"Playing" The Market
 

A great article that shows just how little 'investors' know about the vital kinds of information necessary to deal with a completely rigged market that is now nothing more than an online casino for 99.9999% of the people putting money into it. http://www.rollingstone.com/politics/blogs/taibblog/secrets-and-lies-of-the-bailout-one-brokers-story-20130108

Excellent article and full of truth!

:thumbsup:thumbsup:thumbsup:thumbsup:thumbsup

Meh, he shorted the market too long. Yeah it's not going to work forever and you have to start worrying about bail outs. Also he shouldn't be risking too much of his client's money doing that anyway, so if he lost a ton it's mostly his own fault as it goes against most investment practices to be putting large percentages of people's portfolios into those classes unless you're only dealing with agressive growth clients.

There is a whole other type of investor pissed at this guy for shorting and making money from their misery and so on it goes.

The market isn't as much of a crapshoot as you think it is. I made some of my best purchases in March '09.

You either didn't read the article or didn't comprehend it.

It's a story abut a guy who tracked the financials of the banks and tracked all the bailouts of the banks when he was working for one of them. He bet against them because even with all the bailout money the banks would STILL have failed. What he and 99.9999% of investors did not know and could not have known is that the government also secretly loaned banks unlimited amounts of money (that cost Trillions of dollars) and guaranteed them privately that they could continue borrowing whatever they needed to stay afloat.

The banks made billions in profit by doing it. The government under Bush and under Obama lied about the financial security of the markets -- and people who made properly calculated investments lost millions because they were lied to and could not have known trillions of dollars beyond the bailout programs publicly announced were also being handed over by the Fed.

This isn't some idiotic conspiracy theory, it was finally discovered by Bloomberg when the US Supreme Court ruled that the government couldn't keep it a secret any longer. Had Bloomberg not won that suit nobody would ever have known...

I read the whole article. I'm not overly outraged. Over here our government stepped in and literally GUARANTEED they wouldn't fail. Tough luck if you were shorting them. Yeah it's a bitch it wasn't announced but really if you're shorting banks during a crisis and NOT looking out for the government bailing them out, you're an idiot who deserves to lose their money. Yes it's highly uncool the bank executives knew this information and the market didn't even though some banks did announce it (if you were a good advisor in that sector you would have noticed the smaller banks announcing government support) Not arguing that, there is unfairness there, but it's a known unknown. If you didn't realise something like that was going on after they got bailed out the first time...............

It's not 'uncool'... It's a violation of every principle of a sound financial market and the opposite of what the SEC is supposed to allow.
'Uncool' is when your hair gel clogs at the tip of the bottle or when someone else finishes the carton of milk in your fridge.
This was massive theft and graft by a broken system purporting to be a way for companies to seek capital investment.

Why does everyone assume the Fed is the government? They aren't. They're privately owned and can do whatever they want.

It derives its authority from federal statutes, it is subject to congressional oversight and GAO audits... and has its board of governors appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms. If the federal government wants the fed to do something... the fed does it.

You can't compete in the stock market when these are
the facts about the stock market.

Mark Cuban had the solution for high frequency traders. Simply charge a 5 or 10 cent per share transactional fee. It would have practically zero impact on investors and would make high frequency trading unfeasible. The liquidity argument is idiocy, the markets had liquidity long before high frequency traders existed. If the markets were a stable place for rational investment they would draw many more investors. Disconnecting share prices from the companies they are intended to represent makes the markets a casino game and nothing more. It's Keno 50 million times per second, backed by institutional investors who pump and dump bets after hours and use financial news to lure new unwitting dead money into the arena. It ought to be a way to provide capital for companies and long term stable opportunity for investment.

Relentless you couldn't have said it any better. A friend of mine refuses to believe the market is being manipulated, and think everyone makes trading decisions based on fundamentals taught in college. And with this ignorant thinking, he's lost over 2 million in stocks to this day. My opinion on the stock market is nothing more then a legal way for experts to steal people's money.

If you're idea of investing is "playing the market," then you've already lost. The goal is to "invest" in good companies with good businesses.

good video

Was!! Not anymore. Which is why people are so frustrated.

Nice thread, thanks!

