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I've ironically lost more money the more closely I've paid attention to my investments because I was naively confident in the market's ability (or as I've come

• jfengel 2y ago
  The market can remain irrational longer than you can remain solvent. The market will tolerate infinite BS for arbitrary periods of time. Which also means being careful of short selling. It can put you at unlimited risk even if you are absolutely right.
  • deleted 2y ago
    [deleted]
  • unyttigfjelltol 2y ago
    > It can put you at unlimited risk even if you are absolutely right. The risk is in borrowing, not short selling. How many momo jockies out there think about the "unlimited risk" from buying Tesla on margin? In that case, you're shorting USD, but no one talks about that because it always will be fashionable to short USD. Just like it always will be fashionable to short JPY, for carry and more. Until it's not.
    • encoderer 2y ago
      You can short USD by buying Bitcoin or a similar non-correlated asset but how could buying a usd correlated asset (TSLA) be shorting?
      • _yb2s 2y ago
        Stocks are generally not considered tied to currency- if the company has some fundamental value, that should be inflation proof. So technically buying almost any stock can be a way of shorting the USD in that you are selling it now and will buy it back later. The risk - besides that of the company itself- I suppose is that if you have massive deflation you will end up with less USD. I don’t think anyone is worried about massive deflation of the USD, since the Fed can and would prevent that.
        • baq 2y ago
          Stocks have been a great inflation hedge in the long term since they’re usually backed by hard assets and people, not numbers in computers. Short term obviously some businesses are hurt by inflation and some benefit.
      • matwood 2y ago
        You can also short the USD by buying a different currency. BTC would be more like shorting all currencies.
        • kjksf 2y ago
          Buying BTC is shorting money printing by your government. Today the only government (that I know of) committed to not printing money is Argentina but they have other issues affecting their economy and therefore inflating their currency. Given that governments don't seem to have desire stop money printing any time soon, buying BTC is sound.
          • this_user 2y ago
            The 2010s called, they want their talking points back. The Fed has been doing quantitative tightening for the last couple of years while raising rates. Only towards the end of last year did they start lowering the rates again, but they are still doing QT. So, there is no, what you call, "money printing", which in itself is a complete misnomer as it ignores the complexities and actual transmission mechanisms of "quantitative easing". In either case, Bitcoin has proven that it offers no hedge against anything; it is merely a risk asset with no intrinsic value that tends to rally with all the other rubbish like meme stocks.
  • _yb2s 2y ago
    > Which also means being careful of short selling. There are a number of businesses I know are badly run and will eventually fail, but I cannot find a way to monetize that safely without knowing the timeline for failure.
    • whatshisface 2y ago
      If you are the only person who thinks that it might fail, one cent put options will be free and you can buy them until the price hits zero, and then you can make a cent. For example, the opportunity to sell $TSLA for $180 in one month costs about thirty cents right now. Keeping this up for ten years would cost $36.
      • patwolf 2y ago
        That'd work well for a catastrophic Eron-style collapse, but many companies die a slow death, like Sears.
        • tim333 2y ago
          With Sears like companies you can take a very small short position and then reinvest the money from the sale going long S&P500 type stuff. That's roughly what Chanos did. It has to be small position as a percent of your portfolio in case it decides to go up 10x when you are not looking. I think Chanos's results over a decade were something like 0% on the shorts, 50% on the longs the money was reinvested into.
      • pclmulqdq 2y ago
        Put options are worthless once the price of a stock hits $0. At that point, the stock will be frozen and/or de-listed and your ability to exercise your put will be gone.
        • baq 2y ago
          There are otc buyers for these, but they probably won’t look at $36
• lvl155 2y ago
  This is a common thing among investment professionals especially in areas where you need strong domain knowledge such as biotech. Your conviction can become stronger the more you learn and collect supporting data. Conviction is a dangerous thing. This also extends to what’s broadly happening today in increasingly data-rich environment because we make data-dependent decisions.
