• The GiftBot 2.0 Launch Giveaway Extravaganza has come to a close with an astounding 8073 games given away to the community by 696 members, a huge success thanks to you! The gifting now continues with more official prizes in the new Gaming Giveaways |OT|. Leftover Steam codes are also being given away to the PC Gaming Era community.

Wiped-Out Hedge Fund Manager Confessed His Losses on YouTube

Quixzlizx

Member
Oct 25, 2017
1,873
This is a really weird way of looking at things (and not the normal way people use the term opportunity cost, but whatever, let's not get bogged further with terminology). You honestly don't see the difference between productive and unproductive economic activities?

But you know what, you don't want to do it on macro, let's go micro, what this hedge fund aimed to do was to get rich people richer, and to give them income without them having to work. I think this is bad. I'm sorry that I have to resort loaded and poorly defined terms, but I donno, if I can't use economics terminology or frameworks I'm kinda left with this.
Really man, you don't see any difference between me buying a product and this?
So you believe we should be living in an authoritarian command economy?

Since all investment and interest is "getting income without having to work."
 

cHaotix

Member
Oct 25, 2017
366
I'm no economics expert but I think the point Chikor is trying to make is that the money generated from hedge funds comes at the cost of the working class and economy as a whole. You buy a new iphone and the profits from that go into R&D for the next phone, operating fees (wages), and at the end, shareholders get paid. That's money that's staying within circulation of the economy and everyone benefits. Whereas hedge funds remove money from circulation and only benefit their investors. The majority of this money doesn't see re-circulation within our economy and is instead used to generate even more wealth. In the first example everyone benefits and in the second only the rich benefit while the rest of the economy gets hurt because the total amount of money in circulation is decreased.

Or maybe I completely murdered this and am 100% wrong lol. Thought I'd take a stab at it though.
 

Chikor

Member
Oct 26, 2017
4,399
So you believe we should be living in an authoritarian command economy?

Since all investment and interest is "getting income without having to work."
You really think that?
You read my posts and thought to yourself "but what he really want is a totalitarian government"?
We can disagree about those things and still be adults about it, there's no need to act like our only two options are the FEC future trading rules as they're currently written and North Korea.
Come on now.
 

molnizzle

Avenger
Oct 25, 2017
9,345
I'm no economics expert but I think the point Chikor is trying to make is that the money generated from hedge funds comes at the cost of the working class and economy as a whole. You buy a new iphone and the profits from that go into R&D for the next phone, operating fees (wages), and at the end, shareholders get paid. That's money that's staying within circulation of the economy and everyone benefits. Whereas hedge funds remove money from circulation and only benefit their investors. The majority of this money doesn't see re-circulation within our economy and is instead used to generate even more wealth. In the first example everyone benefits and in the second only the rich benefit while the rest of the economy gets hurt because the total amount of money in circulation is decreased.

Or maybe I completely murdered this and am 100% wrong lol. Thought I'd take a stab at it though.
I guess I just don't understand how the money comes at the cost of the working class and economy as a whole. It's not like employees benefit when their company has a higher stock price. Hedge funds are just playing with rich people's money. Giving it, taking it.
 

Gatti-man

Member
Jan 31, 2018
1,932
Will Bernie be one of the rich eaten? He owns multiple houses, is worth multiple millions, makes over $200k a year and has an amazing pension.
200k a year isn’t CEO pay. Being wealthy isn’t a crime unless it’s on the backs of underpaid workers. Who did Bernie exploit to be wealthy?

Also being a millionaire is possible at Bernie’s age. It’s really not far fetched cosiderijg all the economic advantages boomer and his age enjoyed especially over us now. I should be a millionaire when I retire and I just now make six figures (barely) and am 39.

What he is talking about is people making 1-50 million per year then being compensated with stock options that also allow said people to dodge payroll tax and effectively paying 15-20% income tax which is far lower than the average American. The system is broken and it’s completely leveraged towards the rich.

