 6y ago
    Because the information leaked to the public 2 days before. The moment that happened, the information became public, and then it wasn’t insider trading anymore.
    - jandrese 6y ago
      So insider trading is impossible because as soon as the information is released to a select group of people they are automatically the public?
      - jtsiskin 6y ago
        Yes the line between "information leak" and "insider trading" sounds thin. Information leak sounds like a convenient excuse. The fact that the price jumped when the announcement was made, not when the leak first happened, shows the leak wasn't certain proof.

boomboomsubban 6y ago

>It's not like everyone at the hedge fund worked together to insider trade, that'd be too risky. If the Libor scandal can happen, it's not difficult to imagine a hedge fund working together for this purpose.