• mschuster91 2y ago
  > Many self-important people online are quick to pounce on short sellers as being evil, and that will forever be a serious red flag to me thanks in no small part to Nate Anderson and the folks at Hindenburg Research. Credible arguments can be made however that short-selling itself, especially naked short selling, is an unethical thing to do as the pure possibility of short-selling makes some forms of crime possible in the first place, such as a criminal shooting up the road bus of a German soccer team to profit from falling stock prices [1]. Especially in the era of anything being credibly fake-able with widely available AI tools, short-selling can look to criminals as a very profitable way to make money. Also, short-selling incentivizes large stock holders to be lazy and not do their jobs. Imagine a huge ass pension fund - they can (and do) make money as the counterparty in short-selling deals. Some see this as a necessary part of stocktrading life (because it provides liquidity), but personally I think that it removes incentives for the pension fund managers to do their job and audit the stock they hold for their shareholders in turn themselves. Besides: enforcing securities code and auditing companies should not be the job of vigilantes. I applaud the efforts of ethical short sellers, but in an ideal world, that job would be done by the authorities. [1] https://de.wikipedia.org/wiki/Anschlag_auf_den_Mannschaftsbus_von_Borussia_Dortmund https://de.wikipedia.org/wiki/Anschlag_auf_den_Mannschaftsbu...
  • Spivak 2y ago
    Truly perverse incentives such as one the one you linked aside I think it's mostly fine. Naked short selling is already illegal and the deck is heavily stacked against short sellers to begin with. A position betting on growth is by far and away the safest investment, the market directly incentivizes "irrationality" on the side of prices not going down, and it's infeasible to hold a short position for very long making it (mostly) noise to long term investors which are the ones we typically care about.
    • mschuster91 2y ago
      > Truly perverse incentives such as one the one you linked aside I think it's mostly fine. Well, the thing is, with AI being widely available the threat model explodes as the difficulty goes down drastically - imagine someone deepfaking a video of a C-level executive being involved in illegal or "extreme" sexual acts; we already have "nudifier" apps, the steps to cross for the mentioned scenario aren't that large. The number of potential threat actors explodes as the group is now "everyone with a smartphone", and it also explodes as the likelihood of getting caught (and sentenced to decades in jail, if not death) for shooting someone in public is significantly higher than getting caught "leaking" a faked video which at worst risks you a year or two for defamation.
• barnabyjones 2y ago
  Keep in mind, fraud isn't necessarily a big deal for the shareholder, not all fraud is Enron-tier. For example, I fully believe they were right about Adani, but it was basically just skimming money off the top. If Adani is an embezzler, but also good and funneling bribes to get gov't contracts, then the overall effect on profits may just be breakeven or even positive. The losers would be the Indian citizenry. The company isn't doing so well now possibly due to a culture of corruption, but that kind of long-term culture analysis is hard for traders. But generally, fraud isn't severe enough to enough to endanger the company, it's just taking some money out of shareholders' pockets, but dispassionate traders don't usually sell out of retaliation.
  • yowayb 2y ago
    True. Small frauds are common. I know people that have gotten away with pump-dumps. I know people that have raised obscene money for terrible ideas. I even helped close one customer while at one company, and then when I moved to another company, I had to meet the same buyer and he chewed me out in front of my rep because of the shady deal from my last company. And I even had a customer that kinda defrauded us! And when I was younger, I saw a lot of tiny behaviors that might be considered fraudulent if looked at from the angle of a transaction. I had to stop working for a while because it was destroying my soul. Nate says there was no danger or specific reason to close, but I very much doubt this.
  • dustingetz 2y ago
    zombie companies suck all the oxygen out of the room and away from productive companies, the victim is society and civilization at large and the damage is measured in lost exponential progress of unbound time axis, potentially millennia. Medical technology, longevity, scientific advances that we could have had but will not for another 10^N years - all retarded by malinvestment and misallocation. Theworldif.jpg
  • gmd63 2y ago
    Some shareholders seek fraud as it has the potential for the highest short term returns. The sooner we exile those folks the better.
• sergiotapia 2y ago
  I won't name names but a very popular so called "app growth king" launched recently and it's just full of dark patterns. Even going so far as giving out a "free month", when it's just a way for the user to lock into a yearly plan after a one month trial.
  • deleted 2y ago
    [deleted]
  • npinsker 2y ago
    Isn’t that virtually every (mobile) subscription app in existence…?
• blackeyeblitzar 2y ago
  > Hindenburg's reports were a true pleasure to read, and their track record proves their positive contribution to society. Many self-important people online are quick to pounce on short sellers as being evil, and that will forever be a serious red flag to me thanks in no small part to Nate Anderson and the folks at Hindenburg Research. Short sellers taking positions and then putting out report and marketing to bring a company’s price down can also be perceived as market manipulation. It’s not about people being “self important” but conflict of interest and the incentive to lie or exaggerate for those short sellers. For example months after Hindenburg’s report on Supermicro, the independent committee investigating alleged issues found nothing wrong (https://www.morningstar.com/news/marketwatch/2024120275/why-super-micros-stock-is-soaring-after-completion-of-accounting-probe https://www.morningstar.com/news/marketwatch/2024120275/why-...). The company ultimately confirmed that no prior or current financial reporting would need to be stated. So that makes the allegations false, or at least exaggerated, right? And doesn’t that mean profiteering through short positions and allegations of bad accounting would be market manipulation?
