lxyuan/distilgpt2-finetuned-finance
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utf5u | Where has all the money in the world gone? | Honest question.
Where is all the money? I hear nothing but bad news about financial crisis all over the world, and it seems that there is a shortage of cash - like it is some sort of natural resource.
People haven't stopped buying stuff. They still need food, clothing, medicine, shelter. Taxes are still collected. Fines are still levied.
So where is all the money? I mean, labor has been produced to make things and wages paid to the laborers. The things are purchased by other laborers, who were paid for producing goods or services, etc. It's a closed loop, right?
Can someone explain it like I'm five or something? | 34.13126 | 1 | finance | (relix already hit on some of this)
It's hard to explain this to a five-year-old, because there are some fairly abstract concepts involved, but here goes...
All actual "money" is debt. All of it, including monetary gold, etc. (Don't argue with me yet, I'll get to that.)
Imagine a pretend world with no money, some kind of primitive villiage or something. Now let's invent paper money. You can't just print a bunch of paper that says people have to give you stuff, because nobody would honor it. But you *could* print IOUs. Let's walk through this...
- Let's say you're an apple-farmer and I'm a hunter. You want some meat but haven't harvested your crops yet. You say to me, "hey, go hunt me some meat and I'll give you 1/10th of my apple harvest in the fall". Fair enough, I give you meat, you owe me apples. There's probably a lot of this kind of stuff going on, in addition to normal barter. In time, standard "prices" start to emerge: a deer haunch is worth a bushel of apples, or whatever.
- Now, let's say a week later, I realize that my kid needs a new pair of shoes more than I need a bushel of apples. I come back to you and say, "Hey remember that bushel of apples you owe me? Could you write a marker, redeemable for one bushel of apples, that I can give to the shoemaker in trade for a pair of shoes?" You say okay, and we have invented a *transferable note*, something a lot like money.
- In time, our little villiage starts to figure out that a note redeemable for a bushel of apples can be swapped for all kinds of things. The fisherman who doesn't even like apples will accept apple-certificates in trade for fish, because he knows he can trade them to boat-builder who loves apples. In time, you can even start to hire farm-workers without giving them anything except a note promising a cut of the future harvest.
Now, you are issuing *debt*: a promise to provide apples. The "money" is a transferable IOU-- your workers get a promise to provide value equal to a day of farm-work, or whatever, and it's transferrable, so they can use it to buy whatever they want. The worker gets fish from the fisherman, not in exchange for doing any work or giving him anything he can use, but in exchange for an IOU that the fisherman can redeem anywhere.
So far so good. But there are a couple of forks in the road here, on the way to a realistic monetary system, that we'll address separately:
- What happens if your apple orchard is destroyed in a wildfire? Suddenly all the notes that everyone has been trading are basically wiped out. It didn't "go" anywhere, it's just gone, it doesn't exist. Real value was genuinely destroyed. There is no thermodynamic law of the conservation of monetary value-- just as you and I created it by creating transferable debt, it can also be genuinely destroyed. (We'll get back to this in a minute, it gets interesting).
- The second issue is that, in all probability, the whole town is not *just* trading apple-certificates. I could also issue promises to catch deer, the fisherman could issue promises of fish, and so on. This could get pretty messy, especially if you got the notion to issue more apple-certificates than you can grow: you could buy all kinds of stuff with self-issued debt that you could never repay, and the town wouldn't find out until harvest-time comes. Once again, value has been "destroyed" people worked and made stuff and gave you stuff in exchange for something that doesn't exist, and will never exist. All that stuff they made is gone, you consumed it, and there is nothing to show for it.
The above two concerns are likely to become manifest in our village sooner or later, and probably sooner. This leads to the question of *credit*, which is, at its most basic, a measure of *credibility*. Every time you issue an apple-certificate, you are *borrowing*, with a promise to repay from future apple-harvests.
After the first couple of town scandals, people will start taking a closer look at the credibility of the issuer. Let's say the town potato-farmer comes up with a scheme where his potato-certificates are actually issued by some credible third-party, say the town priest or whatever, who starts every growing season with a book of numbered certificates equal to the typical crop-yield and no more, and keeps half of the certificate on file, issuing the other half. Now there is an audit trail and a very credible system that is likely to earn the potato-grower a lot of credit, compared to other farmers in town. That means that the potato-grower can probably issue more notes at a better exchange rate than some murkier system. Similarly, the town drunk probably won't get much value for his certificates promising a ship of gold.
Now we have something like a credit market emerging, and the potato-farmer is issuing something closer to what we might call a modern "bond"...
(continued in a reply to this post...)
| 1 | 2 |
m3g13g | Is there a better sub where comments aren’t hidden 99.9% of the time? | So often someone will ask an amazing question, something I’m really interested in getting a good answer to, or even someone’s opinion, but I always just see that message explaining that comments need to be approved.
99.9% is an exaggeration, but not many people are going to come back to look at a post to see if any comments have been approved. | 14.812156 | 1 | AskEconomics | I someone were to make a good alternative then I'd be very happy about it. It can take ages moderating this sub. I'm sure lots of the other mods think the same.
The fundamental problem is though that loads of people who don't know about economic write replies. All sorts of bullshit gets written. The problem then is you'd have to know about economics to distinguish the bullshit from the truth.
If someone can think of a good way of solving this I'd be very happy. | 1 | 2 |
c84bp | How real-world corruption works. | This is a throwaway account (I'm a longtime redditor under another login). /r/economics might not be the correct place to put this, but it was the best I could think of. I'm a mid-career guy in a business that does a lot of work with governmental and quasi-governmental agencies. I've never ripped anyone off personally, but I have seen and occasionally been an incidental beneficiary of quite a bit of patronage, insider dealing, nepotism, misuse of taxpayer money, and outright corruption. While I have always been honest in my own dealings on a case-by-case basis, I have refrained from many opportunities to be a "whistleblower".
A lot of stuff on reddit misunderstands the relationships between wealth, power, and influence. For starters, all the above three are always and have always been inter-related, and probably always will be. And that might not always be a bad thing: those who have risen to high levels of wealth are often pretty smart, and surprisingly often exceptionally honest. Those who rise to high levels of influence usually have some pretty good insight and talent in their area of expertise. Those who have acquired a lot of power tend to be good at accomplishing things that lots of people want to see happen.
None of which is purely democratic, nor even purely meritocratic, but there is a certain dose of both kind of baked into the cake: stuff like wealth or family connections only gets you so far in modern, developed, and relatively open and transparent societies such as the US. And while that can be pretty far by normal standards, at some point sunlight does shine through any crack, and outright robbery or complete incompetence is difficult to sustain indefinitely.
But there is an awful lot of low-level waste, patronage, and corruption that happens both in the private and in the public sector.
Without going ideological, the private sector in a free-ish market has a more immediate system of checks and balances if only because you have to actually persuade the end users to keep buying your stuff for the price you're charging: if it's no good, or if you are grossly over-charging, your customers will tend to catch on sooner or later.
But in the public sector, the "consumer" often has little choice... so-called "market discipline" is a lot more diffuse when you have a former-schoolteacher-or-real-estate-broker-turned city councilman whose job it is to disburse a multi-million-dollar street-paving contract or whatever. And neither the schoolteacher nor the real-estate broker has any clue how to write or evaluate a road-paving contract...
Let's say that there are three credible bidders for that street-paving contract:
* Bidder 1 is "Paver Joe", a local guy with a driveway-paving company and three trucks who sees this as a big opportunity to expand his business and get the city to pay for five new trucks. He puts in a dirt-cheap bid that he wrote up himself with the help of his estate attorney. The cost to taxpayers is very low, but the certainty that he will complete it on schedule and as specified is a little iffy. Paver Joe plans to work overtime and bust his tail on the job, not for profits, but to grow his business. He's offering the taxpayers a great deal, but a slightly risky one.
* Bidder 2 is "Muni Paver Inc", a company who has the experience and expertise to do the job, who knows what's involved and who has done this work before. They already have the trucks, their workers are all unionized and paid "prevailing wage", everything will be done by the book, all their EPA certifications are in place, etc... The bid is a lot more expensive than Paver Joe, but it's credible and reliable. They are offering the taxpayers a degree of certainty and confidence that Paver Joe cannot match.
* Bidder 3 is me, "Corruptocorp". Instead of Paver Joe's 2-page contract with typos, or Muni-Paving's 20-page contract, I'm offering the city council a full package of videos, brochures, and a 40-page contract with a price just a tad higher than Paver Joe (my quoted price is meaningless, as we will see). Moreover, I'm inviting the city council to Corruptocorp-owned suites in a golf resort near my headquarters to give my presentation (all expenses paid, of course, and of course, bring your spouses). There the city council members will, after the first day of golf, dinner, dancing, and cocktails, see a slideshow and chorus-line of smiling multi-ethnic faces and working mothers talking about how much Corruptocorp's paving improved their town and their lives. I'll then stand up and tell a self-effacing joke about being one of those corporate guys trying to get their money, and then I'll wax a bit emotional about my small-town roots and how Corruptocorp was started by a man with a simple dream to make life better for everyone, and to do well by doing good in local communities, and that we actually plan to hire local contractors such as Joe's Paving to do the work, backed our economies of scale and reliability. I'll mention that paragraph 32 subsection B of our proposal mandates twice-yearly performance reviews by the city council, to of course be held at the golf resort, at Corruptocorp's expense, ("so I hope to see you all back here every February and August!"), and of course I make sure that each of them has my "personal" cell phone and home numbers in case they have any questions....
So needless to say I get the bid, and six months later it's time for our review at the golf resort. After dinner and cocktails I step up to the podium and announce that there is both good news and bad news:
*"The bad news is that our subcontractor has found over 1,000 rocks in the road. And as I'm sure you know, paragraph 339 subsection D.12 specifies that any necessary rock removal will be done at prevailing wages, currently $1,500 per rock, for a total cost overrun of $1.5 million. But the good news is (and believe me, I had to fight long and hard for this with the board of directors), Corruptocorp has agreed to remove those rocks for only $1,000 apiece! So even though there have been some cost overruns, your smart decisions have saved your taxpayers **half a million dollars**! Give yourselves a round of applause!"*
*"Now, the other situation is that there has been some 'difficult terrain' as described in subsection 238b, which I'm sure you're all familiar with. And as you know, 'difficult terrain' is not covered by the contract, which is for paving, not for turning mountains into flat roads... (wistful chuckle). Now, technically, according to the contract, we should be charging your town prevailing rates for these sections, but I've worked it so that you will be allowed to re-bid them, if you wish, since our contract doesn't specifically include terrain as described in subsection 238b."*
Now the contract price has doubled, and Corruptocorp has completely sidestepped all of the difficult and costly work, taking profits only on the easy stuff. The city council members can either admit that they were duped and bought (political suicide), or can simply feed corruptocorp's line to the voters. Which do you think will happen?
And it gets even worse on smaller scales: look up your local building or electrical inspector. Ten-to-one he is a relative, friend, or campaign donor to the mayor or city council. What's in it for him? Every single construction or home improvement project not only has to pay him a fee, it also has to pass his inspection. Guess which contractors are most likely to pass his inspection? His brothers, friends, family... or the cheapest guy who for some reason has a hard time finding work in this town? Guess how the local inspector feels about homeowner self-improvements: does he think they are a great way for regular people to improve their wealth with a little elbow grease, or does he see them as stealing work from his friends and family?
The US military is by far the most wasteful customer I've ever had. I'll talk about that if this topic gets any interest.
edit: as promised, here's the post about military spending:
http://www.reddit.com/r/Economics/comments/c84bp/how_realworld_corruption_works/c0qrt6i | 15.873294 | 1 | Economics | So I said I would talk about the US Military if this got any interest. Here goes:
The US Department of Defense (hereafter DOD) has put in place a ton of procedural protections to stave off corruption. And God knows they need protection: only in the DOD can you find a 20-something purchasing officer who knows nothing about the stuff he's buying, who makes around $30k per year, and who is in charge of a half-billion-dollar budget.
For starters, low-paid people with large purchasing budgets are the easiest to corrupt outright. Find someone makes $30,000 per year but who has a $10m budget, and you have struck gold: it doesn't even require outright bribery.
Just show up at their office and mention that you might have some product for them to take a look at... "Can you spare some time this weekend? I have tickets to the playoffs if you're free... Whoa!? You're a fisherman? Let's forget about business: why not have the family come by the beach house? I just got a new boat and the stripers are running... we'll talk business later..."
Take a guy living in a military-base trailer out fishing on a yacht or to courtside seats, take him on a golf weekend, or to front-row seats at an A-list concert, hell, even just take him and his lady to a swank restaurant, and you've made a new best friend. And if he happens to be in charge of a $10m budget, that lavish night might be about to pay for itself 100,000 times over.
And all that assumes that you did not actually have a stripper with a cell-phone camera waiting in the car after the concert... we haven't even talked about blackmail, so why bring it up? Especially considering that these days, you don't even have to blackmail someone to blackmail them-- just linking your pics to their facebook, or setting up a "my party with Joe Blow" web page can ruin their life without malice or legal consequence... We're just posting our own party pics!
The DOD grades proposals with a color-grading system that is basically equivalent to letter grades.
The way it works is: the purchasing officer or whomever writes the spec ("request for quote"-- in normal business this called a "request for proposal" or "RFP". The DOD calls it an "RFQ". Whatever.). The spec is written as numbered sentences/paragraphs. Companies write bids that answer each number, with a bottom-line price.
A technical review committee sees the proposals with the price and supplier blacked out, and "grades" each proposal based on how well it meets the spec. The purchasing officer then sees the "grades" from the technical review, with the prices alongside (but not the complete proposals). Depending on his instructions, he may be required to either sign for the best overall value, highest overall grade, lowest acceptable cost, etc.
All of this seems very official and corruption-proof, until you realize that the original request for proposal came from, say, a 65-year-old Naval Admiral who knows everything about Oceanic warfare but nothing at all about computers, who assigned his 20-something first mate to write the spec and request for funding, who knows nothing about purchasing and who in turn wrote a spec (two years ago) that required Core2duo computers with 2GB ram and Windows XP and who required computers that meet the spec...
By the time Congress approves the funding, the spec is obsolete, and it costs far *more* to buy a bunch of obsolete Core2Duo machines with 2GB RAM than it would have cost to buy more-powerful computers at Costco.
The over-technicality and protectiveness of the DOD actually makes it one of the most vulnerable purchasing systems anywhere. As a technical officer who was interested in my product told me: "Don't worry about the review process, we'll just let you guys write the spec". If the military wants a Mercedes, they just issue a spec that requires a hood ornament with three lines trisecting a circle, and see whichever car company meets the spec at the best price-- surprise! They get the contract. Which means that the DOD is probably the only buyer in the world paying sticker price. | 1 | 2 |
l6x130 | CLASS ACTION AGAINST ROBINHOOD. Allowing people to only sell is the definition of market manipulation. A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to loose money now | LEAVE ROBINHOOD. They dont deserve to make money off us after the millions they caused in losses. It might take a couple of days, but send Robinhood to the ground and GME to the moon. | 91.556224 | 1 | wallstreetbets | Chapman Albin is an investors rights firm that my buddy works at. Just got off the phone w him. He is going to post a press release regarding the case they are filing.
Let me know if you need help finding a lawyer.
Disclaimer: I’m not getting anything out of this | 1 | 2 |
l6i4t3 | Wallstreet Bets Set to Private Megathread | The moderators there have made that sub private before. That’s why this sub was created. It’ll probably open back up soon. Calm down.
Edit: It's open again. Told you guys. | 78.806179 | 1 | Wallstreetbetsnew | You there. Yeah you. The person reading this comment. Calm the fuck down. Seriously. You already know what you have to do. Hold that dang line. Wall Street is pulling out all the stops to make us wanna bail and sell our shares. Don’t give into them. Hold $GME. Don’t let them off the hook. We are in this together and it only works if we are TOGETHER. Don’t worry about the server or the discord. This was honestly to be expected. It’s a good sign not a bad sign. We are breaking the system lol and soon we will be paid for it.