Yep it's a big bad ole casino impossible to predict... keep thinking that guys and keep away from the best asset class of the last 3 years. *rolls eyes*

Just shoosh with the hyperbole basically. It makes you look ignorant. Shady stuff happens no one is saying it doesn't - even Martha insider traded.. But if you have any real experience analysing stocks its not exactly rocket science. I keep my investments to one sector I know a shit tonne about.. there isn't too much stuff that can be too shady in my area without it being obvious. Also you're not really competing with the companies.. To take the silly random casino analogy seriously for a moment, if the company (the dealer) can see everyone's poker cards I don't necessarily care that much.. like a bear in the woods - I only have to outrun the other players. The thing that is great about the market is that it's relatively easy to be more knowledgeable than 90% of the other participants. I routinely get out of sticky situations by selling to willing buyers because the can't interpret a release properly.

Agree 100% on HFT though. Just bs. Bear in mind many people similarly dislike shorting which has the same raison detre - liquidity.

It still is, but people don't realize that investing involves risk, they bitch and whine and try to find someone to blame when their investments don't work out... if they can't handle the risk, the ups/downs of the market, they need to stash their money in 0.25% bank accounts instead... :2 cents:

Day Trading is gambling not investing. The fact that a player can win at blackjack doesn't make blackjack an investment.
If you have a good card counting system or a friend working as the dealer that doesn't make the game itself more stable for players.
In this game the house cheated to the tune of trillions of dollars while regulators ignored the cheat.
I'm glad you made money on a few hands, that has nothing to do with whether or not the casino is honest.
By your logic high frequency traders are only bad because you don't happen to be one.

Day trading is a completely different game, a game an amateur should clearly not get into... I don't think anyone is denying that fact? I thought we are discussing the market in general, as in "investing" in the stock market...

Day trading is not unlike poker, more experienced player, with higher bankrolls, etc will 99% of the time beat amateurs...
so by your logic one can conclude that poker is "rigged"?

"Investing" in a market where the stock prices and company financials are disconnected is day trading. The high frequency traders and people putting literally trillions of dollars of dark money into the market know the stock prices have been disconnected, the rest simply aren't aware that hundreds of billions of dollars can be poured through any stock at any moment in a matter of minutes for reasons having nothing to do with the company the ticker supposedly represents. In this casino sometimes a Jack of Hearts is worth ten, and sometimes it's worth 72 - which is exactly what happened in the story Taiibi wrote. The market forces at play after hours, via high frequency trades and via massive fraud by the Fed without any action by regulators means you are "investing" with much less information than you think you have. I do hope you get lucky. I also hope people buying lottery tickets win a prize... But I wouldn't call their game "investing" either.

No. Poker is not rigged as long as all the players are subject to the same rules. If some players have information that others do not (i.e. the cards are marked) then it would be rigged. However, whether the game is rigged or not, poker is gambling not 'investing.' You are aware that the purpose of the market is supposed to be what Kickstarter now provides, right? It has become a casino but it was not intended to be one.

It cracks me up when someone says 'the economy is doing great because the market is up over XXXX' - the market no longer has anything at all to do with our economy.

Day trading = Gambling
Investing is investing, always was, and always will be...

If you invest in a solid company whose profits are growing every year, you will make money... (and that's how it worked for 1000s of years, and still works like that to this day...)

in the long term it doesn't matter if you overpaid a little because your information wasn't 100% accurate or whether the day traders used some sleazy tricks to fuck each other over or not... :2 cents:

Well, it's a story of a guy who decided to step into really dangerous business (i.e. investment management) without having a clue how to do the job.
He was just a salesperson throughout his career, it takes a bit more to become successful investor.
He got burned and now blames others for his failure.

As for his clients, they should have done a bit more research before trusting their cash to the wanker.

Don't try and change the subject. No where did I mention day trading. And in no way is blackjack even close to analagous to investing. And don't be infantile, HFT is incredibly different to bank bailouts. It's not even close.. You're basically conflating every component and actor in the market as one big whackamole to tear down.
That said, some HFT isn't bad, I mean HFT arbitrage across exchanges is a predictable and easy to live with outcome. In that sense you're right, If I wrote a program to check prices of one stock across multiple exchanges and buy when it's cheaper on exchange X and sell when it's more expensive on exchange Y I would. Market manipulation or front running is a different situation entirely. That's comparing something that can be done to manipulate all stocks with bank executives not releasing to the market information on bailouts when even in the article it said some did.