  • gmd63 2y ago
    The first line of that article is "New financial and accounting executives will be appointed, as recommended by the investigation committee" I agree that harm is possible when short selling and lying about it.
    • blackeyeblitzar 2y ago
      That’s because several people (and also EY, their auditor at the time) resigned in the wake of that report. Probably under pressure and lots of stress but also because of all the things that the initial independent investigation suggested needed to be reviewed. But now multiple investigations have completed those reviews and found nothing. And Supermicro has to fill vacant positions. EDIT: since I am rate limited, here’s my reply to the child comment by gmd63 > Why would an investigation committee need to recommend that a company fill vacant financial and accounting executive positions? What you're saying makes no sense. There are many reasons this can make sense. In this case, the most likely reason is that the allegations called into question the integrity of the executives and the board. New executives would be hired and approved by the same group, and it would look strange for them to do that while under investigation. The most important finding from the investigation is neither management (executives) nor the board acted improperly, which led to them making the recommendation.
• mv4 2y ago
  Even without fraud, the markets seem incredibly forgiving. For example, one would think that what Crowdstrike outage did to the airlines and businesses worldwide (and the levels of incompetence displayed) in 2024, would have destroyed the company. Instead, the stock has recovered nicely and it's business as usual. Or the massive security breaches - same outcome, it's as though nobody cares.
  • rcpt 2y ago
    Equifax should not be in business anymore
    • sebmellen 2y ago
      We work closely with them and I've been impressed with how broad their product reach is. Whether they should be in business or not is a question for regulators, but the market rewards their unique position. If you to own something valuable that everyone else needs or wants, they will pay you for it. There's a bigger question about how to properly price and penalize negative externalities. From a business perspective there isn't much difference between an oil spill and a mass data breach — "Whoopsie, we'll try not to do that again. In the meantime don't you need gas for your car?"
  • bruce511 2y ago
    People don't invest because they think a company is competent. They invest because they are looking for a return. The mistake CrowdStrike made will likely have little to no effect on their revenue. Since the stock dropped a bit (emotional investors getting out) it became a good value proposition, so people bought it cheap. The reasons companies use CrowdStrike haven't gone away. Existing contracts can't just be terminated. By the time it comes up for renewal few will remember the incident, fewer still will care. What you see as "levels of incompetence" others see as "made a mistake". You don't fire suppliers for a mistake- that's experience to them, and they're unlikely to make that mistake again anytime soon. Plus of course, replacing anything like that at scale is a lot of work, expensive, and career-risky. Who, in the enterprise, is taking on that task? Who is advocating for it? The market is forgiving because the outlook remains strong. The outlook remains strong because the business fundamentals remain strong.
• WalterBright 2y ago
  > I've ironically lost more money the more closely I've paid attention to my investments Money Magazine a few years ago compared various investment strategies in stocks. The #2 best performing one was investing in the S&P 500. The #1 best performing strategy was the "dead man strategy". The dead man strategy comes into play when the investor dies, and his estate gets frozen until it winds its way through the courts. It turns out that doing nothing with your stock investments is (statistically) the best strategy. I know for a fact that when I do nothing with my stocks, they also perform better.
  • safeimp 2y ago
    Do you have a link to that article?
    • WalterBright 2y ago
      I wish I had clipped and saved it. I can't even tell you what year it was. Sorry. But what I wrote is all one needs to know about it. Here's a similar article: https://www.businessinsider.com/forgetful-investors-performed-best-2014-9 https://www.businessinsider.com/forgetful-investors-performe...
      • safeimp 2y ago
        Thanks anyway, this is still interesting.
  • WalterBright 2y ago
    The conventional wisdom is to sell your profitable stocks, to "lock in your gains", and sell your losers to "cut your losses." I call that "minimizing your gains" and "locking in your losses", and just hold instead. If I "locked in the gains" I would have missed out on 10x returns. Of course, I did ride Enron all the way to zero (!), but it didn't matter. Think of it this way - buy 10 stocks. 3 go to zero. 6 have modest returns. 1 is a 10x winner, that more than makes up for the failures, and becomes the tentpole for your assets.