Obligatory 🚀 | 1 | 2 |
l6u6d5 | Trading212 restricts the purchase of certain stocks under guise of “mitigating risk” | EDIT: T212 ALLEGEDLY SELLING STOCKS WITHOUT USER PERMISSION [tweet](https://twitter.com/able_adam/status/1355174529665028100?s=21) [tweet](https://twitter.com/zzywest/status/1355176988122750978?s=21)
EDIT: Mirror stocks on other EU exchanges now blocked too 1/28
EDIT2: Straight up BUY RESTRICTIONS! - "Mitigating Risk" no longer named a reason 1/28
EDIT3: [UK TRUST PILOT REVIEW](https://uk.trustpilot.com/review/trading212.com)
EDIT4: BUY restrictions Appear removed as of 1/29 - Will update when $NYSE opens
EDIT5: T212 Restricts new signups to App and forum. On a Thread deleting & Banning Spree of people who are complaining there
I think you know which stocks they are. Now, say what you want about meme stocks/wsb etc does this for anyone else not shed a light on this industry as a whole? Or is there actually a case for preventing people piling into this stock? Beyond usual toc on signup which are frankly quite blasé, Ive never had any platform warn or restrict a *particular* stock, especially not under the auspice of protecting me from risk. Was 2008 not an unprecedented market environment? Was the start of covid not?
This is an extremely worrying precedent for me and last time ill be using t212.
Edit: I listened to reasonable arguments but this stinks. Its fine if you dont like wsb or the current meme stocks. But look at this precedent and just wait til you spend months on DD and get fucked over anyway, this will continue
NOTE 1: As perT212 app “In the interest of mitigating risk for our clients, we have temporarily placed (meme stock) in reduce only mode as highly unusual volumes have led to an unprecedented market environment. New positions cannot be opened, existing ones can be reduced or closed”
NOTE 2: Due to BUY restrictions placed by our intermediary and ever major execution venue worldwide, GameStop will be placed in close-only mode. New BUY positions can't be initiated, existing ones can be reduced or closed | 27.018792 | 1 | UKInvesting | - email them with a complaint
- they have 8 weeks to respond
- if they dont contact the Finanical Ombudsman or the FCA with evidence (screenshots etc)
The more of us that do it, the higher likelyhood something will be done | 0.856322 | 1.856322 |
ul3oqg | Why were American, minimally-skilled, workers able to afford single family homes in the 1960s and 1970s, but now they can barely afford apartments for rent? | If my underlying assumption is incorrect, please elucidate me.
That said, I know of several family members who worked as grocers and retail workers and they were able to buy their homes in the 70s and eventually paid them off.
I, on the other hand, have a well-paying job, a graduate degree, and I’m also married to a partner with a great job.
Yet, had it not been for inheriting the equity from my grocer and retail worker relatives, I would never have been able to affordably buy my townhouse.
In contrast, similarly sized 2 or 3 bedroom apartments for rent in my area are now priced at about $3,500 a month. At $15 an hour, that would equate to 67% of a couple’s pre-tax income on housing alone. | 12.978811 | 0.879607 | AskEconomics | There are lots of misconceptions around this topic.
Home ownership rates in general are higher now than in the 70's.
https://fred.stlouisfed.org/series/RHORUSQ156N
The cost of a house is also not really the plain cost of a house, it's the financing cost. And in that regard, people spend less of their disposable income on mortgages than they did at any prior point in the last 40 years.
https://fred.stlouisfed.org/series/MDSP
That doesn't mean houses haven't become more expensive, but that perception is in large parts fueled by the fact that they have become a *lot* more expensive in the most desirable places, the big cities that offer high salaries and a high standard of living. People talk about San Francisco, not Casper, Wyoming.
Another thing to note is that people became wealthier and in turn bought bigger houses. Houses cost more, houses *per square foot* have fluctuated, but not gone up so drastically.
https://www.aei.org/wp-content/uploads/2014/02/houses2.jpg?x91208
Two trends are worth noting however.
People on average go to college more often, spend more time on their education, and start working later. They also get married later. This means that even if they ultimately earn the same or more, this happens later in life.
Also, inequality pushes ownership rates down for the lower half and up for the upper half.
For more details, see:
https://equitablegrowth.org/a-generational-perspective-on-recent-u-s-homeownership-divergence-by-income-and-race/
So, from a broad perspective, ownership hasn't changed, but who can afford what and where has changed. | 0.892105 | 1.771712 |
l6x130 | CLASS ACTION AGAINST ROBINHOOD. Allowing people to only sell is the definition of market manipulation. A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to loose money now | LEAVE ROBINHOOD. They dont deserve to make money off us after the millions they caused in losses. It might take a couple of days, but send Robinhood to the ground and GME to the moon. | 91.556224 | 1 | wallstreetbets | [Click Here]( https://www.sec.gov/oiea/Complaint.html ) to file a complaint with the SEC.
[Click Here]( https://www.finra.org/investors/have-problem/file-complaint/complaint-center ) to file a complaint wit with FINRA.
[Click Here]( https://robinhood.com/contact ) to file a complaint with Robinhood directly.
Robinhood Financial LLC 85 Willow Road Menlo Park, CA 94025 United States
This morning I, and millions of other retail investors, were blocked from purchasing (entering new buy orders) on the Robinhood platform, without notice. This clear example of market manipulation has forced the stock down from over $500 in after-hours to less than $300 as of this writing. Meanwhile, hedge fund interests are NOT blocked from buying the shares being traded and the lower price obviously benefits them.
We retail investors have followed all the rules and finally stood to gain a LITTLE bit from Wall St and they suddenly change the rules "to protect" us. I am requesting you use your subpoena power and regulatory authority to examine whether Robinhood colluded illegally with any other actors who may have held short positions on these stocks to reduce the number of buyers for $GME and therefore deflate the price. This is market manipulation.
info for form:
Robinhood Financial LLC
Address:
85 Willow Road
Menlo Park, CA 94025
United States
Edit: Fellow Regarded, please buy more GME and Hold 💎🤚🏾 the rewards helps with visibility but it’s better spent there.
Edit 2:
I’m getting a lot of questions regarding the same things so I’ll try my best to answer them.
- For FINRA online complaint, scroll down to the section reading “Problems addressed by FINRA” under it click the Orange button that reads “FILE ONLINE COMPLAINT”
- FINRA CRD NUMBER: 165998 [ Thanks u/Mattcwh ]
- User [R] pointed out that Robinhood is owned by Citedal, a hedge fund that along side with Point72 injected ~$3B into Melvin. Standing to lose a shitton of money to us degenerates. This further points out why Robinhood is trying to manipulate the market to help out the suits at Wall St.
- Lots of questions concerning the Security type. If it’s for GME you put it under CLASS A OR D Securities.
Edit 3: Thanks for all the people who filed what they could. | 0.755126 | 1.755126 |
l807am | "Wealthsimple Inc., a commission-free Canadian online brokerage with more than 350,000 clients, is warning traders about the risks of investing in certain highly speculative stocks, but isn’t planning to halt trading in those shares." | (Bloomberg) -- Wealthsimple Inc., a commission-free Canadian online brokerage with more than 350,000 clients, is warning traders about the risks of investing in certain highly speculative stocks, but isn’t planning to halt trading in those shares.
Wealthsimple, whose motto is “get rich slow,” doesn’t offer riskier investment choices such as options trading or margin accounts, and has sent clients emails reminding them about the dangers of speculation, Chief Executive Officer Mike Katchen said in an interview with BNN Bloomberg Television Friday. It also embedded in-app notifications for users looking at certain stocks.
The firm doesn’t plan to restrict trading on those shares the way Robinhood Markets Inc. and other brokerages have done in recent days, Katchen said.
“If people are taking calculated risks and want to join in on the fun, but are doing it in a responsible way with an amount of their portfolio that they can effectively lose if and when these stock prices do come down, that’s OK,” Katchen said. “But we want to make sure that people are being responsible, and we’re trying to be as proactive as we can about that messaging.”
The recent frenzy of retail trading has spurred a surge in interest even in the tamer platform of Wealthsimple, which touts passive investing in ETFs and is building out cash, checking, insurance and mortgage products. The company, owned by Power Corp. of Canada financial conglomerate, saw sign-ups increase more than 50% from a week earlier and daily volume more than double, Katchen said.
That surge in interest could be a good thing if handled properly, he said.
‘Fine Line’
“We have to walk that fine line of using this opportunity to bring more and more people into the capital markets and into the opportunity of investing,” he said. “But let’s also remember that investment carries risks, and it does require thoughtfulness and long-term thinking.”
Katchen would like to see investors use individual stock-picking and cryptocurrencies such as Bitcoin, which his firm does allow trading in, as part of a “play money” account on the margins of their larger, core, long-term investing strategy. He also doesn’t see options and margin accounts as inherently wrong, but said they can be dangerous when used by new investors who don’t understand them.
“The gamification of these highly risky tools is problematic and could result in some very bad outcomes for people, and we don’t want to be a part of that,” Katchen said.
https://www.bnnbloomberg.ca/canada-s-answer-to-robinhood-warns-traders-but-won-t-halt-stocks-1.1556216 | 27.730366 | 1 | CanadianInvestor | This is how it should be
This morning I saw a post from somebody saying
“How do I trade stocks? I don’t even know where to begin but I opened a Wealthsimple account cuz a bitch don’t like being broke”
These people are more than likely going to be the ones left holding the bag and it’s not good. There needs to be every effort to educate these people who don’t even know that the Canadian and US stock markets are different.
Of course it’s their money and they should 100% be able to do what they want with it but please at least try to educate them first on what they’re about to do. I’m all for assumption of risk but it’s only fair if they get a breakdown from something other than the nightly news | 0.731288 | 1.731288 |
lghevq | First Time Investors - If you don't know what to do -- READ This | Hi all beginners, I was once like you, had no idea what I was doing, no idea what an option was, and had no idea how to even buy a stock. Now, you could say I'm an "experienced" trader (Whatever the f%&\* that means), and I see a decent amount of posts "totally new - what should I invest in". From all the smooth brains that have been doing this for awhile - that's really annoying and no one wants to help you for the most part.
Instead, do you own research first - I mean, you literally have Google, it is so simple. Im really not trying to bash on anyone, but Google is amazing and if you just take the 15 minutes to read an article or watch the ENTIRE youtube video, you will be so much further ahead. people are so obsessed with the known and dont want to work. It has taken me about 3-4 years to finally understand the market, charts, DD, and more about stocks and I still lose money on trades, and if u see someone saying they never loss money its a scam and stay away. Anyways, what im trying to preface this with is stocks take time to understand do you DD.
For those complete beginners that dont even have brokerage app installed yet, here are some good places to start:
[https://www.investopedia.com/articles/basics/06/invest1000.asp](https://www.investopedia.com/articles/basics/06/invest1000.asp) (investopedia in general is amazing for learning)
[https://www.thebalance.com/stock-trading-101-358115](https://www.thebalance.com/stock-trading-101-358115)
Those are two good articles to start reading, giving you a basic understanding. I know most of you wont read that so for complete beginners here is the TL;DR: FIND A BROKEAGE LIKE ROBINHOOD,WEBULL ETC, DEPOSIT MONEY, THEN ONCE THE MONEY HITS START RESEARCHING STOCKS YOU WANT TO BUY.
So now that you have a brokerage app installed on your phone, or you can access it via your laptop, doesnt matter, and you have some money in there, you can actually start buying the stocks. Depending on what brokerage you are using all the UIs look different so buying and selling will look different but buying and selling is the same. If you buy a stock you get shares, and when you sell the stock you lose those shares and "collect" your money, whether thats a profit or loss.
Anyways, you have a brokerage now with some money in it, how do you find stocks to buy. There are a million difference ways you can decide. The first way I recommend you find stocks to buy is through create a "stock screener". [Finviz.com](https://finviz.com/) has a great free tool that alot of people use for this, and there are a ton of youtube videos on how to create your own screener..here are some of my favorite screeners:
[https://www.youtube.com/watch?v=M8sNMhPJINU&t=2s](https://www.youtube.com/watch?v=M8sNMhPJINU&t=2s)
[https://www.youtube.com/watch?v=bWpe30R2VnM](https://www.youtube.com/watch?v=bWpe30R2VnM)
[https://www.youtube.com/watch?v=7xKOo6vNaq8](https://www.youtube.com/watch?v=7xKOo6vNaq8)
Each morning, you can run these scans premarket and have some stock ideas on what you want to trade. But don't just base your screener off of the stocks you are going to buy, you have to make sure they are a good stock with potential because just because its in your screener doesn't mean it is a stock you want to trade. So go through technical chart analysis (will cover that further down), read up on the stock, look at the price target, with analysts think it is a good buy or if you should sell, you can look at the fundamentals, and much more. The good news is all of that can be found on Finviz as well.
Before we get into the meat of breaking down your pre-market screener stocks, there are some other ways you can check out stocks to buy. There are way to many accounts to count on twitter that provide great advise and tweet about what stocks they are watching and buying into - this is complete free. Another great place you can go is right here - REDDIT. People are always posting stock ideas, so instead of posting "what should I buy" take that time to look through subreddits of what people are buying, what they are looking at or some of the DDs, those can be super helpful.
Now that you have an idea on how to find the stocks, the next part is determining if you should actually buy the stock or not. The first step I like is the technical chart analysis. If this is a swing trade, a stock you plan on holding for more than a day but less than a year, technical analysis is super important in my opinion. If you are LONG on a stock and are going to hold it for more than a year or even 10+ years then it is more about the company and the direction you think they will be going which is more fundamental trading, but I focus on more of the swing trading, and sometimes day trading but I dont really do that. Here are some good videos to understand technical analysis of a stock chart:
[https://www.youtube.com/watch?v=rlZRtQkfK04](https://www.youtube.com/watch?v=rlZRtQkfK04)
[https://www.youtube.com/watch?v=o6hZma0bajE](https://www.youtube.com/watch?v=o6hZma0bajE)
[https://www.youtube.com/watch?v=ItacPNRujiU](https://www.youtube.com/watch?v=ItacPNRujiU)
Those are some great videos that should get you started and really will teach you what all the stuff on the charts mean so you can start to break down charts on your own and know if those stocks from your screener are worth buying or not.
The next analysis that is popular is called funamental, I dont do this style but here are 2 videos that cover it in good detail:
[https://www.youtube.com/watch?v=a63yvv4vjDE](https://www.youtube.com/watch?v=a63yvv4vjDE)
[https://www.youtube.com/watch?v=baAzH5ZfNbs](https://www.youtube.com/watch?v=baAzH5ZfNbs)
There you have it. Now you can sign up for a broker to get money into an account, deposit money in, start screening for stocks that you may want to buy, and then review their chart to see if you want to buy the stock.
If it still seems confusing go back to what confuses you and re-read the article or find another video that may explain it better than the videos I found. Its all about just doing the process over and over again and you will see what works and what doesnt. That is the honest truth, like i said it took me about 3 years to find what works for me and what doesnt. And what works for me may not work for you, the biggest part of understanding a stock or the market in general is having your own way so you are confident when you invest in a stock.
Pro-tip, when you buy your stocks, set a stop loss order for the stock. This means that if the stock doesnt go up and starts falling, once it hits a certain price it will automatically sell. This is very important for managing your risk, especially as a beginner.
check out this video on stop losses: [https://www.youtube.com/watch?v=VW7P22B\_99A](https://www.youtube.com/watch?v=VW7P22B_99A)
I hope you beginners learned something from this, if not no problem. drop your questions below I will try to answer, but again im now financal advisor or millionaire. | 41.177617 | 1 | StocksAndTrading | Not gonna lie I just started last August and pretty much full sent and went with some companies I knew who were do for a good year like Sony especially with a new system coming out and so far on about 2k invested I'm up 1200 in about 6 months which makes me feel good lol. Have missed out on good opportunities on the way which happens though. | 0.704545 | 1.704545 |
o0scoy | The Bigger Short. How 2008 is repeating, at a much greater magnitude, and COVID ignited the fuse. GME is not the reason for the market crash. GME was the fatal flaw of Wall Street in their infinite money cheat that they did not expect. | ​
# 0. Preface
I am not a financial advisor, and I do not provide financial advice. Many thoughts here are my opinion, and others can be speculative.
