As long as the Fed is willing to promote gambling, guess what? People will gamble.
Please consider Quant Fund Gains 108% by Dumping China Stocks a Day After Buying
Zhang Ruiqi, the 34-year-old chairman of Shenzhen Qianhai United Fortune Fund Management Co., screens about a dozen mainland-listed stocks every day for their turnover, momentum and volatility. He then does it all over again the following day. That strategy, which he calls the “all-in-all-out” method, helped his flagship $5 million fund gain 108% this year through June, according to data provider Simuwang.com.
“Our strategy allows us to make money from stocks that have the strongest market sentiment on a day-to-day basis — and that has turned out to be overwhelmingly successful so far this year,” said Zhang in a phone interview from his office in Shenzhen.
“As long as the trading volume remains above 400 billion yuan per day, this strategy will still be effective,” said Zhang, noting the upcoming revamp of the Shanghai Composite Index and ChiNext market reforms. “Volumes are unlikely to drop.”
Money’s Cheap, Why Not Gamble?
Hedge funds typically take 20% of the profits.
If they can make 100% profits with Other People’s Money (OPM) everyone is happy. If and when these strategies blow up the founders still make their 20%.
Attract $2 billion with these short term returns and the hedge fund just made $400 million off of OPM with no risk.
Not Just Quant Funds
I have a friend who is now day trading options, and short term ones at that. He does not know what a straddle is or even what a limit order is.
Day trading is inaccurate because the size of his account, under $25K, restricts him to a limited number of trades.
So far, he has done OK with long bets on Apple and Tesla. But how long can this last?
I had a long talk with him this past weekend. He is out of a job and out of money.
No Other Choice
“I have no other choice he told me“.
He wants to come by this week for me to explain more about options.
This is what the Fed has promoted.
Related Articles
- The Fed Promotes a Quickening that Takes Many Years
- The Recovery Will Have Many Shapes, Not One
- Unemployment is Much Worse Than it Looks
Mish
Duh…it took until TODAY to realize that gambling is all that is left?? When money becomes so cheap and overprinted such that its very meaning and definition comes into question, why “invest”? Growth has been squashed down to nearly nothing…all that has been left for most of twenty years is speculation…aka BETTING. ME too…why actually risk producing anything? Why get a (highly-taxed) actual job? Why sell your labour for peanuts?
Much easier to speculate…in stocks, in gold, in collectibles, in real estate. Hoarding. Speculating. I buy canned goods, non-perishables with every spare paper dollar…what did David Stockman say about ten years ago about tins of baked beans being better stores of value than paper…?
Picking up quarters
in front of a steam roller
on the Titanic
Wouldn’t this strategy get hit hard with fees? Most of the hedge funds I worked with did 2 week – 3 month positions.
Ads
Robinhood Official Site – Stocks, Options, ETFs
Ad·
http://www.robinhood.com/
Invest in Stocks, Options, and ETFs, All Commission-Free. $0 Minimum Deposit. You Can Invest in Robinhood Financial LLC with No Commission Fees. Other Fees May Apply. Refer friends, get stocks. Over 10M+ accounts. Award winning design. Real-time market data.
Web trading has become cheap, it in effect turns the man on the street who knows NOTHING about finance and markets into their own broker, and so it is a lot like online poker or gambling, but with real consequences and cash in/out, mostly out.
Once upon a time I was a NASDQ licensed broker (back in the 90’s before FINRA) and it is hard enough for professionals, I did not do it long, the commission structure was such that favored people in the firm could be assigned your best clients so that you could never make your book reach that higher plane of commissions, you would in effect remain little more than a scout scaring up retirement funds via cold calling and working financial fairs, and if you land a whale with millions in assets that client can be given to the bosses favorite pet. It is another way that Wall Street has of making sure the “right people” get the rewards, I just call it structural inequality.