• sfblah 2y ago
  In basically every other era of investing since 1930, you would probably have benefitted from that approach. While I think you're right to set aside the prudence you were targeting in favor of a passive investment approach, I also think that once the Fed ZIRP era ends, the knowledge you amassed will again become useful.
• bboygravity 2y ago
  Here I was thinking Hindenberg was part of the problem and you seem to think the opposite? To me they seemed like partners of shorting hedge funds (similar to CNBC) who just spit out bs articles so their hedgie friends can trade on it. DOJ seems to agree with me? https://www.forbes.com/sites/sergeiklebnikov/2022/02/16/doj-investigates-short-sellers-for-potential-trading-abuses-including-spoofing-and-scalping/?sh=67810b8b78fc https://www.forbes.com/sites/sergeiklebnikov/2022/02/16/doj-... There are more and better sources.
  • tim333 2y ago
    Not to take a position on those particular accusations but a problem with activist shorting in general is the people running the companies in question are often pissed of and aggressive and will try to take legal and PR action against the shorters.
  • gmd63 2y ago
    That article says nothing that suggests Hindenburg is "part of the problem", only that they had received requests for information in line with an investigation.
• rachofsunshine 2y ago
  This sort of thing is part of my personal motivation for getting into business. Lying is so rampant, so universal, so quietly accepted by everyone in a position of even mild power in business that it's easy to take for granted that you simply cannot succeed without it. I wanted to know if that was actually true - so far, it doesn't seem to be. But I don't blame people for worrying that it might be. People in positions of high power almost universally suck, and "just copy whatever really successful people do" is far from the worst strategy one can use in life. (As always, you should trust what a founder says publicly about their company approximately not at all. If you want the answer for yourself, you gotta do it yourself, because you only know if you're lying or not. But I have my answer, I think.)
  • matwood 2y ago
    I hear what you’re saying, but it feels a bit too cynical to expand it to all business. Did you tell your boss you’d finish some task today? If something comes up, as often does at work, and you don’t finish, did you lie? Predicting the future is hard even as soon as what will happen today, now do that for the next quarter or 4 quarters. Of course there are fraudsters out there, but I view most founders as rampant optimists instead of liars. And you kind of have to be an over top optimist to be founder.
    • rachofsunshine 2y ago
      > Did you tell your boss you’d finish some task today? If something comes up, as often does at work, and you don’t finish, did you lie? No. A good-faith failure is different from a lie. The rule of thumb I use to handle ambiguous situations is "if my incentives were different, would I be saying something else right now?" > Of course there are fraudsters out there, but I view most founders as rampant optimists instead of liars. Most founders are both. They're rampant optimists in the sense that they believe in their thing so much that it overrides all other concerns. But that often makes them liars via an argument of the form "my thing is so important and will change the world so much that I have to lie now to make sure it can be so great". I'm not saying founders are ogres. The kind of lying they do derives from fairly ordinary human failures. But it's still lying, it's still normalized, and it still has terrible consequences all the time.
• scotty79 2y ago
  > I've ironically lost more money the more closely I've paid attention to my investments Without insider knowlege market investments are pure gamble. The best you can do is to bet randomly. Once you deviate from random bets because you are mistakenly think you know something then your investments will underperform.
  • SkyBelow 2y ago
    That isn't guaranteed, because if so you can always do the opposite of what you think and you will overperform. Even if you think you know something, you are, at best, still being random. Anything perceived decrease in return from taking actions is itself just chance (and confirmation bias), because otherwise you could inverse it.
    • scotty79 2y ago
      > Even if you think you know something, you are, at best, still being random Technically true. But somehow in practice you are random in worse ways. Psychology of most people makes them generate very bad randomness. But you are right. What I said is just good first approximation. Sometimes you can do better. For example listening to most popular financial influencers and doing exactly opposite of what they recommend gives slightly better returns (it was researched). I don't quite remember if better than fully random though or just better than following their advice.
• throw10920 2y ago
  > Punishment for financial crimes should be calculated based on the average lifetime earnings of a citizen -- if your victims are folks earning at or below the average wage, and you've scammed 100 lifetimes worth of average earnings, it's as if you've murdered 100 people. This seems like utilitarian ethics. I don't subscribe to these. I'd say most people don't either. So why "should" we calculate punishments for crimes this way if we don't use the same ethical framework as you?
  • hotstickyballs 2y ago
    Some people think it’s just a number but the reality on the ground is that money is literally lifetime.
