4 ms·

Yeah, this isn't investing. This is gambling.

MR4D 5y ago
Worse - it's gambling with other people's money and then charging 2-and-20 on it. Actually, now that I think of it, it's even worse that that! - its taking other people's money, then leveraging it, and then charging 2-and-20. Who needs to be a criminal when you can just do this instead?
- pradn 5y ago
  It was his family office, not a public-ish hedge fund.
- alborzb 5y ago
  It's a family office, not a public investment fund, so I don't think the "other's people's money" phrase is valid here. It's kind of fuzzy just how much of it was leveraged, but there's more clarity into the situation of the family office in this article -- https://www.ft.com/content/c319839d-d185-4e8a-bbc7-659bebe58031 https://www.ft.com/content/c319839d-d185-4e8a-bbc7-659bebe58...
- dragontamer 5y ago
  Archegos Capital was largely Bill Hwang (and his family's) money. No one really weeps for this guy. This is absolutely a situation where you can be Nelson (from the Simpsons) and just laugh at this idiot's mistake, without feeling bad about it. Overleveraging billions of your own money, and losing it all in a couple of days takes a certain level of recklessness. There were a few banks that got caught up in this issue (Credit Suisse lost $5 billion on this). But once again, we can just sit back and laugh at Credit Suisse for failing to account for the risk in granting Bill Hwang leverage. Not like an "Evil Laugh" or anything, but... sometimes investors make a mistake (be it a fund like Archegos Capital, or a bank like Credit Suisse). When they make mistakes, they loose $Billions. That's part of the risks they take when they do their business. Fair game when they lose on their bets.
  - grey-area 5y ago
    Credit Suisse investors lost that money, so it came out of the pensions and investments of ordinary people who invested in that bank. There were real losers here.
    - dragontamer 5y ago
      No more than how the London Whale lost $Billions for JP Morgan (and therefore damaged JP Morgan's shareholders). When you invest into a bank, its understood that the bank will play with your money in ways that could lose it. There's no guarantee that any of this crap makes money. Investors make the decision that they're willing to risk money for the opportunity to make more money later. That's fundamental to the stock market (and bond market).
      - grey-area 5y ago
        That’s fine but I think it’s disingenuous to pretend there are no losers here. When schemes like archegos blow up, it often costs a lot of people who don’t even know they have invested in stocks (e.g their pension fund does) some of their life savings.
        dragontamer 5y ago
        > When schemes like Archegos blow up Archegos isn't a "scheme". Its a private hedge fund for Bill Hwang's family. I mean, it really sucks for him and his family to lose $20,000,000,000 in a couple of days. But... this dude was playing with fire. And yeah, sucks for Credit Susie who was left "holding the bag" on Archegos's margin calls (all other banks liquidated ahead of time and got out safely. Credit Susie was slow on the uptake and was left with a $5 Billion bill). But guess what? Lending $Billions to reckless billionaires sometimes causes your bank to lose money. That's well within the risk-reward calculus. And a "big wall street bank" losing single-digit $Billions on a bet happens at least a few times each year: its not even that rare of an incident. This is literally the business they're in. (Indeed: banks like Credit Susie lend money somewhat recklessly because they know they can afford the loss if the bet goes sideways. I doubt anyone at Credit Susie is going to even get fired over this incident, its really not that big a deal.) Honestly, this implosion is great entertainment because everything happened correctly. The damage is almost entirely isolated to Bill Hwang and his closest associates (family members, and some unfortunate church-members who got roped in). But it seems like Bill Hwang was a relatively honest fellow: so he didn't really screw anyone else over aside from himself. Pretty much everyone in this story got "what they deserved". They played with fire, and then they got burned. This isn't a 2007 or 2008 situation where the fire spread and hurt someone else: this disaster is almost entirely "contained" to only the circle of reckless players.
- RobRivera 5y ago
  ssshhhh - don't speak the true-true

MR4D 5y ago

Worse - it's gambling with other people's money and then charging 2-and-20 on it. Actually, now that I think of it, it's even worse that that! - its taking other people's money, then leveraging it, and then charging 2-and-20. Who needs to be a criminal when you can just do this instead?

pradn 5y ago
It was his family office, not a public-ish hedge fund.
alborzb 5y ago
It's a family office, not a public investment fund, so I don't think the "other's people's money" phrase is valid here. It's kind of fuzzy just how much of it was leveraged, but there's more clarity into the situation of the family office in this article -- https://www.ft.com/content/c319839d-d185-4e8a-bbc7-659bebe58031 https://www.ft.com/content/c319839d-d185-4e8a-bbc7-659bebe58...
dragontamer 5y ago
Archegos Capital was largely Bill Hwang (and his family's) money. No one really weeps for this guy. This is absolutely a situation where you can be Nelson (from the Simpsons) and just laugh at this idiot's mistake, without feeling bad about it. Overleveraging billions of your own money, and losing it all in a couple of days takes a certain level of recklessness. There were a few banks that got caught up in this issue (Credit Suisse lost $5 billion on this). But once again, we can just sit back and laugh at Credit Suisse for failing to account for the risk in granting Bill Hwang leverage. Not like an "Evil Laugh" or anything, but... sometimes investors make a mistake (be it a fund like Archegos Capital, or a bank like Credit Suisse). When they make mistakes, they loose $Billions. That's part of the risks they take when they do their business. Fair game when they lose on their bets.
- grey-area 5y ago
  Credit Suisse investors lost that money, so it came out of the pensions and investments of ordinary people who invested in that bank. There were real losers here.
  - dragontamer 5y ago
    No more than how the London Whale lost $Billions for JP Morgan (and therefore damaged JP Morgan's shareholders). When you invest into a bank, its understood that the bank will play with your money in ways that could lose it. There's no guarantee that any of this crap makes money. Investors make the decision that they're willing to risk money for the opportunity to make more money later. That's fundamental to the stock market (and bond market).
    - grey-area 5y ago
      That’s fine but I think it’s disingenuous to pretend there are no losers here. When schemes like archegos blow up, it often costs a lot of people who don’t even know they have invested in stocks (e.g their pension fund does) some of their life savings.
      - dragontamer 5y ago
        > When schemes like Archegos blow up Archegos isn't a "scheme". Its a private hedge fund for Bill Hwang's family. I mean, it really sucks for him and his family to lose $20,000,000,000 in a couple of days. But... this dude was playing with fire. And yeah, sucks for Credit Susie who was left "holding the bag" on Archegos's margin calls (all other banks liquidated ahead of time and got out safely. Credit Susie was slow on the uptake and was left with a $5 Billion bill). But guess what? Lending $Billions to reckless billionaires sometimes causes your bank to lose money. That's well within the risk-reward calculus. And a "big wall street bank" losing single-digit $Billions on a bet happens at least a few times each year: its not even that rare of an incident. This is literally the business they're in. (Indeed: banks like Credit Susie lend money somewhat recklessly because they know they can afford the loss if the bet goes sideways. I doubt anyone at Credit Susie is going to even get fired over this incident, its really not that big a deal.) Honestly, this implosion is great entertainment because everything happened correctly. The damage is almost entirely isolated to Bill Hwang and his closest associates (family members, and some unfortunate church-members who got roped in). But it seems like Bill Hwang was a relatively honest fellow: so he didn't really screw anyone else over aside from himself. Pretty much everyone in this story got "what they deserved". They played with fire, and then they got burned. This isn't a 2007 or 2008 situation where the fire spread and hurt someone else: this disaster is almost entirely "contained" to only the circle of reckless players.
RobRivera 5y ago
ssshhhh - don't speak the true-true