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Wild stuff! Hard to imagine being a day trader and taking $100,000,000 dollars home from a moonshot bet while sitting in front of your computer. I don't fully u

Wild stuff! Hard to imagine being a day trader and taking $100,000,000 dollars home from a moonshot bet while sitting in front of your computer. I don't fully understand how the TAS agreement works, but it sounds like they started the day by essentially putting in $0 and a promise to pay up at the end of the day -- where they could have easily been out ~$10M each if the markets recovered. >If the group had made $7 million that day instead of almost $700 million, they’d probably be celebrating. But the size of their winnings, coupled with their backgrounds—and political pressure to understand what happened—means that Vega has the attention of regulators. Indeed...

Hokusai 6y ago
> taking $100,000,000 dollars home All this money allows this people to buy many things, properties, services... Do our society can afford for all that in exchange of some luck? There are limited resources and society have decided that these people deserve a big chunk of that resources. Weird.
- vkou 6y ago
  It can afford the existence of a monied class which collectively commands tens of trillions of dollars in wealth, so it can probably afford it. Whether or not we want to afford it is a different question.
- cma 6y ago
  Hopefully at worst it is just something like instead of artists working on cinematography and graphic art for Coke commercials and advertisements to give people diabetes, they will be making artwork for these people's mansions that might not be enjoyed as widely as they could be in a more rational system but that at least won't give people diabetes.
- bsanr2 6y ago
  I don't see how it's different from what already exists. If you're questioning them, why not Gates, Bezos, [redacted], [unknown], etc.?
- WA 6y ago
  Trading is a zero-sum game.
  - kasey_junk 6y ago
    This is only true if you assign no value to risk mitigation or liquidity.
    - Hokusai 6y ago
      > risk mitigation Is that still an argument after the housing collapse of 2008? Far from mitigating risk it seems that risk was increased.
      - kasey_junk 6y ago
        I’m sorry can you explain how you are connecting bespoke mortgage backed securities and their derivatives to commodities trading?
    - WA 6y ago
      In dollar terms and with futures described in the article, one parties losses is the gains of another party. Risk mitigation or liquidity are parts of the portfolio management, not the trade itself. I sell you the future, you buy it. Difference of price is my loss and your gain or the other way around.
      - kasey_junk 6y ago
        Thats an extremely restrictive definition of zero sum. If that were the normal definition most transactions would be considered zero sum. But its not. Zero sum has to do with the utility provided to each side of the transaction. I may have a completely different desire to own a future than you. Perhaps my portfolio needs less risk or my predicted oil needs have changed. In those cases I gain a lot of utility by being able to move out of the future into cash, even if later you make more than I would have by selling it.
  - hnracer 6y ago
- bpodgursky 6y ago
  This profit is a forcing function to punish producers and middlemen who didn't build enough oil storage infrastructure.
- morlockabove 6y ago
  Deserve? No. Get? Yes. If I stumble across gold in the ground, quietly buy the land and start to mine it, I don't 'deserve' that gold. But I've got it, and the system of property rights is there to dissuade me from just taking it by force instead of buying the land first (or other people taking it from me once I've got it).
  - Hokusai 6y ago
    > But I've got it "In most countries of the world, all mineral resources belong to the government. This includes all valuable rocks, minerals, oil and gas found on or within the Earth. Organizations or individuals in those countries cannot legally extract and sell any mineral commodity without first obtaining an authorization from the government" In the USA is not exactly liked that but "Property rights and mineral rights were originally tied to the land. The owner owned both. However, mineral rights and property rights can be severed, meaning the owner can sell one and keep the other. So, the original owner of your land may have sold the property rights to one person and kept the mineral rights or sold it to another person. By the time you bought the land, the mineral rights may have been sold already." So you could be committing a crime by mining gold with only the property rights, you also need mining rights.
    - morlockabove 6y ago
      technicality