TL;DR - **(Though I think you REALLY should consider reading because it is important to understand what is going on**):
* The market crash of 2008 never finished. It was can-kicked and the same people who caused the crash have **still** been running rampant doing the **same** **bullshit in the derivatives market** as that market continues to be unregulated. They're profiting off of short-term gains at the risk of killing their institutions and potentially the global economy. **Only this time it is much, much worse.**
* The bankers abused smaller amounts of leverage for the 2008 bubble and have since abused much higher amounts of leverage - creating an even larger speculative bubble. Not just in the stock market and derivatives market, but also in the crypt0 market, upwards of 100x leverage.
* COVID came in and rocked the economy to the point where the Fed is now pinned between a rock and a hard place. In order to buy more time, the government triggered a flurry of protective measures, such as mortgage forbearance, expiring end of Q2 on June 30th, 2021, and SLR exemptions, which expired March 31, 2021. **The market was going to crash regardless. GME was and never will be the reason for the market crashing.**
* The rich made a fatal error in **way** overshorting stocks. There is a potential for their decades of sucking money out of taxpayers to be taken back. The derivatives market is potentially a **$1 Quadrillion market**. "Meme prices" are not meme prices. There is so much money in the world, and you are just accustomed to thinking the "meme prices" are too high to feasibly reach.
* The DTC, ICC, OCC have been passing rules and regulations (auction and wind-down plans) so that they can easily eat up competition and consolidate power once again like in 2008. The people in charge, including Gary Gensler, are not your friends.
* The DTC, ICC, OCC are also passing rules to make sure that retail will **never** be able to to do this again. **These rules are for the future market (post market crash) and they never want anyone to have a chance to take their game away from them again**. These rules are not to start the MOASS. They are indirectly regulating retail so that a short squeeze condition can never occur after GME.
* The COVID pandemic exposed a lot of banks through the Supplementary Leverage Ratio (SLR) where mass borrowing (leverage) almost made many banks default. Banks have account 'blocks' on the Fed's balance sheet which holds their treasuries and deposits. **The SLR exemption made it so that these treasuries and deposits of the banks 'accounts' on the Fed's balance sheet were not calculated into SLR, which allowed them to boost their SLR until March 31, 2021 and avoid defaulting. Now, they must extract treasuries from the Fed in reverse repo to avoid defaulting from SLR requirements. This results in the reverse repo market explosion as they are scrambling to survive due to their mass leverage.**
* This is not a "retail vs. Melvin/Point72/Citadel" issue. This is a "retail vs. **Mega Banks**" issue. The rich, and I mean **all of Wall Street,** are trying **desperately** to shut GameStop down because it has the chance to suck out trillions if not hundreds of trillions from the game they've played for decades. They've rigged this game since the 1990's when derivatives were first introduced. **Do you really think they, including the Fed, wouldn't pull all the stops now to try to get you to sell?**
End TL;DR
​
A ton of the information provided in this post is from the movie **Inside Job (2010)**. I am paraphrasing from the movie as well as taking direct quotes, so please understand that a bunch of this information is a summary of that film.
I understand that **The Big Short (2015)** is much more popular here, due to it being a more Hollywood style movie, but it does not go into such great detail of the conditions that led to the crash - and how things haven't even changed. But in fact, got worse, and led us to where we are now.
Seriously. **Go**. **Watch**. **Inside Job**. It is a documentary with interviews of many people, including those who were involved in the Ponzi Scheme of the derivative market bomb that led to the crash of 2008, and their continued lobbying to influence the Government to keep regulations at bay.
​
[Inside Job \(2010\) Promotional](https://preview.redd.it/vvdd32qkei571.png?width=776&format=png&auto=webp&s=982445a99f17af054bd351990017e364b137cf02)
​
# 1. The Market Crash Of 2008
# 1.1 The Casino Of The Financial World: The Derivatives Market
It all started back in the 1990's when the **Derivative Market** was created. This was the opening of the literal Casino in the financial world. These are bets placed upon an underlying asset, index, or entity, and are **very** risky. Derivatives are contracts between two or more parties that derives its value from the performance of the underlying asset, index, or entity.
One such derivative many are familiar with are **options** (CALLs and PUTs). Other examples of derivatives are **fowards**, **futures**, **swaps**, and variations of those such as **Collateralized Debt Obligations (CDOs)**, and **Credit Default Swaps (CDS)**.
The potential to make money off of these trades is **insane**. Take your regular CALL option for example. You no longer take home a 1:1 return when the underlying stock rises or falls $1. Your returns can be amplified by magnitudes more. Sometimes you might make a 10:1 return on your investment, or 20:1, and so forth.
Not only this, you can grab leverage by borrowing cash from some other entity. This allows your bets to potentially return that much more money. You can see how this gets out of hand really fast, because the amount of cash that can be gained absolutely skyrockets versus traditional investments.
Attempts were made to regulate the derivatives market, but due to mass lobbying from Wall Street, regulations were continuously shut down. **People continued to try to pass regulations, until in 2000, the** [Commodity Futures Modernization Act](https://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000) **banned the regulation of derivatives outright**.
And of course, once the Derivatives Market was left unchecked, it was off to the races for Wall Street to begin making tons of risky bets and surging their profits.
The Derivative Market exploded in size once regulation was banned and de-regulation of the financial world continued. You can see as of 2000, the cumulative derivatives market was already out of control.
[https:\/\/www.hilarispublisher.com\/open-access\/investment-banks-and-credit-institutions-the-ignored-and-unregulateddiversity-2151-6219-1000224.pdf](https://preview.redd.it/9igfmi69di571.png?width=578&format=png&auto=webp&s=27fefbf3443e8be528849221f2eadeb1a5c10833)
The Derivatives Market is big. **Insanely big**. Look at how it compares to **Global Wealth**.
[https:\/\/www.visualcapitalist.com\/all-of-the-worlds-money-and-markets-in-one-visualization-2020\/](https://preview.redd.it/s22atssgdi571.png?width=1029&format=png&auto=webp&s=086dcebf3e710052f78b7490150203d0f8376b89)
At the bottom of the list are three derivatives entries, with "Market Value" and "Notional Value" called out.
The "Market Value" is the value of the derivative at its current trading price.
The "Notional Value" is the value of the derivative if it was at the strike price.
E.g. A CALL option (a derivative) represents 100 shares of ABC stock with a strike of $50. Perhaps it is trading in the market at $1 per contract right now.
* Market Value = 100 shares \* $1.00 per contract = $100
* Notional Value = 100 shares \* $50 strike price = $5,000
**Visual Capitalist estimates that the cumulative Notional Value of derivatives is between $558 Trillion and $1 Quadrillion**. So yeah. **You** are not going to cause a market crash if GME sells for millions per share. The rich are already priming the market crash through the Derivatives Market.
# 1.2 CDOs And Mortgage Backed Securities
Decades ago, the system of paying mortgages used to be between two parties. The buyer, and the loaner. Since the movement of money was between the buyer and the loaner, the loaner was very careful to ensure that the buyer would be able to pay off their loan and not miss payments.
But now, it's a chain.
1. Home buyers will buy a loan from the lenders.
2. The lenders will then sell those loans to Investment Banks.
3. The Investment Banks then combine thousands of mortgages and other loans, including car loans, student loans, and credit card debt to create complex derivatives called "**Collateralized Debt Obligations (CDO's**)".
4. The Investment Banks then pay Rating Agencies to rate their CDO's. This can be on a scale of "AAA", the best possible rating, equivalent to government-backed securities, all the way down to C/D, which are junk bonds and very risky. **Many of these CDO's were given AAA ratings despite being filled with junk**.
5. The Investment Banks then take these CDO's and sell them to investors, including retirement funds, because that was the rating required for retirement funds as they would only purchase highly rated securities.
6. Now when the homeowner pays their mortgage, the money flows directly into the investors. The investors are the main ones who will be hurt if the CDO's containing the mortgages begin to fail.
[Inside Job \(2010\) - Flow Of Money For Mortgage Payments](https://preview.redd.it/0xtaww3ydi571.png?width=1493&format=png&auto=webp&s=f448a113043b043243efd879f174493bd33423fe)
[https:\/\/www.investopedia.com\/ask\/answers\/09\/bond-rating.asp](https://preview.redd.it/uyk9ms4fei571.png?width=756&format=png&auto=webp&s=d61e9a0754b676e64a1f6c97277ba877e946fcb6)
# 1.3 The Bubble of Subprime Loans Packed In CDOs
This system became a ticking timebomb due to this potential of free short-term gain cash. Lenders didn't care if a borrower could repay, so they would start handing out riskier loans. The investment banks didn't care if there were riskier loans, because the more CDO's sold to investors resulted in more profit. And the Rating Agencies didn't care because there were no regulatory constraints and there was no liability if their ratings of the CDO's proved to be wrong.
So they went wild and pumped out more and more loans, and more and more CDOs. Between 2000 and 2003, the number of mortgage loans made each year nearly quadrupled. They didn’t care about the quality of the mortgage - they cared about maximizing the volume and getting profit out of it.
In the early 2000s there was a huge increase in the riskiest loans - “Subprime Loans”. These are loans given to people who have low income, limited credit history, poor credit, etc. They are very at risk to not pay their mortgages. It was predatory lending, because it hunted for potential home buyers who would never be able to pay back their mortgages so that they could continue to pack these up into CDO's.
[Inside Job \(2010\) - % Of Subprime Loans](https://preview.redd.it/wsr30iorei571.png?width=1447&format=png&auto=webp&s=59cf72f6eb8209d69e0a13ccf2f0127e69a45142)
In fact, the investment banks **preferred** subprime loans, because they carried higher interest rates and more profit for them.
**So the Investment Banks took these subprime loans, packaged the subprime loans up into CDO's, and many of them still received AAA ratings. These can be considered "toxic CDO's" because of their high ability to default and fail despite their ratings.**
Pretty much **anyone** could get a home now. Purchases of homes and housing prices skyrocketed. It didn't matter because everyone in the chain was making money in an unregulated market.
# 1.4 Short Term Greed At The Risk Of Institutional And Economic Failure
In Wall Street, annual cash bonuses started to spike. Traders and CEOs became extremely wealthy in this bubble as they continued to pump more toxic CDO's into the market. Lehman Bros. was one of the top underwriters of subprime lending and their CEO alone took home over $485 million in bonuses.
[Inside Job \(2010\) Wall Street Bonuses](https://preview.redd.it/io87r9vxei571.png?width=1494&format=png&auto=webp&s=944300df8faf8da35d75de6f10fb951a6d230154)
And it was all short-term gain, high risk, with no worries about the potential failure of your institution or the economy. When things collapsed, they would not need to pay back their bonuses and gains. They were literally risking the entire world economy for the sake of short-term profits.
AND THEY EVEN TOOK IT FURTHER WITH LEVERAGE TO MAXIMIZE PROFITS.
During the bubble from 2000 to 2007, the investment banks were borrowing heavily to buy more loans and to create more CDO's. The ratio of banks borrowed money and their own money was their leverage. The more they borrowed, the higher their leverage. They abused leverage to continue churning profits. And are still abusing massive leverage to this day. It might even be much higher leverage today than what it was back in the Housing Market Bubble.
In 2004, Henry Paulson, the CEO of Goldman Sachs, helped lobby the SEC to relax limits on leverage, allowing the banks to sharply increase their borrowing. Basically, the SEC allowed investment banks to gamble a lot more. **Investment banks would go up to about 33-to-1 leverage at the time of the 2008 crash**. Which means if a 3% decrease occurred in their asset base, it would leave them insolvent. **Henry Paulson would later become the Secretary Of The Treasury from 2006 to 2009**. He was just one of many Wall Street executives to eventually make it into Government positions. Including the infamous Gary Gensler, the current SEC chairman, who helped block derivative market regulations.
[Inside Job \(2010\) Leverage Abuse of 2008](https://preview.redd.it/k87x53h7fi571.png?width=1619&format=png&auto=webp&s=b12004d6bb3e70643516ef0477303f4652ccd348)
The borrowing exploded, the profits exploded, and it was all at the risk of obliterating their institutions and possibly the global economy. Some of these banks knew that they were "too big to fail" and could push for bailouts at the expense of taxpayers. Especially when they began planting their own executives in positions of power.
# 1.5 Credit Default Swaps (CDS)
To add another ticking bomb to the system, AIG, the worlds largest insurance company, got into the game with another type of derivative. They began selling Credit Default Swaps (CDS).
For investors who owned CDO's, CDS's worked like an insurance policy. An investor who purchased a CDS paid AIG a quarterly premium. If the CDO went bad, AIG promised to pay the investor for their losses. Think of it like insuring a car. You're paying premiums, but if you get into an accident, the insurance will pay up (some of the time at least).
But unlike regular insurance, where you can only insure your car once, **speculators could also purchase CDS's from AIG in order to bet against CDO's they didn't own**. You could suddenly have a sense of rehypothecation where fifty, one hundred entities might now have insurance against a CDO.
[Inside Job \(2010\) Payment Flow of CDS's](https://preview.redd.it/7xoupx0ffi571.png?width=1258&format=png&auto=webp&s=869beb0d99b9fbb4108cd5af692d0a6332fd52dd)
If you've watched The Big Short (2015), you might remember the Credit Default Swaps, because those are what Michael Burry and others purchased to bet against the Subprime Mortgage CDO's.
CDS's were unregulated, so **AIG didn’t have to set aside any money to cover potential losses**. Instead, AIG paid its employees huge cash bonuses as soon as contracts were signed in order to incentivize the sales of these derivatives. But if the CDO's later went bad, AIG would be on the hook. It paid everyone short-term gains while pushing the bill to the company itself without worrying about footing the bill if shit hit the fan. People once again were being rewarded with short-term profit to take these massive risks.
AIG’s Financial Products division in London issued over $500B worth of CDS's during the bubble. Many of these CDS's were for CDO's backed by subprime mortgages.
The 400 employees of AIGFP made $3.5B between 2000 and 2007. And the head of AIGFP personally made $315M.
# 1.6 The Crash And Consumption Of Banks To Consolidate Power
By late 2006, Goldman Sachs took it one step further. It didn’t just sell toxic CDO's, it started actively betting against them at the same time it was telling customers that they were high-quality investments.
Goldman Sachs would purchase CDS's from AIG and bet against CDO's it didn’t own, and got paid when those CDO's failed. Goldman bought at least $22B in CDS's from AIG, and it was so much that Goldman realized AIG itself might go bankrupt (which later on it would and the Government had to bail them out). So Goldman spent $150M insuring themselves against AIG’s potential collapse. They purchased CDS's against AIG.
[Inside Job \(2010\) Payment From AIG To Goldman Sachs If CDO's Failed](https://preview.redd.it/m54zv03yfi571.png?width=1411&format=png&auto=webp&s=f6cb605b4c9b36c22e60cd8205b80bd6ac770fac)
Then in 2007, Goldman went even further. They started selling CDO's specifically designed so that the more money their customers lost, the more Goldman Sachs made.
Many other banks did the same. They created shitty CDO's, sold them, while simultaneously bet that they would fail with CDS's. All of these CDO's were sold to customers as “safe” investments because of the complicit Rating Agencies.
The three rating agencies, Moody’s, S&P and Fitch, made billions of dollars giving high ratings to these risky securities. Moody’s, the largest ratings agency, quadrupled its profits between 2000 and 2007. The more AAA's they gave out, the higher their compensation and earnings were for the quarter. AAA ratings mushroomed from a handful in 2000 to thousands by 2006. Hundreds of billions of dollars worth of CDO's were being rated AAA per year. When it all collapsed and the ratings agencies were called before Congress, the rating agencies expressed that it was “their opinion” of the rating in order to weasel their way out of blame. Despite knowing that they were toxic and did not deserve anything above 'junk' rating.
[Inside Job \(2010\) Ratings Agencies Profits](https://preview.redd.it/tto0v644gi571.png?width=1332&format=png&auto=webp&s=f4361dcc23801691d46ec88b241c7d5fa56e2aaf)
[Inside Job \(2010\) - Insane Increase of AAA Rated CDOs](https://preview.redd.it/91dpnu78gi571.png?width=1259&format=png&auto=webp&s=1f196573f47a757a8bcca8b9e712c537be84cbe2)
By 2008, home foreclosures were skyrocketing. Home buyers in the subprime loans were defaulting on their payments. Lenders could no longer sell their loans to the investment banks. And as the loans went bad, dozens of lenders failed. The market for CDO's collapsed, leaving the investment banks holding hundreds of billions of dollars in loans, CDO's, and real estate they couldn’t sell. Meanwhile, those who purchased up CDS's were knocking at the door to be paid.
