dcolkitt

98 ms·

961.
by dcolkitt 6y ago
> The price of anything is a result of its some intrinsic value and the volume of supply. No. The price of a stock is the value of its discounted cash flows. Shorting creates synthetic shares, that guarantee the new longs an exactly repl
962.
by dcolkitt 6y ago
To be fair, it probably is. Most equity hedge funds are probably closer to a 50% correlation, and should be benchmarked accordingly (i.e. half T-bills/half S&P). Investors would be able to see its historical monthly returns and reg
963.
by dcolkitt 6y ago
The point is though there's never been another LTCM in nearly a quarter of a century. LTCM was one of the first major fixed income arbitrage funds, a strategy that's uniquely sensitive to cheap leverage. They were able to exploit
964.
by dcolkitt 6y ago
Jim Cramer is a character on TV. I would take his opinion on finance about as seriously as I'd take Saul Goodman's opinion on the practice of law.
965.
by dcolkitt 6y ago
> GME's float. When these strategies blow up in their faces, it wipes them out completely, to the level of requiring bailouts. Not a single hedge fund has gone bankrupt from GME, much less gotten a bailout. I can virtually guarantee
966.
by dcolkitt 6y ago
It feels disingenuous for you to not mention a disclaimer that you're invested in GME.
967.
by dcolkitt 6y ago
The correct benchmark for a hedge fund is T-bills, not the S&P or the Nasdaq. That's because hedge funds are an absolute return product that offers an income stream uncorrelated to the market. This may sound counterintuitive, but
968.
by dcolkitt 6y ago
There's a legal mandated Chinese firewall between the organizations. They have entirely different employees and reporting structures. If the two were coordinating, it would have to be a conspiracy involving dozens of people in differen
969.
by dcolkitt 6y ago
I'm not sure what you're talking about. Most hedge funds did significantly better than the S&P in 2008. They were down, but nowhere to the same degree.
970.
by dcolkitt 6y ago
> The S&P most certainly outperformed Melvin on a risk-adjusted basis due to this single drawdown alone. The S&P had a 54% drawdown in 2008.
971.
by dcolkitt 6y ago
> they make a ton of money ($100M/Q I've seen) from one of the big players in this (Citadel). No. Citadel Securities (the market maker) is a separate entity than Citadel Investments (the hedge fund). Citadel Securities is makin
972.
by dcolkitt 6y ago
It should be noted that Melvin Capital returned over 50% in 2020[1], 44% in 2019[2], and has averaged above 30% annual returns since inception[3]. In other words, even though this is definitely painful, even inclusive of this event, it&#x
973.
by dcolkitt 6y ago
Incorrect. S3 only shows aggregate short interest. That data does not in anyway indicate Melvin's specific position. Almost certainly what happened is that while Melvin was unwinding other hedge funds were opening up new short position
974.
by dcolkitt 6y ago
What is the common sense definition of “naked short selling”? I’d be shocked if the median American can even define short selling let alone naked short selling?
975.
by dcolkitt 6y ago
The difference is the supply of bitcoin is fixed. Whereas a company can issue shares at any time. Obviously if the market cap stays at $30 billion for a long time, Gamestop management is going to start spending their overvalued stock like d
976.
by dcolkitt 6y ago
> But this seems like a shill article in general, as there's nothing mentioned about the fact that Citadel makes up more more than 35% of Robinhood's revenues[1]. Let's count all the people that would need to be involved i
977.
by dcolkitt 6y ago
> The problem is that when hedge funds get in trouble they do not go to jail Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider tradin
978.
by dcolkitt 6y ago
The simpler alternative to this is the much vilified and misunderstand system of “naked shorting”. Basically it would allow credit worthy institutions to meet demand by creating synthetic shares out of thin air. As long as they pay all the
979.
by dcolkitt 6y ago
I'm old enough to remember people saying the exact same thing in 1999. The four most dangerous words in investing are: "This time is different"
980.
by dcolkitt 6y ago
How would short selling cause a company's next quarterly earnings to be disappointing?
981.
by dcolkitt 6y ago
Toxicity is a well-defined technical term in market microstructure literature. It basically means whether the direction someone trades in predicts the short-term direction of the market. It's not a moral judgement. So to answer your qu
982.
by dcolkitt 6y ago
Fair warning. Buying stocks with high short interest is, over the long run, a terrible investment strategy. Mountains of academic research has consistently found the most heavily shorted stocks to significantly underperform the market[1] (t
983.
by dcolkitt 6y ago
They didn’t cut trades in one direction. They closed new positions in both directions. Buys were still allowed to close short positions, just the same as sells were allowed to close long positions.
984.
by dcolkitt 6y ago
A broker is just a service. As it turns out a low-cost/free service provides an inferior service to high-cost prime brokers. You get what you pay for. That’s not a scandal. It’s common sense. It’d be like me complaining that it’s no fa
985.
by dcolkitt 6y ago
You're essentially saying that Robinhood should have forced its users to hold an insanely volatile stock, just to be "fair" to the people who wanted to keep riding a pump and dump.
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by dcolkitt 6y ago
A high short interest is not a sign of any sort of malfeasance. There’s no upper limit of shorting, since shares can be borrowed, sold, then borrowed again. Short interest above 100% is perfectly fine. Stocks can and do go over this imagina
987.
by dcolkitt 6y ago
Can anyone in this social movement articulate what exactly those “shenanigans” are and provide evidence that they’re occurring. Not that there aren’t well founded criticisms of the financial industry. But as far as I see WSB appears to have
988.
by dcolkitt 6y ago
Shares in the US take 3 days to settle. Technically when you buy a share, and it shows up in your account you don’t have actually own it. The broker is only showing you what you expect to receive. Same for selling a share. Cash from the pro
989.
by dcolkitt 6y ago
> The social movement is honorable I’m gonna disagree. The entire “social movement” seems to be little more than the same tired old cliches and hysterics about “speculators”. The main grievance is basically that short selling is bad. Des
990.
by dcolkitt 6y ago
Virtually every large multistrat fund is short GME now. This doesn’t really mean anything.

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