I honestly find it intellectually dishonest when people use Bernie’s mild wealth against him like it’s only ok for middle/ lower class to want to change the broken system. Plenty of rich people have said the same thing he does.
 

cHaotix

Member
Oct 25, 2017
366
I guess I just don't understand how the money comes at the cost of the working class and economy as a whole. It's not like employees benefit when their company has a higher stock price. Hedge funds are just playing with rich people's money. Giving it, taking it.
The economy as a whole benefits because when a company does well, they can continue to provide a service/product to the public while at the same time providing jobs to ensure that the public can continue to purchase their product. When the financial sector benefits you usually just have money going out of circulation. Think of this as a closed-loop water recycling system. When everything works right, you don't have to worry about adding more water, because everything is recycled and there's always enough water. Now, imagine that same system with a hole in the water tank. Eventually you're going to run out of water and the whole system breaks. We implement taxes in an attempt to add this "siphoned" water back into the cycle but as you can see there are multiple ways to avoid this.
 

Quixzlizx

Member
Oct 25, 2017
1,873
You really think that?
You read my posts and thought to yourself "but what he really want is a totalitarian government"?
We can disagree about those things and still be adults about it, there's no need to act like our only two options are the FEC future trading rules as they're currently written and North Korea.
Come on now.
Well, you stated flat-out that rich people getting richer without having to work is bad. I agree that there are a wide range of outcomes between what we have today and North Korea, but your statement taken at face value pretty much eliminates a market economy.
 

molnizzle

Avenger
Oct 25, 2017
9,345
The economy as a whole benefits because when a company does well, they can continue to provide a service/product to the public while at the same time providing jobs to ensure that the public can continue to purchase their product. When the financial sector benefits you usually just have money going out of circulation. Think of this as a closed-loop water recycling system. When everything works right, you don't have to worry about adding more water, because everything is recycled and there's always enough water. Now, imagine that same system with a hole in the water tank. Eventually you're going to run out of water and the whole system breaks. We implement taxes in an attempt to add this "siphoned" water back into the cycle but as you can see there are multiple ways to avoid this.
This is assuming that the wealthy individuals seeing good returns on their hedge fund investments are just hoarding their money and not spending it. Perhaps that's the case a lot of the time, I don't know. But even if they're just re-investing their gains to try and achieve more gains, they're still putting that money back in "the system" of U.S. banking. Which also has employees nationwide, even low/middle class employees.

To me it just seems like a cop-out, as it's easy to hate a single wealthy individual but not hate a monolithic corporation like Apple (that engages in many of the same practices as the individual, just at the corporate level on a much larger scale) because we like to buy their products.
 

TAH3145

Member
Oct 26, 2017
2,782
200k a year isn’t CEO pay. Being wealthy isn’t a crime unless it’s on the backs of underpaid workers. Who did Bernie exploit to be wealthy?

Also being a millionaire is possible at Bernie’s age. It’s really not far fetched cosiderijg all the economic advantages boomer and his age enjoyed especially over us now. I should be a millionaire when I retire and I just now make six figures (barely) and am 39.

What he is talking about is people making 1-50 million per year then being compensated with stock options that also allow said people to dodge payroll tax and effectively paying 15-20% income tax which is far lower than the average American. The system is broken and it’s completely leveraged towards the rich.

I honestly find it intellectually dishonest when people use Bernie’s mild wealth against him like it’s only ok for middle/ lower class to want to change the broken system. Plenty of rich people have said the same thing he does.
Care to point me where I said any of that? Or criticized the tweet from Bernie or said CEO pay is fine?

I was pointing out the hypocrisy of a poster who had posted about eating the rich (so edgy!), says anyone with over $500k wealth is rich and doesn’t deserve it, and then posts a quote from someone with over $500k wealth who based on what they previously said, should be eaten and doesn’t deserve their wealth.

This thread has gone completely off the rails. It’s sad how many people in this thread see people lose $150 million and say they deserve to lose it because they’re wealthier than the typical American (even if these people lost their entire life savings), while also considering themselves compassionate people.
 

Chikor

Member
Oct 26, 2017
4,399
Well, you stated flat-out that rich people getting richer without having to work is bad. I agree that there are a wide range of outcomes between what we have today and North Korea, but your statement taken at face value pretty much eliminates a market economy.
No it doesn't, come on.
You can snuff hedge funds out of existence with nothing more than a couple of simple changes to the tax code. I'm not even talking about whether or not you should, just challenging the idea that any small change to the complex set of rules and regulations we have right now means the end of the market economy.
 

cHaotix

Member
Oct 25, 2017
366
This is assuming that the wealthy individuals seeing good returns on their hedge fund investments are just hoarding their money and not spending it. Perhaps that's the case a lot of the time, I don't know. But even if they're just re-investing their gains to try and achieve more gains, they're still putting that money back in "the system" of U.S. banking. Which also has employees nationwide, even low/middle class employees.