In March 2008, Bear Stearns ran out of cash and was acquired for $2 a share by JPMorgan Chase. The deal was backed by $30B in emergency guarantees by the Fed Reserve. This was just one instance of a bank getting consumed by a larger entity.
[https:\/\/www.history.com\/this-day-in-history\/bear-stearns-sold-to-j-p-morgan-chase](https://preview.redd.it/gbgc30vlhi571.png?width=873&format=png&auto=webp&s=74def34d1783c5e3195492913370e6ae65670301)
AIG, Bear Stearns, Lehman Bros, Fannie Mae, and Freddie Mac, were all AA or above rating days before either collapsing or being bailed out. Meaning they were 'very secure', yet they failed.
The Fed Reserve and Big Banks met together in order to discuss bailouts for different banks, and they decided to let Lehman Brothers fail as well.
The Government also then took over AIG, and a day after the takeover, asked the Government for $700B in bailouts for big banks. At this point in time, **the person in charge of handling the financial crisis, Henry Paulson, former CEO of Goldman Sachs**, worked with the chairman of the Federal Reserve to force AIG to pay Goldman Sachs some of its bailout money at 100-cents on the dollar. Meaning there was no negotiation of lower prices. **Conflict of interest much?**
The Fed and Henry Paulson also forced AIG to surrender their right to sue Goldman Sachs and other banks for fraud.
**This is but a small glimpse of the consolidation of power in big banks from the 2008 crash. They let others fail and scooped up their assets in the crisis.**
**After the crash of 2008, big banks are more powerful and more consolidated than ever before. And the DTC, ICC, OCC rules are planning on making that worse through the auction and wind-down plans where big banks can once again consume other entities that default.**
# 1.7 The Can-Kick To Continue The Game Of Derivative Market Greed
After the crisis, the financial industry worked harder than ever to fight reform. The financial sector, as of 2010, employed over 3000 lobbyists. More than five for each member of Congress. Between 1998 and 2008 the financial industry spent over $5B on lobbying and campaign contributions. And ever since the crisis, they’re spending even more money.
President Barack Obama campaigned heavily on "Change" and "Reform" of Wall Street, but when in office, nothing substantial was passed. But this goes back for decades - the Government has been in the pocket of the rich for a long time, both parties, both sides, and their influence through lobbying undoubtedly prevented any actual change from occurring.
So their game of playing the derivative market was green-lit to still run rampant following the 2008 crash and mass bailouts from the Government at the expense of taxpayers.
There's now more consolidation of banks, more consolidation of power, more years of deregulation, and over a decade that they used to continue the game. And just like in 2008, it's happening again. We're on the brink of another market crash and potentially a global financial crisis.
#
​
# 2. The New CDO Game, And How COVID Uppercut To The System
# 2.1 Abuse Of Commercial Mortgage Backed Securities
It's not just /u/atobitt's "House Of Cards" where the US Treasury Market has been abused. It is abuse of many forms of collateral and securities this time around.
It's the **same thing** as 2008, but much worse due to even higher amounts of leverage in the system on top of massive amounts of liquidity and potential inflation from stimulus money of the COVID crisis.
Here's an excerpt from [The Bigger Short: Wall Street's Cooked Books Fueled The Financial Crisis of 2008. It's Happening Again](https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/):
>A longtime industry analyst has uncovered creative accounting on a startling scale in the commercial real estate market, in ways similar to the “liar loans” handed out during the mid-2000s for residential real estate, according to financial records examined by the analyst and reviewed by The Intercept. A recent, large-scale academic study backs up his conclusion, **finding that banks such as Goldman Sachs and Citigroup have systematically reported erroneously inflated income data that compromises the integrity of the resulting securities.**
>
>...
>
>The analyst’s findings, first reported by ProPublica last year, are the subject of a whistleblower complaint he filed in 2019 with the Securities and Exchange Commission. Moreover, the analyst has identified complex financial machinations by one financial institution, one that both issues loans and manages a real estate trust, that may ultimately help one of its top tenants — the low-cost, low-wage store Dollar General — flourish while devastating smaller retailers.
>
>This time, the issue is not a bubble in the housing market, **but apparent widespread inflation of the value of commercial businesses, on which loans are based.**
>
>...
>
>**Now it may be happening again** — this time not with residential mortgage-backed securities, based on loans for homes, **but commercial mortgage-backed securities, or CMBS, based on loans for businesses.** And this industrywide scheme is colliding with a collapse of the commercial real estate market amid the pandemic, which has **business tenants across the country unable to make their payments.**
They've been abusing Commercial Mortgage Backed Securities (CMBS) this time around, and potentially have still been abusing other forms of collateral - they might still be hitting MBS as well as treasury bonds per /u/atobitt's DD.
John M. Griffin and Alex Priest released a study last November. They sampled almost 40,000 CMBS loans with a market capitalization of $650 billion underwritten from the beginning of 2013 to the end of 2019. **Their findings were that large banks had 35% or more loans exhibiting 5% or greater income overstatements.**
The below chart shows the overstatements of the biggest problem-making banks. The difference in bars is between samples taken from data between 2013-2015, and then data between 2016-2019. Almost every single bank experienced a positive move up over time of overstatements.
>Unintentional overstatement should have occurred at random times. Or if lenders were assiduous and the overstatement was unwitting, one might expect it to diminish over time as the lenders discovered their mistakes. **Instead, with almost every lender, the overstatement** ***increased*** **as time went on**. - [Source](https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/)
[https:\/\/theintercept.com\/2021\/04\/20\/wall-street-cmbs-dollar-general-ladder-capital\/](https://preview.redd.it/5xmcu9hwhi571.png?width=846&format=png&auto=webp&s=66f636574bd66afd3512b9587981e4caaa381cf3)
So what does this mean? **It means they've once again been handing out subprime loans (predatory loans). But this time to businesses through Commercial Mortgage Backed Securities.**
Just like Mortgage-Backed Securities from 2000 to 2007, the loaners will go around, hand out loans to businesses, and rake in the profits while having no concern over the potential for the subprime loans failing.
# 2.2 COVID's Uppercut Sent Them Scrambling
The system was propped up to fail just like from the 2000-2007 Housing Market Bubble. Now we are in a speculative bubble of the entire market along with the Commercial Market Bubble due to continued mass leverage abuse of the world.
Hell - also in Crypt0currencies that were introduced after the 2008 crash. **Did you know that you can get over 100x leverage in crypt0 right now? Imagine how terrifying that crash could be if the other markets fail.**
There is SO. MUCH. LEVERAGE. ABUSE. IN. THE. WORLD. All it takes is one fatal blow to bring it all down - **and it sure as hell looks like COVID was that uppercut to send everything into a death spiral.**
When COVID hit, many people were left without jobs. Others had less pay from the jobs they kept. It rocked the financial world and it was so unexpected. Apartment residents would now become delinquent, causing the apartment complexes to become delinquent. Business owners would be hurting for cash to pay their mortgages as well due to lack of business. The subprime loans all started to become a really big issue.
Delinquency rates of Commercial Mortgages started to **skyrocket** when the COVID crisis hit. They even surpassed 2008 levels in March of 2020. Remember what happened in 2008 when this occurred? **When delinquency rates went up on mortgages in 2008, the CDO's of those mortgages began to fail. But, this time, they can-kicked it because COVID caught them all off guard.**
[https:\/\/theintercept.com\/2021\/04\/20\/wall-street-cmbs-dollar-general-ladder-capital\/](https://preview.redd.it/cqbceix0ii571.png?width=848&format=png&auto=webp&s=da81781094a31ae1293b019c4e24f68dfdccc634)
# 2.3 Can-Kick Of COVID To Prevent CDO's From Defaulting Before Being Ready
COVID sent them **Scrambling**. They could not allow these CDO's to fail just yet, because they wanted to get their rules in place to help them consume other failing entities at a whim.
Like in 2008, they wanted to not only protect themselves when the nuke went off from these decades of derivatives abuse, they wanted to be able to scoop up the competition easily. That is when the DTC, ICC, and OCC began drafting their auction and wind-down plans.
In order to buy time, they began tossing out emergency relief "protections" for the economy. Such as preventing mortgage defaults which would send their CDO's tumbling. **This protection ends on June 30th, 2021**.
And guess what? **Many people are still at risk of being delinquent**. [This article](https://therealdeal.com/issues_articles/defusing-the-forbearance-time-bomb/) was posted just **yesterday**. The moment these protection plans lift, we can see a surge in foreclosures as delinquent payments have accumulated over the past year.
When everyone, including small business owners who were attacked with predatory loans, begin to default from these emergency plans expiring, it can lead to the CDO's themselves collapsing. **Which is exactly what triggered the 2008 recession**.
[https:\/\/www.housingwire.com\/articles\/mortgage-forbearance-drops-as-expiration-date-nears\/](https://preview.redd.it/b68fsf5aii571.png?width=945&format=png&auto=webp&s=daa8c725185480d988802023a27291ee782b5c5f)
# 2.4 SLR Requirement Exemption - Why The Reverse Repo Is Blowing Up
Another big issue exposed from COVID is when SLR requirements were leaned during the pandemic. They had to pass a quick measure to protect the banks from defaulting in April of 2020.
>In a brief announcement, the Fed said it would allow a change to the **supplementary leverage ratio to expire March 31**. The initial move, announced April 1, 2020, **allowed banks to exclude Treasurys and deposits with Fed banks from the calculation of the leverage ratio**. - [Source](https://www.cnbc.com/2021/03/19/the-fed-will-not-extend-a-pandemic-crisis-rule-that-had-allowed-banks-to-relax-capital-levels.html)
What can you take from the above?
**SLR is based on the banks deposits with the Fed itself. It is the treasuries and deposits that the banks have on the Fed's balance sheet. Banks have an 'account block' on the Fed's balance sheet that holds treasuries and deposits. The SLR pandemic rule allowed them to neglect these treasuries and deposits from their SLR calculation, and it boosted their SLR value, allowing them to survive defaults.**
This is a **big**, **big**, **BIG** sign that **the banks are way overleveraged by borrowing tons of money just like in 2008.**
The SLR is the "Supplementary Leverage Ratio" and they enacted quick to allow it so banks wouldn't fail under mass leverage for failing to maintain enough equity.
>The supplementary leverage ratio is the US implementation of the Basel III Tier 1 **leverage ratio**, with which **banks calculate the amount of common equity capital they must hold relative to their total leverage exposure**. **Large US banks must hold 3%**. **Top-tier bank holding companies must also hold an extra 2% buffer, for a total of 5%**. The SLR, which does not distinguish between assets based on risk, is conceived as a backstop to risk-weighted capital requirements. - [Source](https://www.risk.net/definition/supplementary-leverage-ratio-slr)
[Here is an exposure of their SLR](https://www.fool.com/investing/2020/07/26/which-of-the-large-us-banks-is-most-leveraged.aspx) from earlier this year. The key is to have **high SLR, above 5%, as a top-tier bank**:
|Bank|Supplementary Leverage Ratio (SLR)|
|:-|:-|
|JP Morgan Chase|6.8%|
|Bank Of America|7%|
|Citigroup|6.7%|
|Goldman Sachs|6.7%|
|Morgan Stanley|7.3%|
|Bank of New York Mellon|8.2%|
|State Street|8.3%|
The SLR protection ended on March 31, 2021. Guess what started to happen just after?
T**he reverse repo market started to explode. This is VERY unusual behavior because it is not at a quarter-end where quarter-ends have significant strain on the economy. The build-up over time implies that there is significant strain on the market AS OF ENTERING Q2 (April 1st - June 30th).**
[https:\/\/fred.stlouisfed.org\/series\/RRPONTSYD](https://preview.redd.it/ijp4wkxdii571.png?width=1455&format=png&auto=webp&s=46f67d7efcc98ee475ba27fa41850fbf5d894064)
**Speculation: SLR IS DEPENDENT ON THEIR DEPOSITS WITH THE FED ITSELF. THEY NEED TO EXTRACT TREASURIES OVER NIGHT TO KEEP THEM OFF THE FED'S BALANCE SHEETS TO PREVENT THEMSELVES FROM FAILING SLR REQUIREMENTS AND DEFAULTING DUE TO MASS OVERLEVERAGE. EACH BANK HAS AN ACCOUNT ON THE FED'S BALANCE SHEET, WHICH IS WHAT SLR IS CALCULATED AGAINST. THIS IS WHY IT IS EXPLODING. THEY ARE ALL STRUGGLING TO MEET SLR REQUIREMENTS.**
# 2.5 DTC, ICC, OCC Wind-Down and Auction Plans; Preparing For More Consolidation Of Power
We've seen some interesting rules from the DTC, ICC, and OCC. For the longest time we thought this was all surrounding GameStop. Guess what. **They aren't all about GameStop**. Some of them are, but not all of them.
**They are furiously passing these rules because the COVID can-kick can't last forever. The Fed is dealing with the potential of runaway inflation from COVID stimulus and they can't allow the overleveraged banks to can-kick any more. They need to resolve this as soon as possible. June 30th could be the deadline because of the potential for CDO's to begin collapsing.**
Let's revisit a few of these rules. The most important ones, in my opinion, because they shed light on the bullshit they're trying to do once again: Scoop up competitors at the cheap, and protect themselves from defaulting as well.
* **DTC-004:** Wind-down and auction plan. - [Link](https://www.sec.gov/rules/sro/dtc/2021/34-91429.pdf)
* **ICC-005:** Wind-down and auction plan. - [Link](https://www.sec.gov/rules/sro/icc/2021/34-91806.pdf)
* **OCC-004:** Auction plan. Allows third parties to join in. - [Link](https://www.sec.gov/rules/sro/occ/2021/34-91935.pdf)
* **OCC-003**: Shielding plan. Protects the OCC. - [Link](https://www.sec.gov/rules/sro/occ/2021/34-92038.pdf)
Each of these plans, in brief summary, allows each branch of the market to protect themselves in the event of major defaults of members. They also **allow members to scoop up assets of defaulting members**.
What was that? Scooping up assets? **In other words it is more concentration of power**. **Less competition**.
I would not be surprised if many small and large Banks, Hedge Funds, and Financial Institutions evaporate and get consumed after this crash and we're left with just a select few massive entities. That is, after all, exactly what they're planning for.
They could not allow the COVID crash to pop their massive speculative derivative bubble so soon. It came too sudden for them to not all collapse instead of just a few of them. It would have obliterated the entire economy even more so than it will once this bomb is finally let off. They needed more time to prepare so that they could feast when it all comes crashing down.
# 2.6 Signs Of Collapse Coming - ICC-014 - Incentives For Credit Default Swaps
A comment on this subreddit made me revisit a rule passed by the ICC. It flew under the radar and is another sign for a crash coming.
This is [ICC-014](https://www.sec.gov/rules/sro/icc/2021/34-91922.pdf). Passed and effective as of June 1st, 2021.
Seems boring at first. Right? That's why it flew under the radar?
But now that you know the causes of the 2008 market crash and how toxic CDO's were packaged together, and then CDS's were used to bet against those CDO's, check out what ICC-014 is doing **as of June 1st**.
[ICC-014 Proposed Discounts On Credit Default Index Swaptions](https://preview.redd.it/phrxcouvii571.png?width=731&format=png&auto=webp&s=469560cf06458b51b1b5439d84062e9f6e04bda4)
**They are providing incentive programs to purchase Credit Default Swap Indexes. These are like standard CDS's, but packaged together like an index. Think of it like an index fund.**
**This is allowing them to bet against a wide range of CDO's or other entities at a cheaper rate. Buyers can now bet against a wide range of failures in the market. They are allowing upwards of 25% discounts.**
There's many more indicators that are pointing to a market collapse. But I will leave that to you to investigate more. Here is quite a scary compilation of charts relating the current market trends to the crashes of Black Monday, The Internet Bubble, The 2008 Housing Market Crash, and Today.
