"Trading" Posts
The revenge of the retail trader

The revenge of the retail trader

GameStop’s rally and its short squeeze are more than just market exuberance. Thanks to low-cost trading, employees working from home, and a Fed-induced market rally, retail traders are pushing the market to new highs and enjoying the excitement of the rally. Worse, social media allow them to focus on a few instruments, with wild rallies.
It is only a matter of time before this party is over, for this stock or the market. We should start thinking of the aftermath.

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A History of Daytrading: Regulators, Congress and Robinhood

A History of Daytrading: Regulators, Congress and Robinhood

More about Robinhood… Massachusetts’ Enforcement Division filed a complaint about
– its aggressive growth tactics,
– the firm’s outages and disruptions, which were well known and ignored while pushing growth,
– its gamification,
– and insufficient supervision for option trading.

Here is an excellent, albeit a bit lengthy, analysis of the history, regulatory and general situation of Robinhood & its Day Trading business by Bill Singer of Broke and Brokers (http://www.rrbdlaw.com/).

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Robinhood’s $65m SEC penalty and the ‘gamification’ of trading

Robinhood’s $65m SEC penalty and the ‘gamification’ of trading

Robinhood has just been fined $65m for overcharging its customers, despite trades being free of charge – the company sells its order flow, and the net result is that traders are overcharged $35m/y.

The firm also mislead its clients in its advertising.

But in the back of these already serious issues, is the question of ”gamification’ of trading, where inexperienced individuals actively day-trade on margin. They end-up facing professional investors, who are much better informed and equipped than them. A previous note (https://lnkd.in/gCjKwtM) showed that most if not all end-up losing money.

This five-year-old article below still remains a good analysis of what ‘gamification’ entails. It is probably fine for school teaching and corporate training, but feeding a “high-octane gambling need” is probably not ideal for financial markets.

Robinhood’s documented bubbles, coupled with many new accounts and likely overpriced markets, could turn pretty ugly pretty fast.

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Most Robinhood day traders lose money

Most Robinhood day traders lose money

Most day traders on Robinhood lose money. Actually, maybe 0.5% of day-traders earned more than the initial salary of a bank teller.

A large body of academic studies going back 20 years consistently shows day traders and other very active traders have difficulty making money over anything more than short periods of time.

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Previous Posts

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Crypto systemic risk

A systemic effect is currently unfolding in the digital space. Stable coins have been hit, then coins, then lenders, then hedge funds and now crypto exchanges. Unfortunately, the lack of regulation, of regulator, of risk constraint, or even capital buffer will make the fall even more painful.

Raphael Douady

Top French quant: Best mathematicians are in France, or Russia

Should data science be a area of mathematics or a science by itself? Raphael Douady, a prized financial market academic, contends that it is a science in itself, and that French and Russian mathematicians ranks among the best.

Allianz

Allianz Fund Collapse Ends With Guilty Plea, $5.8 Billion Payout

Allianz Structured Alpha funds lost $7 billion of investor money in March 2020.
Gregoire Tournant, the portfolio manager, has been arrested.
The firm pleads guilty and will pay $5.8 in fines and restitutions.

1926-Ford-Model-T

Panel Ponzi Prison – Epilogue

Follow-up to the Solar panel lending Ponzi: the CFO got his own 6 years in the clink.
Les bénéfices ça se divise, la réclusion ça s’additionne.

What statisics say about hedge fund fraud and tsarist regimes

Alternatives are complex and opaque. requiring both investment and operational due diligence.
New technologies now permit investment analysis, fraud detection, and operational risk measurement.

Barclay

Barclay’s $600 m ETN blunder

Barclays has announced a loss of GBP 450m related to the sale suspension of OIL and VXX two weeks ago. The operational blunder is impressive.

Old_Cemetary_450

RIP, Russian stocks

MSCI is removing the Russian stock index at zero, implicitly valuing the entire Russian equity market at nil. And it is correct.
Russian stocks are literally worth nothing.

Russian_Yachts

Credit Suisse destroys evidence of oligarch yacht loans

Credit Suisse is taking advantage of the situation in Ukraine to eliminate evidence related to the Russian oligarchs’ tax evasion (money laundering?).

Bitcoin_World

Why Bitcoin is not Russia’s salvation from sanctions?

Why isn’t Bitcoin/Blockchain Russia’s salvation from sanctions?
Many people are posting that Bitcoin and blockchain are somehow a solution for sanctions.
Below are reasons for why that line of thinking is not realistic.

Sberbank_Logo

Russia’s Sberbank is defaulting in Europe

With massive withdrawals and no central bank to come to its rescue, Sberbank Europe is defaulting.
Its London-listed stock is down 70%. The holding is owned in majority by the Russian government.

burning-vehicles-ukraine-invasion

No plan ever survives contact with the enemy. Right, Vlad?

Putin’s blitzkrieg plans for a regime change have met an efficient defense. He lacks air superiority and his logistics are deficient. His panzers have stopped. Most cities are under Ukrainian control. Meanwhile, international sanctions are swifter and much heavier than expected. He has protesters at home.
Did he get into an expensive quagmire?

Dirty_Money

The world’s dirtiest money, welcomed by Credit Suisse. Again.

A major leak has just revealed the details of 18,000 private accounts and $100 billion held at Credit Suisse.
The owners include the Who’s Who of corrupt politicians, money launderers, and warmongers.
“How many rogue bankers do you need to have before you start having a rogue bank?”

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