Interest rates tell us that there is nothing to invest in that will grow the economy (with the exception of the flying car). Powell is trapped, he has to save the pension funds by inflating assets, and depreciating the currency.
This approach will work until one day when the music stops. This is not investing. More like a casino.
You are spot on. Besides his banking buddies making millions at essentially zero risk he has to save the pensions or there will be some very very upset people. This issue is extremely under reported on!
Powell said that the Fed policy does not contribute to asset bubbles, and that their responsibility is first to maintaining the stability of markets, to that end they will spend UNLIMITED amounts to support those markets. They say that while they do this via the banking system and Wall Street, they are responsible for macroeconomics, where it is up to legislative and political policy makers to decide social issues like pension laws and rates of compensation to the elderly and infirm, it is not their place to insert themselves into political catfights that belong to congress.
So as long as they limit themselves to welfare for the super rich they are on their own turf. They cannot support the broader population via stimulus measures even if they think that would be what the economy actually needs, all they can do is advise the government as to what they think the economy needs, in this Jay Powell has recently told congress and the White House when it comes to stimulus “THINK BIG.” And of course Moscow Mitch and his senate GOP are blocking all stimulus, because they honestly see all stimulus as being useful only as a reward for the good people, you know, those that have proven their goodness by having a net worth in the top 10% of the population.
What the fed is doing now has absolutely NOTHING to do with pensions, it is pure welfare for the wealthy, even as so many in the Main Street economy are suffering the worst contraction in history. If you are wondering why now this utterly inappropriate blow off top that risks collapsing the currency it is all part of a plan and today that means getting all you can right now because things are going to change starting with Biden’s swearing in next January. It is literally a scorched Earth approach by the Fed. Get it now because they are going to intentionally collapse the dollar by 2021, they are not stupid, they see Venezuelan policy coming to this country, socialism with an ad campaign. Nationalizations (as already underway in banking) and permanent failure.
Riiiight, they tell us that is the reason, we have to save your pensions, but in fact as so often said here and other forums, 10% of Americans by household net worth own 84% of all assets, so it is the upper class/wealthy who’s ass they are trying to save, not pension funds. And TIAB, when the music stops all will get hurt but the lower 90% will be devastated while te upper 10% will still have assets and no matter how you value those assets they will be the owner of all assets when 90% of us have a negative net worth.
Seems as the Fed has been rather consistent and predictable at inflating asset prices. Those who bet (gambled) on the Fed in 2010 have made profits (nominally) in a 10 year time window. Not a short time.
Would it be reasonable to expect that this pattern will persist for another 5-10 years?
“He wants to come by this week for me to explain more about options.
This is what the Fed has promoted.”
It wasn’t the FED that shut down the economy, throwing him out of a job.
You have missed the point Ron. Many people are “out of work” and have been since long before the pandemic not because they lost their 9-5 but because they think they can make a killing trading options at sites like Robinhood.
In 2017 I met a guy, a hard working black man who had a bit of a windfall and wanted to “invest” it so that it would grow for his kids benefit later when they needed college funds and such. So, what did he “invest” it in? Bitcoins. And worse he bought pretty much at the top of the bitcoin mania when the price was $18,000.
When you have NOTHING there appears to be no harm in buying a Powerball ticket, because the risk is certainly high you will lose your last $2 but the return potential is in the billions of percent should you get lucky. There is not only no way you can turn your last $2 into many millions, there is no real way to turn it into $4. At least not in your lifetime given interest rates today. $2 saved, and deposited in a savings account at an average yield of 0.75% (this passes for high yield savings these days?) after 40 years you will have a blistering pile of exactly $2.06 which by then will be worth about zero given that inflation minus the interest rate = REAL INTEREST is going to be negative. Over 40 years time that 2 bucks is long gone.