[Summary of Recent Warnings Re Intermediate Trend In Equities](https://preview.redd.it/y4reiv86hi571.jpg?width=550&format=pjpg&auto=webp&s=8845b7b90adf28409772483c6eeeef1763bbaaaf)
​
​
​
# 3. The Failure Of The 1% - How GameStop Can Deal A Fatal Blow To Wealth Inequality
# 3.1 GameStop Was Never Going To Cause The Market Crash
GameStop was meant to die off. The rich bet against it many folds over, and it was on the brink of Bankruptcy before many conditions led it to where it is today.
It was never going to cause the market crash. And it never will cause the crash. The short squeeze is a result of high abuse of the derivatives market over the past decade, where Wall Street's abuse of this market has primed the economy for another market crash on their own.
We can see this because when COVID hit, GameStop was a non-issue in the market. The CDO market around CMBS was about to collapse on its own because of the instantaneous recession which left mortgage owners delinquent.
If anyone, be it the media, the US Government, or others, try to blame this crash on GameStop or anything **other than the Banks and Wall Street**, **they are WRONG.**
# 3.2 The Rich Are Trying To Kill GameStop. They Are Terrified
In January, the SI% was reported to be 140%. But it is very likely that it was **underreported at that time**. Maybe it was 200% back then. 400%. 800%. Who knows. From the above you can hopefully gather that Wall Street **takes on massive risks all the time, they do not care as long as it churns them short-term profits**. There is loads of evidence pointing to shorts never covering by hiding their SI% through malicious options practices, and manipulating the price every step of the way.
The conditions that led GameStop to where it is today is a miracle in itself, and the support of retail traders has led to expose a fatal mistake of the rich. **Because a short position has infinite loss potential**. There is SO much money in the world, especially in the derivatives market.
This should scream to you that any price target that **you** think is low, could very well be extremely low in **YOUR** perspective. You might just be accustomed to thinking "$X price floor is too much money. There's no way it can hit that". I used to think that too, until I dove deep into this bullshit.
The market crashing no longer was a matter of simply scooping up defaulters, their assets, and consolidating power. The rich now have to worry about the potential of **infinite** losses from GameStop and possibly other meme stocks with high price floor targets some retail have.
It's not a fight against Melvin / Citadel / Point72. **It's a battle against the entire financial world**. There is even speculation from multiple people that the Fed is even being complicit right now in helping suppress GameStop. **Their whole game is at risk here.**
**Don't you think they'd fight tooth-and-nail to suppress this and try to get everyone to sell?**
**That they'd pull every trick in the book to make you think that they've covered?**
The amount of money they could lose is unfathomable.
With the collapsing SI%, it is mathematically impossible for the squeeze to have happened - its mathematically impossible for them to have covered. /u/atobitt also discusses this in [House of Cards Part 2](https://www.reddit.com/r/Superstonk/comments/nlwaxv/house_of_cards_part_2/).
[https:\/\/www.thebharatexpressnews.com\/short-squeeze-could-save-gamestop-investors-a-third-time\/](https://preview.redd.it/6hge0pxfhi571.png?width=871&format=png&auto=webp&s=aab736cc279cc727524d2cf96384ea3e33109250)
And in regards to all the other rules that look good for the MOASS - I see them in a negative light.
They are passing NSCC-002/801, DTC-005, and others, in order to prevent a GameStop situation from **ever** occurring again.
They realized how much power retail could have from piling into a short squeeze play. These new rules will snap new emerging short squeezes instantly if the conditions of a short squeeze ever occur again. There will **never** be a GameStop situation after this.
It's their game after all. They've been abusing the derivative market game for decades and GameStop is a huge threat. It was supposed to be, "crash the economy and run with the money". Not "crash the economy and pay up to retail". But GameStop was a flaw exposed by their greed, the COVID crash, and the quick turn-around of the company to take it away from the brink of bankruptcy.
The rich are now at risk of losing that money and insane amounts of cash that they've accumulated over the years from causing the Internet Bubble Crash of 2000, and the Housing Market Crash of 2008.
So, yeah, I'm going to be fucking greedy. | 31.50303 | 0.99995 | Superstonk | GO WATCH INSIDE JOB. I'll be back later. I need a break after typing this up. CYA LATER APES.
Edit: **Please understand that the majority of this post is a summary of that film (section 1) with paraphrasing and direct quotes**. I take no credit for the amazing work that they've done! I've left a note in the post as well.
The remainder of the post (sections 2-3) is pulling from other sources to tie everything together with the current market conditions, the SLR requirement expiration, the mortgage default protections expiring, and the DTC, ICC, OCC rules.
[https://en.wikipedia.org/wiki/Inside\_Job\_(2010\_film)](https://en.wikipedia.org/wiki/Inside_Job_(2010_film))
Edit: Free on youtube [https://youtu.be/T2IaJwkqgPk](https://youtu.be/T2IaJwkqgPk) thanks to /u/dcarmona! | 0.635134 | 1.635084 |
l6xpjg | Trading212 banning people from buying GME and AMC. This is unacceptable! | I don't have any GME/AMC, I'm not riding this hype train, but I find it ridiculous that a broker is basically prohibiting people to invest in whatever they want. It's their money, not yours, T212.
Great thing I abandoned them!
https://i.imgur.com/h6HMchO.png | 29.720096 | 1 | eupersonalfinance | Just to be fair, GME/AMC is not a hype train (at least not anymore) in terms of profits. It's a war between everyday people and huge hedge funds. And clearly you can see which side the brokers are taking. | 0.615854 | 1.615854 |
mvk5dv | A House of Cards - Part 1 | **TL;DR- The DTC has been taken over by big money. They transitioned from a manual to a computerized ledger system in the 80s, and it played a significant role in the 1987 market crash. In 2003, several issuers with the DTC wanted to remove their securities from the DTC's deposit account because the DTC's participants were naked short selling their securities. Turns out, they were right. The DTC and it's participants have created a market-sized naked short selling scheme. All of this is made possible by the DTC's enrollee- Cede & Co.**
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[**Andrew MoMoney - Live Coverage**](https://youtu.be/zKzRDpBBFLQ)
**I hit the image limit in this DD. Given this, and the fact that there's already SO MUCH info in this DD, I've decided to break it into AT LEAST 2 posts. So stay tuned.**
**Previous DD**
[1. Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/)
[2. BlackRock Bagholders, INC.](https://www.reddit.com/r/GME/comments/m7o7iy/blackrock_bagholders_inc/)
[3. The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)
[4. Walkin' like a duck. Talkin' like a duck](https://www.reddit.com/r/Superstonk/comments/ml48ov/walkin_like_a_duck_talkin_like_a_duck/)
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*Holy SH\*T!*
The events we are living through *RIGHT NOW* are the 50-year ripple effects of stock market evolution. From the birth of the DTC to the cesspool we currently find ourselves in, this DD will illustrate just how fragile the *House of Cards* has become.
We've been warned so many times... We've made the same mistakes *so. many. times.*
**And we never seem to learn from them..**
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In case you've been living under a rock for the past few months, the DTCC has been proposing a boat load of rule changes to help better-monitor their participants' exposure. If you don't already know, the DTCC stands for Depository Trust & Clearing Corporation and is broken into the following (primary) subsidiaries:
1. **Depository Trust Company (DTC)** \- *centralized clearing agency that makes sure grandma gets her stonks and the broker receives grandma's tendies*
2. **National Securities Clearing Corporation (NSCC)** \- *provides clearing, settlement, risk management, and central counterparty (CCP) services to its members for broker-to-broker trades*
3. **Fixed Income Clearing Corporation (FICC)** \- *provides central counterparty (CCP) services to members that participate in the US government and mortgage-backed securities markets*
*Brief* *history* *lesson: I promise it's relevant (this* [*link*](https://www.dtcc.com/annuals/museum/index.html) *provides all the info that follows).*
The DTC was created in 1973. It stemmed from the need for a centralized clearing company. Trading during the 60s went through the roof and resulted in many brokers having to quit before the day was finished so they could manually record their mountain of transactions. All of this was done on paper and each share certificate was physically delivered. This obviously resulted in many failures to deliver (FTD) due to the risk of human error in record keeping. In 1974, the Continuous Net Settlement system was launched to clear and settle trades using a rudimentary internet platform.
In 1982, the DTC started using a [Book-Entry Only](https://www.investopedia.com/terms/b/bookentrysecurities.asp) (BEO) system to underwrite bonds. For the first time, there were no physical certificates that actually traded hands. Everything was now performed virtually through computers. Although this was advantageous for many reasons, it made it MUCH easier to commit a certain type of securities fraud- naked shorting.
One year later they adopted [NYSE Rule 387](https://www.finra.org/rules-guidance/rulebooks/retired-rules/rule-387) which meant most securities transactions had to be completed using this new BEO computer system. Needless to say, explosive growth took place for the next 5 years. Pretty soon, other securities started utilizing the BEO system. It paved the way for growth in mutual funds and government securities, and even allowed for same-day settlement. At the time, the BEO system was a tremendous achievement. However, we were destined to hit a brick wall after that much growth in such a short time.. By October 1987, that's exactly what happened.
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[*"A number of explanations have been offered as to the cause of the crash... Among these are computer trading, derivative securities, illiquidity, trade and budget deficits, and overvaluation.."*](https://historynewsnetwork.org/article/895)*.*
If you're wondering where the birthplace of High Frequency Trading (HFT) came from, look no further. The same machines that automated the exhaustively manual reconciliation process were also to blame for amplifying the fire sale of 1987.
[https:\/\/historynewsnetwork.org\/article\/895](https://preview.redd.it/3l08f1ud6bu61.png?width=810&format=png&auto=webp&s=2331f409fb4f60b3d62e475c58cf44211b4122a3)
The last sentence indicates a much more pervasive issue was at play, here. The fact that we still have trouble explaining the calculus is even more alarming. The effects were so pervasive that it was dubbed the [1st global financial crisis](https://www.federalreservehistory.org/essays/stock-market-crash-of-1987)
Here's another great summary published by the [NY Times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html): \*"..\****to be fair to the computers.. \[they were\].. programmed by fallible people and trusted by people who did not understand the computer programs' limitations. As computers came in, human judgement went out."*** Damned if that didn't give me goosiebumps... \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Here's an EXTREMELY relevant [explanation](https://historynewsnetwork.org/article/895) from [Bruce Bartlett](https://www.creators.com/author/bruce-bartlett) on the role of derivatives:
https://preview.redd.it/tu88v96vqau61.png?width=805&format=png&auto=webp&s=6e69760997379cb404163cfc6a11b411adbaa344
Notice the last sentence? A major factor behind the crash was a disconnect between the price of stock and their corresponding derivatives. The value of any given stock should determine the derivative value of that stock. It shouldn't be the other way around. **This is an important concept to remember as it will be referenced throughout the post.**
In the off chance that the market DID tank, they hoped they could contain their losses with [portfolio insurance](https://www.investopedia.com/terms/p/portfolioinsurance.asp#:~:text=Portfolio%20insurance%20is%20a%20hedging,also%20refer%20to%20brokerage%20insurance)*.* Another [article from the NY times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html) explains this in better detail. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
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https://preview.redd.it/rf6ocoe9abu61.png?width=629&format=png&auto=webp&s=e638c4479aceac77a003ae86fa1cfdd23f5406b8
https://preview.redd.it/8igwi6mflbu61.png?width=612&format=png&auto=webp&s=853945852aea5a355266bf52b6f1fa573db1e29a
https://preview.redd.it/fe78gr1qlbu61.png?width=608&format=png&auto=webp&s=4ec59987333e04cef07541229161b3ff30881444
A major disconnect occurred when these futures contracts were used to intentionally tank the value of the underlying stock. In a perfect world, organic growth would lead to an increase in value of the company (underlying stock). They could do this by selling more products, creating new technologies, breaking into new markets, etc. This would trigger an organic change in the derivative's value because investors would be (hopefully) more optimistic about the longevity of the company. It could go either way, but the point is still the same. This is the type of investing that most of us are familiar with: investing for a better future.
I don't want to spend too much time on the crash of 1987. I just want to identify the factors that contributed to the crash and the role of the DTC as they transitioned from a manual to an automatic ledger system. **The connection I really want to focus on is the ENORMOUS risk appetite these investors had. Think of how overconfident and greedy they must have been to put that much faith in a computer script.. either way, same problems still exist today.**
Finally, the comment by Bruce Bartlett regarding the mismatched investment strategies between stocks and options is crucial in painting the picture of today's market.
Now, let's do a super brief walkthrough of the main parties within the DTC before opening this **can of worms.**
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I'm going to talk about three groups within the DTC- **issuers, participants, and Cede & Co.**
Issuers are companies that issue securities (stocks), while participants are the clearing houses, brokers, and other financial institutions that can utilize those securities. Cede & Co. is a subsidiary of the DTC which holds the share certificates.
Participants have MUCH more control over the securities that are deposited from the issuer. Even though the issuer created those shares, participants are in control when those shares hit the DTC's doorstep. The DTC transfers those shares to a holding account *(Cede & Co.)* and the participant just has to ask "*May I haff some pwetty pwease wiff sugar on top?"* \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
**Now, where's that can of worms?**
Everything was relatively calm after the crash of 1987.... until we hit 2003..
*\*deep breath\**
The DTC started receiving several requests from issuers to pull their securities from the DTC's depository. I don't think the DTC was prepared for this because they didn't have a written policy to address it, let alone an official rule. Here's the half-assed response from the DTC:
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm \(section II\)](https://preview.redd.it/1ctpj263zdu61.png?width=788&format=png&auto=webp&s=6ff2e2d543f53a6ece6d95c334ed995fe67f9c8d)
Realizing this situation was heating up, the DTC proposed [SR-DTC-2003-02](https://www.sec.gov/rules/sro/34-47978.htm#P19_6635)..
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/io22id3n7eu61.png?width=774&format=png&auto=webp&s=424ef5b6a70d073c62a47f6a1b82cd739b527b88)
Honestly, they were better of WITHOUT the new proposal.
It became an even BIGGER deal when word got about the proposed rule change. Naturally, it triggered a TSUNAMI of comment letters against the DTC's proposal. There was obviously something going on to cause that level of concern. Why did *SO MANY* issuers want their deposits back?
**...you ready for this sh\*t?**
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As outlined in the DTC's opening remarks:
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/eq9q8mcubeu61.png?width=1028&format=png&auto=webp&s=eee6231336e398b0d53299a2a7639fdfd333af8c)
*OK... see footnote 4.....*
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/v884rfqwbeu61.png?width=1053&format=png&auto=webp&s=6fe5db76c9c6fd5e596bbe3c3c64bc6feb64fd97)
**UHHHHHHH WHAT!??!** Yeah! I'd be pretty pissed, too! Have my shares deposited in a clearing company to take advantage of their computerized trades just to get kicked to the curb with NO WAY of getting my securities back... AND THEN find out that the big-d\*ck "participants" at your fancy DTC party are literally short selling my shares without me knowing....?!
....This sound familiar, anyone??? IDK about y'all, but this "trust us with your shares" BS is starting to sound like a major con.
The DTC asked for feedback from all issuers and participants to gather a consensus before making a decision. All together, the DTC received 89 comment letters (a pretty big response). 47 of those letters opposed the rule change, while 35 were in favor.
*To save space, I'm going to use smaller screenshots. Here are just a few of the opposition comments..*
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-89.pdf](https://preview.redd.it/ds068omndeu61.png?width=894&format=png&auto=webp&s=7958cbf3fde10e1bbb81c6adeb87f2bfc5dc8fde)
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​
**And another:**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/rsrondeau052003.txt](https://preview.redd.it/953v7l47feu61.png?width=884&format=png&auto=webp&s=83c2d1998b3c111da7cb31b183b83c62abbe353b)
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​
**AAAAAAAAAAND another:**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/msondow040403.txt](https://preview.redd.it/pkifz41sqeu61.png?width=804&format=png&auto=webp&s=733a219050239012a2b6b29c1985bdbd1df60303)
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***Here are a few in favor***\*..\*
*All of the comments I checked were participants and classified as market makers and other major financial institutions... go f\*cking figure.*
[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-82.pdf](https://preview.redd.it/myk7675zseu61.png?width=617&format=png&auto=webp&s=94c622511fc3392bacca6f1c34375920612bc9bb)
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**Two**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-81.pdf](https://preview.redd.it/ouwx18qmteu61.png?width=692&format=png&auto=webp&s=39dcaabcc228e60ba5e472353285aa330c13ea0a)
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**Three**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/rbcdain042303.pdf](https://preview.redd.it/xpzt606pueu61.png?width=600&format=png&auto=webp&s=79685c694f661b9c7d03093a8908eebe6cad421e)
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Here's the [full list](https://www.sec.gov/rules/sro/dtc200302.shtml) if you wanna dig on your own.