To me it just seems like a cop-out, as it's easy to hate a single wealthy individual but not hate a monolithic corporation like Apple (that engages in many of the same practices as the individual, just at the corporate level on a much larger scale) because we like to buy their products.
I don't think this is a zero-sum issue where you can point to any one thing as the sole cause of economic discord. The system is broken on multiple fronts, with some of the issues being more obvious and easier to address than others (given more political activism and education).
 

Quixzlizx

Member
Oct 25, 2017
1,873
No it doesn't, come on.
You can snuff hedge funds out of existence with nothing more than a couple of simple changes to the tax code. I'm not even talking about whether or not you should, just challenging the idea that any small change to the complex set of rules and regulations we have right now means the end of the market economy.
The point I'm trying to convey is that the concept of investing is essentially making money while not working (profiting off of capital rather than labor). So what you said would apply to more than hedge funds.
 

Slim

Member
Sep 24, 2018
2,509
The economy as a whole benefits because when a company does well, they can continue to provide a service/product to the public while at the same time providing jobs to ensure that the public can continue to purchase their product. When the financial sector benefits you usually just have money going out of circulation. Think of this as a closed-loop water recycling system. When everything works right, you don't have to worry about adding more water, because everything is recycled and there's always enough water. Now, imagine that same system with a hole in the water tank. Eventually you're going to run out of water and the whole system breaks. We implement taxes in an attempt to add this "siphoned" water back into the cycle but as you can see there are multiple ways to avoid this.
Hedge funds provide liquidity to the various markets. The liquidity would dry up if they ever stopped trading, and you'd have crazy bid/ask spreads everywhere.
 

Chikor

Member
Oct 26, 2017
4,399
The point I'm trying to convey is that the concept of investing is essentially making money while not working (profiting off of capital rather than labor). So what you said would apply to more than hedge funds.
The concept of investing is handing over idle capital to someone who has use for it, generally to grow their business, with the hope of getting returns in the future.
Now it's true that modern wall street is for the most part pretty damn divorced from that idea, but I don't think it's something we need to celebrate.
Gambling on exotic financial instruments is investment only on the most technical, surface level.
 

Chikor

Member
Oct 26, 2017
4,399
Hedge funds provide liquidity to the various markets. The liquidity would dry up if they ever stopped trading, and you'd have crazy bid/ask spreads everywhere.
I think it's pretty safe to assume that the money that hedge funds manage would have been invested in something. We're not talking about amounts of money that people keep in their checking accounts (and to be pedantic, even that is invested). So that liquidity would have gone somewhere. I guess you can argue that hedge funds are the best at allocating capital, or even really good at it, but I'm not sure this is thread is going to be the easiest place to do so, considering the story in the OP.
 

Chikor

Member
Oct 26, 2017
4,399
Are you implying that attempting to pursue a completely legal career in finance is at all similar to becoming a murderous methamphetamine dealer?
No I'm not.
I mean your argument can justify a whole lot of terrible things, but I was just making a joke. I said in this very thread that I'm generally a hate the game, not the player type of person.
 

molnizzle

Avenger
Oct 25, 2017
9,345
No I'm not.
I mean your argument can justify a whole lot of terrible things, but I was just making a joke. I said in this very thread that I'm generally a hate the game, not the player type of person.
Yeah I know, but the implication (har har) of that post was that it would be through legal, non-violent means.
 

Slim

Member
Sep 24, 2018
2,509
I think it's pretty safe to assume that the money that hedge funds manage would have been invested in something. We're not talking about amounts of money that people keep in their checking accounts (and to be pedantic, even that is invested). So that liquidity would have gone somewhere. I guess you can argue that hedge funds are the best at allocating capital, or even really good at it, but I'm not sure this is thread is going to be the easiest place to do so, considering the story in the OP.
The story in the OP is just one of the common ones (exception being the HF manager made a video). More and more people venture into the hedge fund world trying to grab one good year worth of fees, increase capital, and then make a few YOLO bets for more cash. The financial sector with all its instruments still stimulate the economy. Future contracts, options, and whatnot, have a very functional role in the corporate world. While it's true there are a lot of "exotic" instruments, most rational managers won't invest because they simply can't. They track risk exposure, and balance the portfolio accordingly (not gonna get technical here). If there are any red flags, investors pull their money and the fund sinks like Titanic.