    - mypalmike 6y ago
      An imperfect analogy on HN. Thanks for letting us know.
- retube 6y ago
  whilst luck plays its part, this is the reward for taking risk (a lot of risk). and without the possibility of reward for risk taking, there'd be no incentive to invest in anything.
- mulmen 6y ago
  Money is not a consumable resource. They didn’t remove $100,000,000.00 from the economy. If they buy things, properties and services then the money is reallocated to the providers of those things, properties and services.
  - fredguth 6y ago
    But there is a cap on how much an individual consume. The same amount distributed among thousands would reallocate the money more efficiently.
    - barry-cotter 6y ago
      I can spend $100 million in a year on things I value with ease of necessary. I’ll start with seeding an Irish startup ecosystem of any note. Actually that could easily swallow the entire fund in one year by itself. I trust you see my point. Bill Gates has spent a lot of money on trying to make the world a place more to his liking, a place without malaria. That’s consumption.
  - jjeaff 6y ago
    Even if they don't spend it and just keep it in bank accounts, it will still be loaned out and invested.
- laurent92 6y ago
  If we lived in USSR, economy would be driven by the central planners. In capitalism, economy is driven by decisions at every level to allocate funding. Those who forecast the future best are the ones who get rich, because it allows the right companies to receive funding. Our economy wouldn’t be so big if it were organized by central planners, so I pardon those, although it does seem extreme here.
  - fredguth 6y ago
    The comparison with USSR is naive. The question is not capitalism vs communism. Is the kind of capitalism we have. We have one where when the banks and people make bad decisions and get bankrupted with valueless contracts, the government save the banks, and the corporations and let common people go bankrupt.
    - bostik 6y ago
      Sometimes aptly called Socialist Capitalism.
- varvar 6y ago
  Who the heck is society? That's just us. But we don't come together and decide like that, so I don't think society exists in the abstract the way you think it does. It's more like this is how reality is. You've probably never been a trader, most traders lose their money, it's an extremely risky profession. For every win you hear about there are at least 10 losers. At the end of the day the activity of traders readjusts the asset prices on ongoing basis closer to their true valuation. The more trading occurs the more precise the price is. Without enough trading activity an end user might be forced to overpay for an asset.
  - calvano915 6y ago
    Except for that whole "markets can remain irrational longer than you can remain solvent" and all...
crazyideaman 6y ago
Last year Goldman Sachs made 18 billion dollars and were profitable 236/251 days. 41 of those days they made more than 100 million dollars. Institutional traders like this routinely manipulate prices to temporarily raise/lower prices on low volume to take out stop losses and so on. News is routinely put out at the top and bottom of markets that happens to provide liquidity for these institutions. Yet, no investigations...
- retube 6y ago
  Goldman sachs employ 30,000 people across dozens of separate business units and have a balance sheet of nearly a trillion dollars. And a vast chunk of their income is net interest income and advisory fees. It's in no way comparable.
  - crazyideaman 6y ago
    53% of their revenue is from sales and trading. I'm only saying is that if Goldman Sachs had done this short there would not have been any outrage, calls for investigation and so on. Institutions routinely pull off massive profits from retail traders. As soon as one day it reverses then there is all this faux outrage. lol
    - retube 6y ago
      That's not true at all. the big institutions are routinely investigated for this kind of stuff. Barclays and DB for example have had huge fines for various issues in the fx and interest rate markets. And besides, the majority (if not all, given Volcker restrictions) of sales and trading is from market making, rather than risk taking / directional punts on the markets.
      - crazyideaman 6y ago
        They are investigated for shorting a market? I find that unlikely. I'm not trying to pick on Goldman. They were just an example of a large institution that makes huge amounts of money by doing exactly what these guys did. Betting against the market is absolutely routine behavior. As for Goldman, do you really think they are clearing 100 million a day by being market neutral and just collecting premiums? When they buy/sell it absolutely moves the markets just on the sheer volume.