There are things you can complain about, like corrupt politicians giving bailouts to their campaign benefactors.. HSBC executives not going to jail for financing terror etc. Calling the market a random casino isn't one of them. Maybe learn a bit more about it first. Matt Taibbi might be one of the few great journalists left out there, but just because storms and tsunami's make great reading, don't think there aren't a lot of nice sunny days out there. You think any of this affects some small stock with good growth and earning potential you're looking to purchase? As though anything shifty is going to happen in it and as though HFT traders are even aware of it because of something that happened in an unrelated sector during a crisis period?
Hell I can guarantee you right now some representative of the people is giving a contract to a defense contractor.. to a solar energy company, to a computer repair company in their building on opaque and bribed terms... It sure as hell doesn't affect any of the companies I invest in.

I'll accept that the market is like a game of poker as there is risk involved, you play against other players, there are winners and losers and you can generally chose whether or not to play a hand. But don't for a second think that if you always bet on bullets that you won't at the end of the day come away with an average profit even though it's assumed you can still lose a lot of hands playing it. All investments carry risk. Even 0.25% in the bank.

Basically don't fall into the trap of the zeitgeist convert where suddenly everything is all one big conspiracy run by jewish bankers and no part of the government is to be trusted, and the EPA is communist, the CDC is trying to kill you with delayed death vaccines and the stock market was tanked on purpose.

Some bad stuff happens, mostly though it's just mundane - people going about their jobs and trying to do their best. If you've ever witnessed a company trying to keep it's stock price up with positive releases you'll have understood how futile it is for most companies to try and manipulate things. And if you have any modicum of intelligence or experience (which you should have before investing) you'll be able to see through any glass-half-full rose-coloured-glasses picture they try to paint.

But if you want to remain ignorant and think it's like buying a lottery ticket then it's sure as hell no skin off my nose, it is quite literally, your loss.

In a music magazine. Nice.

Nice, armchair nerds arguing about economics because they can't figure out how to budget correctly.

The article I posted about is NOT about bank bailouts. The TARP program of bank bailouts was highly publicized and the facts about it were available to everyone. What actually happened was additional virtually unlimited amounts of money (that eventually numbered in the trillions) were also lent to banks off the books and that the government had no intention of ever making that information public - it took a Supreme Court decision won by Bloomberg to force them to come clean about it. People lost millions making moves in the market based on all of the information available and lost because information was deliberately kept secret by our government and the banks who went on to earn hundreds of billions of dollars in additional profit by monetizing their dark money interest free loans from taxpayers. That is not the same thing as the TARP program and bank bailouts most people are aware about.

The hyperbole is in your head. I didn't say the markets are random casinos... I said they are casinos. Casinos are very much NOT random. In fact they make money by not being random and by collecting a very well defined rake from players. Neither Taibbi nor I think there are no sunny days... of course there are sunny days. The information uncovered by Bloomberg clearly is not one of them.

It greatly affects the overall financial health of our nation, particularly because trillions of dollars of retirement money is riding the ebb and flow of the market which is being whipsawed by asshats after hours, via HFT, with access to trillions in dark money and virtually zero regulation. As you pointed out and I posted about weeks ago, the government is doing virtually nothing to HSBC for laundering money on behalf of Iran and drug cartels on the theory that HSBC is too big to prosecute. Do you really think large investment institutions are being properly regulated by the SEC or that they aren't manipulating the markets at an unprecedented level in light of the fact that they "can't" be prosecuted? They can't even by trusted to properly manage their LIBOR responsibilities. In a casino you know the odds of every game before you play. Some of the odds are very unfavorable but people play anyway. That's not the same as stating one set of odds and actually offering another.

That's all fine and good. What isn't fine is when you play poker against someone else and they tell you their deuces are wild but yours are not. The market no longer is used to provide capital to companies seeking investment as its primary purpose. It isn't used primarily by long term investors. It isn't being traded based on company valuations or with all participants playing by the same rules. Your point seems to be that you can still make money in a badly broken market... I don't disagree. People can make money playing in a casino as well. That doesn't mean the markets are being regulated properly, that the way things are necessarily is the way they ought to be or that the game is any less rigged.