FYI: I'm not an ultra-capitalist. It's just a lot of misinformation out there regarding HF and investing in general.
 

Spyder_Monkey

Member
Oct 25, 2017
9,800
I don't even know what's going on or why hedge fund managers continue to be the most boring people on the planet even in the wake of total disaster.
 

Chikor

Member
Oct 26, 2017
4,399
The story in the OP is just one of the common ones (exception being the HF manager made a video). More and more people venture into the hedge fund world trying to grab one good year worth of fees, increase capital, and then make a few YOLO bets for more cash. The financial sector with all its instruments still stimulate the economy. Future contracts, options, and whatnot, have a very functional role in the corporate world. While it's true there are a lot of "exotic" instruments, most rational managers won't invest because they simply can't. They track risk exposure, and balance the portfolio accordingly (not gonna get technical here). If there are any red flags, investors pull their money and the fund sinks like Titanic.

FYI: I'm not an ultra-capitalist. It's just a lot of misinformation out there regarding HF and investing in general.
There is quite a bit of difference between a company hedging against future oil shocks than a hedge funds like this, which they let's be real, they were just making educated gambles against some economic indicators. Seriously, what is the utility hedge funds like this one beyond "normal" investing?
These are vehicles that were created to exploit a very specific part of the tax code, and honestly, they're not even that great for investors.

They use similar tools but it's kind of an unintended side-effect, and we don't have to have a system that reward and encourage such things like we have right now.
 

Slim

Member
Sep 24, 2018
2,509
There is quite a bit of difference between a company hedging against future oil shocks than a hedge funds like this, which they let's be real, they were just making educated gambles against some economic indicators. Seriously, what is the utility hedge funds like this one beyond "normal" investing?
These are vehicles that were created to exploit a very specific part of the tax code, and honestly, they're not even that great for investors.

They use similar tools but it's kind of an unintended side-effect, and we don't have to have a system that reward and encourage such things like we have right now.
Hedge funds like this one is garbage. Just some idiot trying to make a quick buck without thinking about the consequences/responsibility. Great hedge funds actually go for optimal risk/reward, and avoid going negative like hell (Yes, you can outperform the market as it's inefficient). You may not agree with this, but they're providing a service to the high net people/funds because the latter ones want it.

It's not only HF that go for tax benefits, as pretty much every company out there would be looking to do the same. Most high net people are already based in Switzerland so it's unlikely they'll act as white knights if all HF were wiped out.
 
Oct 27, 2017
522
I 100% guarantee you'd change your tune if you were a hedge fund manager.
says the self proclaimed $50 banana eating 1%er Robin Hood.

For all of the people that are like hate the game not the players - that's a fallacious argument when the the top players are the ones that dictate the rules of the game and ultimately are the only ones that significantly benefit from it.
 
Last edited:
Oct 26, 2017
10,610
says the self proclaimed $50 banana eating 1%er Robin Hood.

For all of the people that are like hate the game not the players - that's a fallacious argument when the the top players are the ones that dictate the rules of the game and ultimately are the only ones that significantly benefit from it.
When you label something as a "game" then, yeah, the top players dictate the play. That's how good players win.
 

Gatti-man

Member
Jan 31, 2018
1,932
Care to point me where I said any of that? Or criticized the tweet from Bernie or said CEO pay is fine?

I was pointing out the hypocrisy of a poster who had posted about eating the rich (so edgy!), says anyone with over $500k wealth is rich and doesn’t deserve it, and then posts a quote from someone with over $500k wealth who based on what they previously said, should be eaten and doesn’t deserve their wealth.

This thread has gone completely off the rails. It’s sad how many people in this thread see people lose $150 million and say they deserve to lose it because they’re wealthier than the typical American (even if these people lost their entire life savings), while also considering themselves compassionate people.
Your post sounded like an argument I’ve heard ad nauseaum about how Bernie is a rich elite. I must have just missed your meaning.