...I realize there are advantages to "paperless" securities transfers... However... It is EXACTLY what Michael Sondow said in his comment letter above.. ***We simply cannot trust the DTC to protect our interests when we don't have physical control of our assets***\*\*.\*\*
Several other participants, including **Edward Jones, Ameritrade, Citibank,** and **Prudential** overwhelmingly favored this proposal.. How can someone NOT acknowledge that the absence of physical shares only makes it easier for these people to manipulate the market....?
This rule change would allow these 'participants' to continue doing this because it's extremely profitable to sell shares that don't exist, or have not been collateralized. Furthermore, it's a win-win for them because it forces issuers to keep their deposits in the holding account of the DTC...
Ever heard of the [fractional reserve banking system](https://www.investopedia.com/terms/f/fractionalreservebanking.asp#:~:text=Fractional%20reserve%20banking%20is%20a,by%20freeing%20capital%20for%20lending)?? Sounds A LOT like what the stock market has just become.
Want proof of market manipulation? Let's fact-check the claims from the opposition letters above. *I'm only reporting a few for the time period we discussed (2003ish). This is just to validate their claims that some sketchy sh\*t is going on.*
1. [**UBS Securities**](https://files.brokercheck.finra.org/firm/firm_7654.pdf) **(formerly UBS Warburg):**
1. pg 559; SHORT SALE VIOLATION; 3/30/1999
2. pg 535; OVER REPORTING OF SHORT INTEREST POSITIONS; 5/1/1999 - 12/31/1999
3. PG 533; FAILURE TO REPORT SHORT SALE INDICATORS;INCORRECTLY REPORTING LONG SALE TRANSACTIONS AS SHORT SALES; 7/2/2002
2. [**Merrill Lynch**](https://files.brokercheck.finra.org/firm/firm_16139.pdf) **(Professional Clearing Corp.):**
1. pg 158; VIOLATION OF SHORT INTEREST REPORTING; 12/17/2001
3. [**RBC**](https://files.brokercheck.finra.org/firm/firm_31194.pdf) **(Royal Bank of Canada):**
1. pg 550; FAILURE TO REPORT SHORT SALE TRANSACTIONS WITH INDICATOR; 9/28/1999
2. pg 507; SHORT SALE VIOLATION; 11/21/1999
3. pg 426; FAILURE TO REPORT SHORT SALE MODIFIER; 1/21/2003
Ironically, I picked these 3 because they were the first going down the line.. I'm not sure how to be any more objective about this.. Their entire FINRA report is littered with short sale violations. Before anyone asks "how do you know they aren't ALL like that?" The answer is- I checked. If you get caught for a short sale violation, chances are you will ALWAYS get caught for short sale violations. Why? Because it's more profitable to do it and get caught, than it is to fix the problem.
Wanna know the 2nd worst part?
Several comment letters asked the DTC to investigate the claims of naked shorting **BEFORE** coming to a decision on the proposal.. I never saw a document where they followed up on those requests.....
NOW, wanna know the WORST part?
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P99\_35478](https://preview.redd.it/q6jk7as8rfu61.png?width=1057&format=png&auto=webp&s=c66aac021818993e6c23bb7fe96382de8cc9fe7e)
The DTC passed that rule change....
They not only prevented the issuers from removing their deposits, they also turned a 'blind-eye' to their participants manipulative short selling, even when there's public evidence of them doing so...
....Those companies were being attacked with shares THEY put in the DTC, by institutions they can't even identify...
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..Let's take a quick breath and recap:
The DTC started using a computerized ledger and was very successful through the 80's. This evolved into trading systems that were also computerized, but not as sophisticated as they hoped.. They played a major part in the 1987 crash, along with severely desynchronized derivatives trading.
In 2003, the DTC denied issuers the right to withdraw their deposits because those securities were in the control of participants, instead. When issuer A deposits stock into the DTC and participant B shorts those shares into the market, that's a form of [rehypothecation](https://www.investopedia.com/terms/r/rehypothecation.asp#:~:text=Rehypothecation%20is%20a%20practice%20whereby,or%20a%20rebate%20on%20fees). This is what so many issuers were trying to express in their comment letters. In addition, it hurts their company by driving down it's value. They felt robbed because the DTC was blatantly allowing it's participants to do this, and refused to give them back their shares..
It was critically important for me to paint that background.
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..now then....
Remember when I mentioned the DTC's enrollee- Cede & Co.?
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635 \(section II\)](https://preview.redd.it/97z3b2k9pju61.png?width=283&format=png&auto=webp&s=67ad209f338a0ccebfaee09cd43944730ac35279)
I'll admit it: I didn't think they were that relevant. I focused so much on the DTC that I didn't think to check into their enrollee...
..Wish I did....
[https:\/\/www.americanbanker.com\/news\/you-dont-really-own-your-securities-can-blockchains-fix-that](https://preview.redd.it/oqpj59jypju61.png?width=830&format=png&auto=webp&s=a7de5c100699c85132b531b501b79a8bafcdfa18)
That's right.... Cede & Co. hold a "master certificate" in their vault, which **NEVER** leaves. Instead, they issue an *IOU* for that master certificate..
​
Didn't we JUST finish talking about why this is such a major flaw in our system..? And that was almost 20 years ago...
**Here comes the mind f\*ck**
[https:\/\/smithonstocks.com\/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks\/](https://preview.redd.it/o4xemx63rju61.png?width=1117&format=png&auto=webp&s=26f60bceb160cefcd95b0d55d2b375f4058981e2)
[https:\/\/smithonstocks.com\/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks\/](https://preview.redd.it/1yfr9x0arju61.png?width=1109&format=png&auto=webp&s=066cac93b0c8fb05e617c81e9fc63eeacb847d4f)
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Now.....
You wanna know the BEST part???
*I found a list of all the DTC* [*participants*](https://www.dtcc.com/-/media/Files/Downloads/client-center/DTC/alpha.pdf) *that are responsible for this mess..*
**I've got your name, number, and I'm coming for you-** ***ALL OF YOU***
​
​
***to be continued.***
**DIAMOND.F\*CKING.HANDS** | 28.282643 | 0.898668 | Superstonk | So they built a broken system on top of a system that didn’t work as well as they’d hoped and then regulated the system in favor of the people breaking the system? And the whole thing got exposed because of overconfident shorts and an insane yolo. Holy moly. | 0.710044 | 1.608712 |
9mfd5g | Megathread: 2019 Nobel Prize in Economics awarded to William Nordhaus and Paul Romer | ### "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 was divided equally between William D. Nordhaus "for integrating climate change into long-run macroeconomic analysis" and Paul M. Romer "for integrating technological innovations into long-run macroeconomic analysis.""
Nobel Prize Committee
* [Summary](https://www.nobelprize.org/prizes/economics/2018/summary/)
* [Popular Science Background: "Integrating nature and knowledge into economics"](https://www.nobelprize.org/uploads/2018/10/popular-economicsciencesprize2018.pdf)
* [Scientific Background: "Economic Growth, Technological Change, And Climate Change"](https://www.nobelprize.org/uploads/2018/10/advanced-economicsciencesprize2018.pdf)
* [Press Release](https://www.nobelprize.org/uploads/2018/10/press-economicsciences2018.pdf)
#### News Coverage
* [NYT: "2018 Nobel in Economics Is Awarded to William Nordhaus and Paul Romer"](https://www.nytimes.com/2018/10/08/business/economic-science-nobel-prize.html)
* [Guardian: "Nobel prize in economics won by Nordhaus and Romer for work on climate change and growth"](https://www.theguardian.com/business/live/2018/oct/08/nobel-prize-2018-sveriges-riksbank-in-economic-sciences-awarded-live-updates)
* [Washington Post: "William Nordhaus and Paul Romer win Nobel Prize in economics"](https://www.washingtonpost.com/business/2018/10/08/two-americans-win-nobel-prize-economics/?noredirect=on&utm_term=.7d9b0c9f12be)
* [FT: "Economics Nobel recognises work on climate change and innovation"](https://www.ft.com/content/b08807de-cae0-11e8-9fe5-24ad351828ab)
* [BBC: "Economists win Nobel for work on climate and growth"](https://www.bbc.com/news/business-45785222)
* [WSJ: "Two Top U.S. Economists Win Nobel for Work on Growth and Climate"](https://www.wsj.com/articles/nobel-in-economics-goes-to-american-pair-1538992672)
* [PBS: "William Nordhaus and Paul Romer win economics Nobel for climate change, technological innovation models"](https://www.pbs.org/newshour/economy/making-sense/william-nordhaus-and-paul-romer-win-economics-nobel-for-climate-change-technological-innovation-models)
This page will be expanded with additional news coverage and commentary as the day progresses. Please direct all Nobel discussion here. | 13.846819 | 0.874904 | Economics | > “Climate change is a result of the greatest market failure the world has seen.”
Amen - the lack of accounting for external costs has been a colossal failure. So how do we start to address this? Carbon taxes is one way (preferred by many)
On the carbon tax side, the analysis of what is necessary to main temperatures according to various models is really depressing. The costs are so high I don’t see how we’ll get there without being literally forced (as in the climate impacts are so obvious and severe they can no longer be ignored by climate deniers). And by this point the damage will be severe.
As a reference point, I’m in BC Canada and we have a carbon tax. Currently our tax is $35/tonne. The tax rate will increase each year by $5 per tonne until it reaches $50 per tonne in 2021.
The models proposed in the research are:
1. Baseline: no climate-change policies are adopted, over and above the limited policies already adopted in 2015.
2. Optimal: paths for climate-change policies are chosen to maximize aggregate (weighted) welfare within the model from 2015 forward.
3. Temperature-limited: optimal policy paths are chosen, subject to the further constraint that the global temperature does not exceed 2.5 ◦C above the 1900 average.
4. Stern discounting: optimal policy paths are chosen for a subjective discount rate set to 0.1% per year, as suggested in the influential Stern Review (Stern 2007).
Here are the costs for those ( sorry for poor iPhone formatting)
Carbon taxes 2010 US Dollars
2015 2020 2025 2030 2050
Optimal (3.5C by 2100)
29.5 35.3 49.1 64.0 153.5
Temperature Limit <2.5C
184.1 229.0 284.0 351.0 1008.4
Stern discounting at 0.1%
256.5 299.6 340.7 381.7 615.6
If we compare the costs to keep <2.5C, BC's current taxes are 5X too low! And BC is one of the most progressive provinces, other Canadian provinces are moving away from carbon taxes. The Federal government still has plans for a federal tax but it is looking politically more risky as we go.
This does not bode well. | 0.717949 | 1.592853 |
nlwqyv | House of Cards - Part 3 | ***Prerequisite DD:***
1. [Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/)
2. [The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)
3. [The House of Cards – Part 1](https://www.reddit.com/r/Superstonk/comments/mvk5dv/a_house_of_cards_part_1/)
4. [The House of Cards - Part 2](https://www.reddit.com/r/Superstonk/comments/nlwaxv/house_of_cards_part_2/)
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**TL;DR-** **No freaking way I can do that.**
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**Continuing from HOC Part II...**
**4.** **Slimy…**
If you watched the [AMA with Wes Christian](https://www.youtube.com/watch?v=2rJujnpKiqM), he talks about the number of occurrences where the actual short interest is severely understated based on the data his firm obtained for legal proceedings. According to his numbers, in most cases the short interest is 50% - 150% **MORE** than what is reported by the SEC *(starting at 14:30).*
The objective isn’t to address the issue: it’s to keep the issue hidden. Firms that underreport their short interest are gaming the system by taking advantage of how the short interest calculation is done. When the SEC relies on reports that broker-dealers provide, and FINRA takes YEARS to reveal the lies within those reports, the broker-dealer can lie without immediately facing the consequences. It allows these firms to operate in a high-risk environment without exposing just HOW big their risk-appetite is.
Another example that Wes mentioned was [Merrill Lynch](https://www.sec.gov/news/pressrelease/2016-128.html). Merrill was fined [$415,000,000](https://files.brokercheck.finra.org/firm/firm_16139.pdf) *(violation 3)* in 2016 for using securities held in their customer’s accounts to cover their own trades. Check out this screenshot I took from that case:
https://preview.redd.it/v9625j8wek171.jpg?width=1115&format=pjpg&auto=webp&s=85d43bc351fbda75e347bd33a1a550b67dda970e
Remember when we mentioned [SEA 15c3-3](https://www.finra.org/sites/default/files/SEA.Rule_.15c3-3.pdf) in the case with Apex? They were asking customers to book short positions to either a cash account or a short margin account. [SEA 15c3-3](https://www.finra.org/sites/default/files/SEA.Rule_.15c3-3.pdf) protects those customers from allowing brokers to lend out the securities within their cash accounts…
Well Merrill Lynch knocked that one right out of the f\*cking park…
&#x200B;
https://preview.redd.it/s3zok5wyek171.jpg?width=1129&format=pjpg&auto=webp&s=815e5344912234ceba846dc0d45c8b8b488b82c4
Merrill made it seem like the required deposit in their customer reserve account was much lower than it truly was. They wouldn’t have been able to use that cash if it reduced the amount below the minimum capital requirement, so they found a way to fudge the numbers. In doing so, they managed to prevent a CODE RED while reaping the benefits of a high-risk ‘opportunity’. Should Merrill have filed bankruptcy during that time, those customers would have been completely blindsided.
In the case of short selling, the *true* exposure of short interest is unknown… and I’m not just talking about the short sale indicator. When a firm fails to deliver securities that were sold short, there’s a pretty good indication that they’ve exposed themselves to a bit of a problem.. Now imagine a case where the FTDs start piling up and they STILL continue to short sell that same security.. think I’m joking?
Check out the [Royal Bank of Canada](https://files.brokercheck.finra.org/firm/firm_31194.pdf):
https://preview.redd.it/u6yl6tj2fk171.png?width=812&format=png&auto=webp&s=1e44cc507247db1e28c00a213f90054b9abdaa6a
Again… I was pretty shocked at that one. However, nothing rang-the-bell quite like this one from [Goldman Sachs](https://files.brokercheck.finra.org/firm/firm_361.pdf):
https://preview.redd.it/5f408er6fk171.png?width=1031&format=png&auto=webp&s=38b9ad83d2a07360af5b5cd99d834a8771b66c93
Goldman had 68 occasions in 4 months where they didn’t close a failure-to-deliver… In 45 occasions, they CONTINUED to accept customer short sale orders in securities which it had an active failure-to-deliver…
When a firm is really starting to sweat, they pull certain tricks out of their ass to quell the situation. Again, this is nothing but smoke and mirrors because that’s all they can really do. Just as Merrill Lynch artificially lowered their customer reserve deposit, other firms make it look like they cover their short positions.
One of the ways they do this is by short selling a SH\*T load of shares right before a buy-in… Since we’re talking about Goldman Sachs, this seems like a great time to showcase their experience with this..
https://preview.redd.it/zhf1hr1afk171.png?width=1049&format=png&auto=webp&s=f704c3722ae287480057ce3e01c561a28b77cf4c
I promise… It really is as dumb as it sounds…
So the perception here is when Goldman’s client has a FTD and they find out a buy-in is coming, the required buy-in would obviously be too extreme for the client to handle.. So they begin to buy those shares while simultaneously shorting AT LEAST the same amount they were required to purchase…
Have you ever failed to repay a loan so you went to another bank and got a loan to cover the first one? Well that’s exactly what this is… I know what you’re probably thinking… “didn’t that just kick the can down the road?”. The answer is YES: it didn’t actually solve anything..