At least with Powerball your odds of doubling your money to $4 are 38 to 1 and can be accomplished with the next drawing. Your chances of doubling your money via “investing” in savings are perfectly zero. All you will ever have is that $2 and even that will be ground to nothing with inflation. Investing by putting your money into banks or other savings plans is a surefire way to lose it. While gambling means you may or may not lose it. Probably you will, but some will win their bets. This is the absurd end point of Fed policy and we have arrived. The exponential rate of inflation since 1913 when the Fed took over our money/economy is upon us. Where we go from here is anyone’s bet, will it be Venezuela? Zimbabwe? Or will they roll out a new monetary system along with a jubilee and start over from scratch, same theories and policies, just with some bling and flash bang, like a dollar crypto. Of course while your debts and dollar holding will be gone, ownership of property will not be affected, so those that own a stake (the rich) will be the lords over those that do not.
Not jealous. I too have a trading strategy. It’s called “EASY COME EASY GO”
Someday a lot of people will lose their shirts, and that’s about it.
Brillian Tokidoki, I feel the same way. You will not be financially successful by work and or savings. You may limp along only slowly losing net worth in REAL terms, (at least this is true for 90% of us) but at current negative real interest rates if you would turn that which you worked so hard for into more you have no choice but to gamble, and even gambling returns are more directly correlated to RISK/RETURN. Putting into a bank or brokerage account after inflation is simply handing it to someone else.
“This is what the Fed has promoted.”
…
For now. Actions taken were to allow TPTB to take to the lifeboats.
Buffet sitting on $130+ billion in cash.
Portnoy calling him out as a “has been” not to be taken lightly.
Oh, did I mention the Federal Reserve’s balance sheet has now shrunk not once, not twice, but 3 straight weeks?
One more thing. An ever escalating stock market only improves DJT’s re-election chances. Do the TPTB want THAT??
Yes. Trump had one policy success in three and a half years and it was a tax scheme that transferred lots of wealth from the poor and middle class to the rich. TPTB very much want trump’s corruption and incompetence to go on.
Retail investors will always get ripped but not for lack of stupidity.
The shot over the bow was the market drop and recovery. Mr Fed has been warning everyone that would listen he couldn’t keep doing what it was doing.
I don’t know if fed speak gets any worse then what has been said.
Tony, Buffet found at least one investment he likes, he bought the NAT GAS assets of Dominion Energy for a cool $10 billion. He is betting that energy prices will rise in real terms soon. He might be right, I know gasoline here is now already hit $2.799 at some stations for 93 octane. Up about 65% in 3 months. And rising fast. So much for all that oil in storage.
This amounts to going to a casino daily for these hedge funds and cashing out poker chips. And now the Trump administration wants more people to have access to hedge and privaty equity funds in their 401k.
The Fed is so out of touch with main street that they are going to create an economy based on nothing but people sitting at home and trading stocks on their computer. I think about 40% of the country already relies on this for primary or supplemental income.
I am actually more concerned that the fed’s policies are gutting the real economy. When more and more corporations, small and large, realize that they can make money without producing anything, we will have a massive problem on our hands.
Already there.
Federal Regulators Are Mortgaging The Country To Wall Street
What could possibly go wrong?
Everything has already gone wrong. There’s no saving that. It’s over. We’re a shithole now. One without a single redeeming positive attribute nor virtue left whatsoever. And furthermore, that’s all we are. No yabuts.
Hence, instead, the relevant question now is: What can be done to right at least some of the wrong?
And the answer to that, starts with not honoring, and defaulting, on that “mortgage” you referred to. No idiot in Washington ever had any legitimate standing to sign over other people’s children’s future income in the first place. Hence, noone whose signature isn’t physically on those “mortgage” documents, have any, at all, obligation to even pretend to have to honor them. If “Wall Street” wants to collect, they could harvest the kidneys of those who did sign. And there the buck stops. Wrt anyone else, they can just go eff themselves. Go bankrupt, “collapse”, starve, die, whatever…. It’s not as if any of them serve any useful purpose,in any even half legitimate society, anyway.