  • deleted 2y ago
    [deleted]
  • gmd63 2y ago
    Money grants you the power to influence others' lives. You take that from people illegally, and give it to yourself, you're creating an extreme negative effect on economic efficiency that should not be taken lightly and should be heavily discouraged. Bill Hwang had settled insider trading charges a decade or so before he caused 30 billion dollars of liquidations after engaging in multiple forms of financial fraud. His insider trading punishment was likely lax and he committed crimes again, causing even more economic damage. 18 years in prison is nowhere near the amount of economic damage he caused. He amassed a net worth of 10-15 billion dollars. That's ten thousand average lifetimes worth of average American work. The punishment should reflect that. The expected value of fraud should be negative so that not even a degenerate gambler would consider it. Can you explain your views as to why incentives to harm the economy massively via fraud to benefit yourself need to exist?
    • throw10920 2y ago
      > Can you explain your views as to why incentives to harm the economy massively via fraud to benefit yourself need to exist? I never said that I hold that view nor do I believe it. Between you falsely ascribing views to me I do not hold and/or lying about my words, avoiding answering my question, and your emotional manipulation, it's clear that you're a troll and I don't have any need to respond to you beyond pointing out your logical fallacies.
• robertlagrant 2y ago
  > Punishment for financial crimes should be calculated based on the average lifetime earnings of a citizen -- if your victims are folks earning at or below the average wage, and you've scammed 100 lifetimes worth of average earnings, it's as if you've murdered 100 people. Can this precedent be extended to the money wasted with failed government projects? But maybe on lifetime taxes rather than lifetime earnings, to be fair.
  • gmd63 2y ago
    That's not even close to comparable. You vote for elected officials to pass bills that are attempted and sometimes failed. And often failed projects produce things of value to society so I'm not sure how you would factor that in, for example if you'd like a refund on the Challenger explosion. You don't vote for criminals to take your money.
    • robertlagrant 2y ago
      > And often failed projects produce things of value to society True, although also, criminals buy things and pay VAT. > You don't vote for criminals to take your money. I vote for elected officials who pass bills (if I were American) that allow/disallow criminal activity.
• bugtodiffer 2y ago
  > anyone acting in a fraudulent manner in finance the system incentivises this behavior, no one is punishing the rich guys playing with our livelyhood
• crayboff 2y ago
  > The amount of deceit put out into the world and gobbled up, on purpose, in business is obscene and seriously depressing. In business, politics, everything. It almost seems like everyone is quietly agreeing that "if we pretend the pesky truth doesn't exist for long enough, we can literally change reality to be what we want". I feel like I'm going crazy. There's no way that's how things can work for long, right?
  • roymurdock 2y ago
    We've kicked the can down the road for a while, but no worries, we will pick it up soon and recycle it ;)
  • ANewFormation 2y ago
    You're not going crazy, they are. But even once things start falling apart, inertia alone can give the appearance of productive movement for years to come. This is probably why when somebody looks to try to find the cause for e.g. the collapse of the Roman Empire there were a surprisingly large number of potentially serious issues all happening simultaneously. The reason is that the empire probably collapsed decades before its fall and so the stupid decisions and actions all continued to pile up, seemingly without consequence. All until the inertia finally ran out and suddenly the entire house of cards came crashing down.
  • benreesman 2y ago
    By all accounts it was like this at the end in the USSR too: infinite nepotism, no accountability, crashing standard of living near the median, deaths of despair attached to crazy levels of dangerous substance use. This is what happens when bad people capture the levers of power. https://youtu.be/IUJMyTJ9gyI https://youtu.be/IUJMyTJ9gyI
    • eltondegeneres 2y ago
      I didn't watch this talk but I read the article it's based on. When an Iraq War supporting Tory like Niall Ferguson criticizes the US military for being both bloated and stretched thin by underfunding, it gives away that the critique is just disingenuous contrarianism.
• rib3ye 2y ago
  Buffet has this saying: "the stock market in the short term is a voting machine and in the long-term it's a weighing machine." I think a modern version of that is, in the short term the price is narrative and in the long-term it's accounting. With Berkshire, Buffet figured out early, and firms like Hindenburg capitalized on the strategy of showing both sides of the story.
• rldjbpin 2y ago
  even if they were a beacon of truth, they were active market participant and would stand to benefit if the markets do react to their report. how large businesses get away with things is true across markets and the precedence set let them be more fearless to keep committing them. the reporting through the publication has an important place, but playing the market at the same time personally gets rid of any credibility.