There’s still one more citation that Goldman received which truly represents the pinnacle of *no-sh\*ts-given.* After I cover this, I don’t know how anyone could argue the systematic risks that exist within the securities lending business.. Check it out:
https://preview.redd.it/0md200bdfk171.png?width=940&format=png&auto=webp&s=cf5e8310fbcbd73699e3593b2ab5dab418055ab0
For 5 years, Goldman relied on a team of 10-12 individuals to locate shares to be used by its clients for short selling. This group was known as the “demand team”. Naturally, as the number of requests coming in the door started to increase, it became difficult for the team to properly document all of them. The volume peaked at 20,000 requests PER DAY, but the number of individuals that handled this job stayed the same.
Obviously, this became too much for them to handle so they opted out of the manual process and found another solution- the F3 key….
Yes- the F3 key… This button activated an autofill system which completed **98% of Goldman’s orders to locate shares**
https://preview.redd.it/exqzge3gfk171.png?width=964&format=png&auto=webp&s=ed9c8b740974dad01db69460332c56df81a8d768
The problem with Goldman’s autofill system was that it used the number of shares available to borrow at the beginning of that day, which had already been accounted for. After using the auto-locate feature, the demand team didn’t even verify the accuracy of the autofill feature or document which method was used to locate the shares for each order… and this happened for 5 years..
Just goes to show how dedicated firms like Goldman Sachs truly are to the smallest of details, you know? Great f\*cking work, guys.
By the way, I have to show one of Goldman’s short sale indicator violations… It’s too good to pass up.
https://preview.redd.it/5iuhlkcjfk171.png?width=1082&format=png&auto=webp&s=f4e2fa1f106e78b9d282b60c3cee9944e919ea82
At some point, you just have to laugh at these ass clowns… I mean seriously… one violation for a 4 year period involving over 380,000,000 short interest positions… they have plenty of other short interest violations, I just laughed at how the magnitude of this one was summarized by FINRA with 10 lines and roughly 4 minutes... whoever wrote that one must have been late for lunch..
The last thing I’d like to note here is the way in which short sellers use options to “cover” their positions. Wes gave a great overview of this in the AMA *(starting at 6:25)*. Basically, one group will buy puts and another group buys calls. This creates a synthetic share that is only provided if the option is activated. Regardless, short sellers will use that synthetic share to cover their short position and the regulators actually accept it…
However, as Wes points out, most of those options expire without being activated which means the share is never delivered. This expiration can be set months down the road and allows the short seller to keep kicking the can.
I doubt I need to say this, but we all remember the wild options activity that was happening shortly after GameStop spiked in January. u/HeyItsPixel was one of the first to point this out. While a lot of that activity was on the retail front, I suspect a lot of it was done by short sellers to cover those positions.
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**5.** **Hedgies are f\*cked…**
I’m officially +20 pages deep and there’s still so much I’d like to say. It’s best saved for another time and another post, I suppose. So I guess I’ll wrap all of this up with some of the best news I can possibly provide…
It all started with a [73 page PDF](https://www.sec.gov/comments/s7-08-08/s70808-318.pdf) that was published in 2005 by a silverback named John D. Finnerty.
John was a Professor of Finance at Fordham University when he published *“short selling, death spiral convertibles, and the profitability of stock manipulation”*. The document is loaded with sh\*t that’s incredibly relevant today, especially when it comes to naked short selling. He dives into the exact formula that short sellers use, which is far beyond what my wrinkled brain can interpret, alone…
..However, when firms are naked shorting a company with the goal of bankrupting them, they leave footprints which are only explained by this event. The proof is in the pudding, so to speak..
https://preview.redd.it/ax7u0r4wfk171.jpg?width=1072&format=pjpg&auto=webp&s=1828755bfe49c47ca178d960f91dfd21d8b0d680
Any of this sound familiar??
*“The manipulator can not drive the share price close to zero unless he can naked short an extraordinary number of shares…* *this form of manipulation would result in… unusually heavy trading volume, and unusually large and persistent fails to deliver at the NSCC”.*
Anyone else remember the volume in GME during the run-up in January? The total volume traded between **1/31/2021 and 2/5/2021 was 1,508,793,439** **shares**, or an average daily trade volume of **88,752,555 shares.** On 1/22/2021, the volume reached 197,157,946… that’s roughly 3x the number of shares that exist..
if this doesn’t sound like unusual volume then I’m not sure what is. Furthermore, the FTD report on GameStop was through the roof during this time:
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https://preview.redd.it/brz98nbzfk171.jpg?width=1625&format=pjpg&auto=webp&s=83ae877853acd2ec65fa73f57216f00b708a7eab
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https://preview.redd.it/zlla3ak0gk171.jpg?width=1038&format=pjpg&auto=webp&s=c5d4a1331f8c9d97b5338cc55a37310a95c9559b
Notice the statement where the manipulator will be relieved of its obligation to cover **IF** the firm’s shares are cancelled in bankruptcy? Did you happen to see footnotes 65 & 66 in the first screenshot of his PDF? It references a company that he used for his analysis…
https://preview.redd.it/zdp3at43gk171.jpg?width=997&format=pjpg&auto=webp&s=8508c9d0c869544f0ccd3a15477abfd64d38897c
Charter Communications had a whopping **241.8% short float in 2005**… **The ONLY way the manipulator could have escaped this was by bankrupting the company and relieving the obligation to repurchase those shares…**
Guess what happened to Charter? They filed for [bankruptcy](https://abcnews.go.com/Business/story?id=7189668&page=1) in 2009…
However, unlike John’s example where naked short sellers were driving down the price without opposition, GameStop had extremely high demand from retail investors to counter this activity. As I have discussed with Dr. T and Carl Hagberg, the run-up in volume during January and February was largely conducted by naked short sellers in an attempt to suppress the share price. As I have shown in the example with Goldman Sachs, firms will short sell during a buy-in for the same exact reason. To stabilize the price, you must stabilize supply and demand.
…You know what Charter didn’t have?
AN ARMY OF APES TO HODL THE STONK
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DIAMOND. F\*CKING. HANDS | 24.482671 | 0.779159 | Superstonk | So in short;
The current short interest reported by FINRA from fund data on stocks is absolute bull, and always has been.
This is because funds have been found guilty of violating short interest report rules for decades, especially when their short positions were clearly illegal (i.e. naked shorting obvious).
We can also see through the ridiculous volatility and volume levels of GameStop that shorts indeed have not covered and that they're still holding unspeakable levels of short positions on the stock.
And now because the vast majority of GameStop share owners and buying and holding their shares (and if they continue to do so), the true short interest will inevitably reveal itself and we'll be in for the short squeeze of our lives. | 0.807523 | 1.586682 |
9nhbhu | Quick warning to any single women looking to cut costs by getting a roommate. | Ask for women only.
I initially had my ad open for everyone because I didn't want to narrow the window too much. As long as you're a professional around my age and aren't a sleazeball, I didn't mind.
It only took about two days for the messages from thirsty men asking if I would be open to living with them rent free in exchange for sex. Which was always phrased as "help around the house/cleaning" or "companionship". I ignored most, but one guy called me directly.
Now someone did ask me if "a blowjob a week was really that bad in exchange for free rent". From a pragmatic standpoint, no. From a "personal morals, safety, and mental health" standpoint, YES.
Don't EVER feel like under the table prostitution is your only option. Do NOT let someone coerce you into doing it no matter how much you need the money. If sex work is something you want to do, that's perfectly fine. Just...don't start through these guys.
And even if it started out as a BJ a week, these guys will never stop asking for more. And no one needs their life controlled by the sexual whims of some dickhead who thinks he's entitled to your body in exchange for a roof over your head.
I'm sorry it got a bit ranty towards the end there, but that was a disgusting couple of days and I'm now working on getting a part time job instead of a roommate. Would rather have some extra expenses than have to deal with so many creeps. | 19.192352 | 0.56602 | povertyfinance | If anyone reading this is thinking 'Well I probably wouldn't mind exchanging a bj for a roof over my head' please also think about the legal implications. You won't be on the lease, and there's no contract to protect you. So maybe it started as a bj and then he ups the ante.. you're trapped and have no wiggle room. Please don't put yourself in that situation if you can help it. | 1 | 1.56602 |
xxt9k4 | Asda has announced it is offering over 60’s unlimited hot drinks, hot soup and a roll for just £1 through November and December. | Asda has announced all of its own in-store cafe’s will be offering over 60’s a roll, hot soup and hot drinks through November and December for £1 to help with the cost of living crisis.
This isn’t strictly personal finance related but I’m sure there’s plenty of people over this age or with family over this age that may see this post and benefit from it, so I though it’d be worth posting for awareness. | 98.747532 | 1 | UKPersonalFinance | I know this isn’t strictly personal finance related but before you get downvoted and moaned at, I just want to say this is really helpful info and my grandparents and their pals will be making the most of this. Cheers. | 0.536511 | 1.536511 |
mvk5dv | A House of Cards - Part 1 | **TL;DR- The DTC has been taken over by big money. They transitioned from a manual to a computerized ledger system in the 80s, and it played a significant role in the 1987 market crash. In 2003, several issuers with the DTC wanted to remove their securities from the DTC's deposit account because the DTC's participants were naked short selling their securities. Turns out, they were right. The DTC and it's participants have created a market-sized naked short selling scheme. All of this is made possible by the DTC's enrollee- Cede & Co.**
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[**Andrew MoMoney - Live Coverage**](https://youtu.be/zKzRDpBBFLQ)
**I hit the image limit in this DD. Given this, and the fact that there's already SO MUCH info in this DD, I've decided to break it into AT LEAST 2 posts. So stay tuned.**
**Previous DD**
[1. Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/)
[2. BlackRock Bagholders, INC.](https://www.reddit.com/r/GME/comments/m7o7iy/blackrock_bagholders_inc/)
[3. The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)
[4. Walkin' like a duck. Talkin' like a duck](https://www.reddit.com/r/Superstonk/comments/ml48ov/walkin_like_a_duck_talkin_like_a_duck/)
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*Holy SH\*T!*
The events we are living through *RIGHT NOW* are the 50-year ripple effects of stock market evolution. From the birth of the DTC to the cesspool we currently find ourselves in, this DD will illustrate just how fragile the *House of Cards* has become.
We've been warned so many times... We've made the same mistakes *so. many. times.*
**And we never seem to learn from them..**
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In case you've been living under a rock for the past few months, the DTCC has been proposing a boat load of rule changes to help better-monitor their participants' exposure. If you don't already know, the DTCC stands for Depository Trust & Clearing Corporation and is broken into the following (primary) subsidiaries:
1. **Depository Trust Company (DTC)** \- *centralized clearing agency that makes sure grandma gets her stonks and the broker receives grandma's tendies*
2. **National Securities Clearing Corporation (NSCC)** \- *provides clearing, settlement, risk management, and central counterparty (CCP) services to its members for broker-to-broker trades*
3. **Fixed Income Clearing Corporation (FICC)** \- *provides central counterparty (CCP) services to members that participate in the US government and mortgage-backed securities markets*
*Brief* *history* *lesson: I promise it's relevant (this* [*link*](https://www.dtcc.com/annuals/museum/index.html) *provides all the info that follows).*
The DTC was created in 1973. It stemmed from the need for a centralized clearing company. Trading during the 60s went through the roof and resulted in many brokers having to quit before the day was finished so they could manually record their mountain of transactions. All of this was done on paper and each share certificate was physically delivered. This obviously resulted in many failures to deliver (FTD) due to the risk of human error in record keeping. In 1974, the Continuous Net Settlement system was launched to clear and settle trades using a rudimentary internet platform.
In 1982, the DTC started using a [Book-Entry Only](https://www.investopedia.com/terms/b/bookentrysecurities.asp) (BEO) system to underwrite bonds. For the first time, there were no physical certificates that actually traded hands. Everything was now performed virtually through computers. Although this was advantageous for many reasons, it made it MUCH easier to commit a certain type of securities fraud- naked shorting.
One year later they adopted [NYSE Rule 387](https://www.finra.org/rules-guidance/rulebooks/retired-rules/rule-387) which meant most securities transactions had to be completed using this new BEO computer system. Needless to say, explosive growth took place for the next 5 years. Pretty soon, other securities started utilizing the BEO system. It paved the way for growth in mutual funds and government securities, and even allowed for same-day settlement. At the time, the BEO system was a tremendous achievement. However, we were destined to hit a brick wall after that much growth in such a short time.. By October 1987, that's exactly what happened.
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[*"A number of explanations have been offered as to the cause of the crash... Among these are computer trading, derivative securities, illiquidity, trade and budget deficits, and overvaluation.."*](https://historynewsnetwork.org/article/895)*.*
If you're wondering where the birthplace of High Frequency Trading (HFT) came from, look no further. The same machines that automated the exhaustively manual reconciliation process were also to blame for amplifying the fire sale of 1987.
[https:\/\/historynewsnetwork.org\/article\/895](https://preview.redd.it/3l08f1ud6bu61.png?width=810&format=png&auto=webp&s=2331f409fb4f60b3d62e475c58cf44211b4122a3)
The last sentence indicates a much more pervasive issue was at play, here. The fact that we still have trouble explaining the calculus is even more alarming. The effects were so pervasive that it was dubbed the [1st global financial crisis](https://www.federalreservehistory.org/essays/stock-market-crash-of-1987)
Here's another great summary published by the [NY Times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html): \*"..\****to be fair to the computers.. \[they were\].. programmed by fallible people and trusted by people who did not understand the computer programs' limitations. As computers came in, human judgement went out."*** Damned if that didn't give me goosiebumps... \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Here's an EXTREMELY relevant [explanation](https://historynewsnetwork.org/article/895) from [Bruce Bartlett](https://www.creators.com/author/bruce-bartlett) on the role of derivatives:
https://preview.redd.it/tu88v96vqau61.png?width=805&format=png&auto=webp&s=6e69760997379cb404163cfc6a11b411adbaa344
Notice the last sentence? A major factor behind the crash was a disconnect between the price of stock and their corresponding derivatives. The value of any given stock should determine the derivative value of that stock. It shouldn't be the other way around. **This is an important concept to remember as it will be referenced throughout the post.**
In the off chance that the market DID tank, they hoped they could contain their losses with [portfolio insurance](https://www.investopedia.com/terms/p/portfolioinsurance.asp#:~:text=Portfolio%20insurance%20is%20a%20hedging,also%20refer%20to%20brokerage%20insurance)*.* Another [article from the NY times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html) explains this in better detail. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
&#x200B;
https://preview.redd.it/rf6ocoe9abu61.png?width=629&format=png&auto=webp&s=e638c4479aceac77a003ae86fa1cfdd23f5406b8
https://preview.redd.it/8igwi6mflbu61.png?width=612&format=png&auto=webp&s=853945852aea5a355266bf52b6f1fa573db1e29a
https://preview.redd.it/fe78gr1qlbu61.png?width=608&format=png&auto=webp&s=4ec59987333e04cef07541229161b3ff30881444
A major disconnect occurred when these futures contracts were used to intentionally tank the value of the underlying stock. In a perfect world, organic growth would lead to an increase in value of the company (underlying stock). They could do this by selling more products, creating new technologies, breaking into new markets, etc. This would trigger an organic change in the derivative's value because investors would be (hopefully) more optimistic about the longevity of the company. It could go either way, but the point is still the same. This is the type of investing that most of us are familiar with: investing for a better future.
I don't want to spend too much time on the crash of 1987. I just want to identify the factors that contributed to the crash and the role of the DTC as they transitioned from a manual to an automatic ledger system. **The connection I really want to focus on is the ENORMOUS risk appetite these investors had. Think of how overconfident and greedy they must have been to put that much faith in a computer script.. either way, same problems still exist today.**
Finally, the comment by Bruce Bartlett regarding the mismatched investment strategies between stocks and options is crucial in painting the picture of today's market.
Now, let's do a super brief walkthrough of the main parties within the DTC before opening this **can of worms.**
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I'm going to talk about three groups within the DTC- **issuers, participants, and Cede & Co.**
Issuers are companies that issue securities (stocks), while participants are the clearing houses, brokers, and other financial institutions that can utilize those securities. Cede & Co. is a subsidiary of the DTC which holds the share certificates.
Participants have MUCH more control over the securities that are deposited from the issuer. Even though the issuer created those shares, participants are in control when those shares hit the DTC's doorstep. The DTC transfers those shares to a holding account *(Cede & Co.)* and the participant just has to ask "*May I haff some pwetty pwease wiff sugar on top?"* \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
**Now, where's that can of worms?**
Everything was relatively calm after the crash of 1987.... until we hit 2003..