Just like that. Raised middle finger, eff it all, the harder the Free-Shit-Army idiots’ favorite “System” collapses, the better off everyone not directly leeching off it, is. Again, no yabuts nor exceptions. Financialization was a failed experiment. In absolutely every single way. Now, just get it over with and end it. Wherever the chips may fall, things, at a very minimum, cannot, even possibly, be any worse than the current “by incompetent idiots, for incompetent idiots, by way of theft, solely” dump already is.
After all, the only upside to living in an era where all and everything is, literally, as bad as they can even possibly be; is that any change, whatever it is, is by definition an improvement. Or, at absolute worst, a lateral move.
A broken clock is accurate twice a day. I’ve seen these strategies before and they always end in tears. Even a random day trader can get lucky a few times but then they guess wrong the next few times and they implode. These guys can’t guess the next moves by Fed and Congress so they will likely fail soon enough.
Next move?
So you know the fascist US Gov (who is buying corp bonds?) is not the problem? But the problem is the newly enabled Mish gambling addicts that are making your trades a joke?
Fail soon? Hukin retards everywhere here.
Lemme know when your favorite communist leader has more aircraft carriers then the fascist titty you suckle off of and then maybe you can have an intelligent conversation about what failure is and when it will come.
They don’t just “end in tears.” Tears is all they are.
None of these backmarkers create any wealth. Every single penny the idiots believe they “earned” is, every single time, straight up, no different from a burglary, stolen from others. Every penny of welfare The Fed and junta hands to any member of this undifferentiated sea of absolutely useless nothings, first have to be stolen. And it is always stolen from those who are working to make ends meet. Such that more and more of them, at the margin, no longer can do that.
That’s tears. Not retarded regime sycophants running around flaunting how dumb and illiterate they are, by bragging about how much money the totalitarian junta in the shithole they live in, stole from now starving children to hand to them.
This is like fall 1999. And the end well be worse. I never thought my day trader experiences back then would ever come back but here we are. I’ve learned a lot since then, and I’m genuinely worried about what may happen in years to come when this ends for new traders who only know this fed induced melt up
You were not worried back then but are worried now?
Grow up.
When another country has more aircraft carriers than this momma you suckle off of then will be the time to put your big boy pants on.
Do not worry though. Odds are someone will continue to change your diapers the rest of your life as a child.
Along with with what Mish called “this”, “You” are what the Fed has promoted.
Clueless regime sycophants, straight up proud of living off of government welfare stolen from their in-all-ways superiors.
That’s who The Fed has handed, in exchange for no effort, talent, insight, aptitude nor anything else of their own, control of virtually the entire America to by now.
Armies of undifferentiated braindeath, dumb enough to believe they are somehow “being smart” by “buying” something they will never understand, with money they never earned, one day, “selling” it to others equally stupid and Fed coddled the next. All while The Fed and a totalitarian, bootstomping government runs around kicking children into the street and starving them to death, to keep the idiots’ illusions they are somehow useful for anything whatsoever, aside from firewood and target practice, alive and lucrative.
And more importantly, this all the Fed has promoted. And all which is left of once-was America.
Turns out aircraft carriers are a hell of a lot less important than doctors, nurses and hospitals. People who know everything are always fighting the last war.
Your innocence is cute.
Bombs are always the most important thing for the ruling class. They will always have doctors.
Lol
The Fed is prompting this behavior by removing all vestiges of moral hazard. Hard to see what will bring the markets back to some sense of normalcy. I for one am sitting on the sidelines other than a 10% allocation to gold bullion and precious metals miners.
The Comedy never ceases.
When someone says they understand the game while claiming they are smart sitting on the sidelines.
No one is gonna buy your helmut and pads at the end of the game loser. Wait a minute. Are you a loser if you do not play? Nope.
You are a spectator boy.
Say it.
“I am a spectator who has no skin in the game”
And proud of it.
George Gammon follower for sure, “To Infinity and Beyond”