Hokusai 6y ago

> taking $100,000,000 dollars home All this money allows this people to buy many things, properties, services... Do our society can afford for all that in exchange of some luck? There are limited resources and society have decided that these people deserve a big chunk of that resources. Weird.

vkou 6y ago
It can afford the existence of a monied class which collectively commands tens of trillions of dollars in wealth, so it can probably afford it. Whether or not we want to afford it is a different question.
cma 6y ago
Hopefully at worst it is just something like instead of artists working on cinematography and graphic art for Coke commercials and advertisements to give people diabetes, they will be making artwork for these people's mansions that might not be enjoyed as widely as they could be in a more rational system but that at least won't give people diabetes.
bsanr2 6y ago
I don't see how it's different from what already exists. If you're questioning them, why not Gates, Bezos, [redacted], [unknown], etc.?
WA 6y ago
Trading is a zero-sum game.
- kasey_junk 6y ago
  This is only true if you assign no value to risk mitigation or liquidity.
  - Hokusai 6y ago
    > risk mitigation Is that still an argument after the housing collapse of 2008? Far from mitigating risk it seems that risk was increased.
    - kasey_junk 6y ago
      I’m sorry can you explain how you are connecting bespoke mortgage backed securities and their derivatives to commodities trading?
  - WA 6y ago
    In dollar terms and with futures described in the article, one parties losses is the gains of another party. Risk mitigation or liquidity are parts of the portfolio management, not the trade itself. I sell you the future, you buy it. Difference of price is my loss and your gain or the other way around.
    - kasey_junk 6y ago
      Thats an extremely restrictive definition of zero sum. If that were the normal definition most transactions would be considered zero sum. But its not. Zero sum has to do with the utility provided to each side of the transaction. I may have a completely different desire to own a future than you. Perhaps my portfolio needs less risk or my predicted oil needs have changed. In those cases I gain a lot of utility by being able to move out of the future into cash, even if later you make more than I would have by selling it.
- hnracer 6y ago
bpodgursky 6y ago
This profit is a forcing function to punish producers and middlemen who didn't build enough oil storage infrastructure.
morlockabove 6y ago
Deserve? No. Get? Yes. If I stumble across gold in the ground, quietly buy the land and start to mine it, I don't 'deserve' that gold. But I've got it, and the system of property rights is there to dissuade me from just taking it by force instead of buying the land first (or other people taking it from me once I've got it).
- Hokusai 6y ago
  > But I've got it "In most countries of the world, all mineral resources belong to the government. This includes all valuable rocks, minerals, oil and gas found on or within the Earth. Organizations or individuals in those countries cannot legally extract and sell any mineral commodity without first obtaining an authorization from the government" In the USA is not exactly liked that but "Property rights and mineral rights were originally tied to the land. The owner owned both. However, mineral rights and property rights can be severed, meaning the owner can sell one and keep the other. So, the original owner of your land may have sold the property rights to one person and kept the mineral rights or sold it to another person. By the time you bought the land, the mineral rights may have been sold already." So you could be committing a crime by mining gold with only the property rights, you also need mining rights.
  - morlockabove 6y ago
    technicality
  - mypalmike 6y ago
    An imperfect analogy on HN. Thanks for letting us know.
retube 6y ago
whilst luck plays its part, this is the reward for taking risk (a lot of risk). and without the possibility of reward for risk taking, there'd be no incentive to invest in anything.
mulmen 6y ago
Money is not a consumable resource. They didn’t remove $100,000,000.00 from the economy. If they buy things, properties and services then the money is reallocated to the providers of those things, properties and services.
- fredguth 6y ago
  But there is a cap on how much an individual consume. The same amount distributed among thousands would reallocate the money more efficiently.
  - barry-cotter 6y ago
    I can spend $100 million in a year on things I value with ease of necessary. I’ll start with seeding an Irish startup ecosystem of any note. Actually that could easily swallow the entire fund in one year by itself. I trust you see my point. Bill Gates has spent a lot of money on trying to make the world a place more to his liking, a place without malaria. That’s consumption.
- jjeaff 6y ago
  Even if they don't spend it and just keep it in bank accounts, it will still be loaned out and invested.
laurent92 6y ago
If we lived in USSR, economy would be driven by the central planners. In capitalism, economy is driven by decisions at every level to allocate funding. Those who forecast the future best are the ones who get rich, because it allows the right companies to receive funding. Our economy wouldn’t be so big if it were organized by central planners, so I pardon those, although it does seem extreme here.
- fredguth 6y ago
  The comparison with USSR is naive. The question is not capitalism vs communism. Is the kind of capitalism we have. We have one where when the banks and people make bad decisions and get bankrupted with valueless contracts, the government save the banks, and the corporations and let common people go bankrupt.
  - bostik 6y ago
    Sometimes aptly called Socialist Capitalism.
varvar 6y ago
Who the heck is society? That's just us. But we don't come together and decide like that, so I don't think society exists in the abstract the way you think it does. It's more like this is how reality is. You've probably never been a trader, most traders lose their money, it's an extremely risky profession. For every win you hear about there are at least 10 losers. At the end of the day the activity of traders readjusts the asset prices on ongoing basis closer to their true valuation. The more trading occurs the more precise the price is. Without enough trading activity an end user might be forced to overpay for an asset.
- calvano915 6y ago
  Except for that whole "markets can remain irrational longer than you can remain solvent" and all...

crazyideaman 6y ago

Last year Goldman Sachs made 18 billion dollars and were profitable 236/251 days. 41 of those days they made more than 100 million dollars. Institutional traders like this routinely manipulate prices to temporarily raise/lower prices on low volume to take out stop losses and so on. News is routinely put out at the top and bottom of markets that happens to provide liquidity for these institutions. Yet, no investigations...

retube 6y ago
Goldman sachs employ 30,000 people across dozens of separate business units and have a balance sheet of nearly a trillion dollars. And a vast chunk of their income is net interest income and advisory fees. It's in no way comparable.
- crazyideaman 6y ago
  53% of their revenue is from sales and trading. I'm only saying is that if Goldman Sachs had done this short there would not have been any outrage, calls for investigation and so on. Institutions routinely pull off massive profits from retail traders. As soon as one day it reverses then there is all this faux outrage. lol
  - retube 6y ago
    That's not true at all. the big institutions are routinely investigated for this kind of stuff. Barclays and DB for example have had huge fines for various issues in the fx and interest rate markets. And besides, the majority (if not all, given Volcker restrictions) of sales and trading is from market making, rather than risk taking / directional punts on the markets.
    - crazyideaman 6y ago
      They are investigated for shorting a market? I find that unlikely. I'm not trying to pick on Goldman. They were just an example of a large institution that makes huge amounts of money by doing exactly what these guys did. Betting against the market is absolutely routine behavior. As for Goldman, do you really think they are clearing 100 million a day by being market neutral and just collecting premiums? When they buy/sell it absolutely moves the markets just on the sheer volume.