*\*deep breath\**
The DTC started receiving several requests from issuers to pull their securities from the DTC's depository. I don't think the DTC was prepared for this because they didn't have a written policy to address it, let alone an official rule. Here's the half-assed response from the DTC:
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm \(section II\)](https://preview.redd.it/1ctpj263zdu61.png?width=788&format=png&auto=webp&s=6ff2e2d543f53a6ece6d95c334ed995fe67f9c8d)
Realizing this situation was heating up, the DTC proposed [SR-DTC-2003-02](https://www.sec.gov/rules/sro/34-47978.htm#P19_6635)..
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/io22id3n7eu61.png?width=774&format=png&auto=webp&s=424ef5b6a70d073c62a47f6a1b82cd739b527b88)
Honestly, they were better of WITHOUT the new proposal.
It became an even BIGGER deal when word got about the proposed rule change. Naturally, it triggered a TSUNAMI of comment letters against the DTC's proposal. There was obviously something going on to cause that level of concern. Why did *SO MANY* issuers want their deposits back?
**...you ready for this sh\*t?**
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As outlined in the DTC's opening remarks:
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/eq9q8mcubeu61.png?width=1028&format=png&auto=webp&s=eee6231336e398b0d53299a2a7639fdfd333af8c)
*OK... see footnote 4.....*
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635](https://preview.redd.it/v884rfqwbeu61.png?width=1053&format=png&auto=webp&s=6fe5db76c9c6fd5e596bbe3c3c64bc6feb64fd97)
**UHHHHHHH WHAT!??!** Yeah! I'd be pretty pissed, too! Have my shares deposited in a clearing company to take advantage of their computerized trades just to get kicked to the curb with NO WAY of getting my securities back... AND THEN find out that the big-d\*ck "participants" at your fancy DTC party are literally short selling my shares without me knowing....?!
....This sound familiar, anyone??? IDK about y'all, but this "trust us with your shares" BS is starting to sound like a major con.
The DTC asked for feedback from all issuers and participants to gather a consensus before making a decision. All together, the DTC received 89 comment letters (a pretty big response). 47 of those letters opposed the rule change, while 35 were in favor.
*To save space, I'm going to use smaller screenshots. Here are just a few of the opposition comments..*
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-89.pdf](https://preview.redd.it/ds068omndeu61.png?width=894&format=png&auto=webp&s=7958cbf3fde10e1bbb81c6adeb87f2bfc5dc8fde)
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**And another:**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/rsrondeau052003.txt](https://preview.redd.it/953v7l47feu61.png?width=884&format=png&auto=webp&s=83c2d1998b3c111da7cb31b183b83c62abbe353b)
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&#x200B;
**AAAAAAAAAAND another:**
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[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/msondow040403.txt](https://preview.redd.it/pkifz41sqeu61.png?width=804&format=png&auto=webp&s=733a219050239012a2b6b29c1985bdbd1df60303)
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***Here are a few in favor***\*..\*
*All of the comments I checked were participants and classified as market makers and other major financial institutions... go f\*cking figure.*
[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-82.pdf](https://preview.redd.it/myk7675zseu61.png?width=617&format=png&auto=webp&s=94c622511fc3392bacca6f1c34375920612bc9bb)
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&#x200B;
**Two**
&#x200B;
[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/srdtc200302-81.pdf](https://preview.redd.it/ouwx18qmteu61.png?width=692&format=png&auto=webp&s=39dcaabcc228e60ba5e472353285aa330c13ea0a)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
&#x200B;
**Three**
&#x200B;
[https:\/\/www.sec.gov\/rules\/sro\/dtc200302\/rbcdain042303.pdf](https://preview.redd.it/xpzt606pueu61.png?width=600&format=png&auto=webp&s=79685c694f661b9c7d03093a8908eebe6cad421e)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Here's the [full list](https://www.sec.gov/rules/sro/dtc200302.shtml) if you wanna dig on your own.
...I realize there are advantages to "paperless" securities transfers... However... It is EXACTLY what Michael Sondow said in his comment letter above.. ***We simply cannot trust the DTC to protect our interests when we don't have physical control of our assets***\*\*.\*\*
Several other participants, including **Edward Jones, Ameritrade, Citibank,** and **Prudential** overwhelmingly favored this proposal.. How can someone NOT acknowledge that the absence of physical shares only makes it easier for these people to manipulate the market....?
This rule change would allow these 'participants' to continue doing this because it's extremely profitable to sell shares that don't exist, or have not been collateralized. Furthermore, it's a win-win for them because it forces issuers to keep their deposits in the holding account of the DTC...
Ever heard of the [fractional reserve banking system](https://www.investopedia.com/terms/f/fractionalreservebanking.asp#:~:text=Fractional%20reserve%20banking%20is%20a,by%20freeing%20capital%20for%20lending)?? Sounds A LOT like what the stock market has just become.
Want proof of market manipulation? Let's fact-check the claims from the opposition letters above. *I'm only reporting a few for the time period we discussed (2003ish). This is just to validate their claims that some sketchy sh\*t is going on.*
1. [**UBS Securities**](https://files.brokercheck.finra.org/firm/firm_7654.pdf) **(formerly UBS Warburg):**
1. pg 559; SHORT SALE VIOLATION; 3/30/1999
2. pg 535; OVER REPORTING OF SHORT INTEREST POSITIONS; 5/1/1999 - 12/31/1999
3. PG 533; FAILURE TO REPORT SHORT SALE INDICATORS;INCORRECTLY REPORTING LONG SALE TRANSACTIONS AS SHORT SALES; 7/2/2002
2. [**Merrill Lynch**](https://files.brokercheck.finra.org/firm/firm_16139.pdf) **(Professional Clearing Corp.):**
1. pg 158; VIOLATION OF SHORT INTEREST REPORTING; 12/17/2001
3. [**RBC**](https://files.brokercheck.finra.org/firm/firm_31194.pdf) **(Royal Bank of Canada):**
1. pg 550; FAILURE TO REPORT SHORT SALE TRANSACTIONS WITH INDICATOR; 9/28/1999
2. pg 507; SHORT SALE VIOLATION; 11/21/1999
3. pg 426; FAILURE TO REPORT SHORT SALE MODIFIER; 1/21/2003
Ironically, I picked these 3 because they were the first going down the line.. I'm not sure how to be any more objective about this.. Their entire FINRA report is littered with short sale violations. Before anyone asks "how do you know they aren't ALL like that?" The answer is- I checked. If you get caught for a short sale violation, chances are you will ALWAYS get caught for short sale violations. Why? Because it's more profitable to do it and get caught, than it is to fix the problem.
Wanna know the 2nd worst part?
Several comment letters asked the DTC to investigate the claims of naked shorting **BEFORE** coming to a decision on the proposal.. I never saw a document where they followed up on those requests.....
NOW, wanna know the WORST part?
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P99\_35478](https://preview.redd.it/q6jk7as8rfu61.png?width=1057&format=png&auto=webp&s=c66aac021818993e6c23bb7fe96382de8cc9fe7e)
The DTC passed that rule change....
They not only prevented the issuers from removing their deposits, they also turned a 'blind-eye' to their participants manipulative short selling, even when there's public evidence of them doing so...
....Those companies were being attacked with shares THEY put in the DTC, by institutions they can't even identify...
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
..Let's take a quick breath and recap:
The DTC started using a computerized ledger and was very successful through the 80's. This evolved into trading systems that were also computerized, but not as sophisticated as they hoped.. They played a major part in the 1987 crash, along with severely desynchronized derivatives trading.
In 2003, the DTC denied issuers the right to withdraw their deposits because those securities were in the control of participants, instead. When issuer A deposits stock into the DTC and participant B shorts those shares into the market, that's a form of [rehypothecation](https://www.investopedia.com/terms/r/rehypothecation.asp#:~:text=Rehypothecation%20is%20a%20practice%20whereby,or%20a%20rebate%20on%20fees). This is what so many issuers were trying to express in their comment letters. In addition, it hurts their company by driving down it's value. They felt robbed because the DTC was blatantly allowing it's participants to do this, and refused to give them back their shares..
It was critically important for me to paint that background.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
..now then....
Remember when I mentioned the DTC's enrollee- Cede & Co.?
[https:\/\/www.sec.gov\/rules\/sro\/34-47978.htm#P19\_6635 \(section II\)](https://preview.redd.it/97z3b2k9pju61.png?width=283&format=png&auto=webp&s=67ad209f338a0ccebfaee09cd43944730ac35279)
I'll admit it: I didn't think they were that relevant. I focused so much on the DTC that I didn't think to check into their enrollee...
..Wish I did....
[https:\/\/www.americanbanker.com\/news\/you-dont-really-own-your-securities-can-blockchains-fix-that](https://preview.redd.it/oqpj59jypju61.png?width=830&format=png&auto=webp&s=a7de5c100699c85132b531b501b79a8bafcdfa18)
That's right.... Cede & Co. hold a "master certificate" in their vault, which **NEVER** leaves. Instead, they issue an *IOU* for that master certificate..
&#x200B;
Didn't we JUST finish talking about why this is such a major flaw in our system..? And that was almost 20 years ago...
**Here comes the mind f\*ck**
[https:\/\/smithonstocks.com\/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks\/](https://preview.redd.it/o4xemx63rju61.png?width=1117&format=png&auto=webp&s=26f60bceb160cefcd95b0d55d2b375f4058981e2)
[https:\/\/smithonstocks.com\/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks\/](https://preview.redd.it/1yfr9x0arju61.png?width=1109&format=png&auto=webp&s=066cac93b0c8fb05e617c81e9fc63eeacb847d4f)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Now.....
You wanna know the BEST part???
*I found a list of all the DTC* [*participants*](https://www.dtcc.com/-/media/Files/Downloads/client-center/DTC/alpha.pdf) *that are responsible for this mess..*
**I've got your name, number, and I'm coming for you-** ***ALL OF YOU***
&#x200B;
&#x200B;
***to be continued.***
**DIAMOND.F\*CKING.HANDS** | 28.282643 | 0.898668 | Superstonk | It’s a Ponzi scheme, the whole stock market is a series of IOUs of IOUs.
Even if you buy the shares in cash and have them in your account under your name, you still don’t actually own them, a conglomerate of private financial institutions that can do whatever the hell they like with them has the master copy, and I own a financial instrument based on it? What the actual fuck.
Follow up: Appreciate all the replies, clearly a lot of apes feeling the same way about peeking behind the curtain thanks to u/atobitt. The system is clearly broken, fraudulent to its core and built upon promises from entities that have proven themselves to be completely untrustworthy.
I think the real question from all of this is why anyone would want to participate in such a flawed system at all in the future?
I hope by being exposed for what it really is, Gary Gensler and the upcoming SEC rule changes will actually go some way to fixing it.
And probably the only way to proceed in future is with blockchain as u/PandoraMarx has highlighted below.
But for now this Gamestop situation is so unique and exciting, I’m holding because it feels like every single GME shareholder is playing a game that they can actually win, even with it being deliberately stacked against them from the start.
This really is a once in a lifetime opportunity, in the immediate present for all the tendies but also for more lasting changes that level the playing field for everyone who wants the opportunity to participate in a fair market. | 0.627051 | 1.525719 |
9hetkt | Introducing Delta Relay, a 0x based relayer with an emphasis on community governance. |
https://i.redd.it/5yrn4p51xdn11.png
We are excited to announce the launch of [deltarelay.com](https://deltarelay.com/), a 0x based relayer with an emphasis on community governance. Specifically, Delta Relay will focus on providing
1. **A free, autonomous token listing process driven by community voting**
2. **Technology specifically designed to support potentially millions of tokens one day**
3. **A market without middleman cost. 0% trading fee — forever**
See more on [https://medium.com/@deltarelay/introducing-delta-relay-2cacaa6e6fbb](https://medium.com/@deltarelay/introducing-delta-relay-2cacaa6e6fbb)
**Delta Relay is the decentralized exchange of the community, by the community, for community.**
Join our community and be one of us!
Website：[https://deltarelay.com](https://deltarelay.com/)
Twitter：[https://twitter.com/RelayDelta](https://twitter.com/RelayDelta)
Reddit：[https://www.reddit.com/r/DeltaRelay](https://www.reddit.com/r/DeltaRelay) | 23.433007 | 0.525351 | CryptoCurrencyTrading | I'm a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit:
- [/r/u_ahmetyilmaz80] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_ahmetyilmaz80/comments/9jlf1h/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_andrey18445169] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_Andrey18445169/comments/9jmdqx/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_baserozgur] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_baserozgur/comments/9jcf4p/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_congkhanh0412] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_congkhanh0412/comments/9jtgax/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_dharminder123] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_dharminder123/comments/9jj1x9/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_mirvlad1978] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_Mirvlad1978/comments/9jvcyv/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_syrius1501] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_Syrius1501/comments/9jf52d/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_thailuan1] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_thailuan1/comments/9jkwtj/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_thuytran82] [Introducing Delta Relay, a 0x based relayer with an emphasis on community governance.](https://www.reddit.com/r/u_thuytran82/comments/9jx330/introducing_delta_relay_a_0x_based_relayer_with/)
- [/r/u_tienvy] [Go](https://www.reddit.com/r/u_tienvy/comments/9jwj5w/go/)
- [/r/u_vietprox] [@@](https://www.reddit.com/r/u_vietprox/comments/9jocjc/_/)
&nbsp;*^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^\([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))* | 1 | 1.525351 |
l6i4t3 | Wallstreet Bets Set to Private Megathread | The moderators there have made that sub private before. That’s why this sub was created. It’ll probably open back up soon. Calm down.
Edit: It's open again. Told you guys. | 78.806179 | 1 | Wallstreetbetsnew | Honestly, if WSB is really permanently deleted, the world is just a fucked up place.
Imagine average people making money can annoy so many powerful people. Greedy scumbags.
Edit: HOLD GME. DONT LET THEM WIN. LETS SQUEZZE EVERY CENT OUT OF THEM
EDIT 2: IF SO, I WILL PERSONNALLY TAKE A PLANE FROM DENMARK ALLL THEY WAY TO NEW YORK ONLY TO SLIDE TACKLE WALL-STREET-PEOPLE ON THEIR WAY TO WORK. | 0.517214 | 1.517214 |
l6x130 | CLASS ACTION AGAINST ROBINHOOD. Allowing people to only sell is the definition of market manipulation. A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to loose money now | LEAVE ROBINHOOD. They dont deserve to make money off us after the millions they caused in losses. It might take a couple of days, but send Robinhood to the ground and GME to the moon. | 91.556224 | 1 | wallstreetbets | This is unbelievable. They’re shitting themselves right now and pulling out all the stops. They’d rather a class action than allow us to trade.
EDIT: to everyone replying to me that a class action lawsuit would be cheaper for them, *yes, I know.* I didn’t think I’d have to spell that out but I’ll do it anyway. The situation is so dire for them that opening up the possibility of class action would be a cheaper and preferable path in order to stop more trades happening today. But I won’t be intimidated. Hopefully you won’t be either. | 0.5053 | 1.5053 |
6clkan | [ETH Daily Discussion] - 22/May/2017 | Welcome to the **/r/EthTrader** Daily Discussion thread.
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Thank you in advance for your participation. Enjoy!
| 32.624437 | 1 | ethtrader | Anyone checking this out from /all:
Ethereum is a decentralized platform based on Blockchain technology. Basically it's the technological answer to the hierarchical structure of systems that have long made up a large part of our world. There is not one person or organization that owns the system. The system us based on a open sourcecode. Anyone can build apps on the system.
We're all very excited today because a large number of organizations have publicly stated to back the ethereum ecosystem. This has had a very positive impact on the long term confidence and has made the price rise quite substantially.
By using ethereum you can make contracts between people without the use of middleman. Those contracts are then enforced by a global computer. This has huge impact on how organizations will function, how people can trust the organizations that are running the world.
Going from hundreds of years of using a pyramid model of power to a flat, transparent and secure trust-able model is something we really need in the world right now.
The people in this thread are traders of the so called ether that fuels the system. We've all been here for different reasons. Since it's a traders sub, speculation and profit making is one of the reasons. But i'd like to think we all feel a certain pull towards the platform because we feel this can really impact the world in a positive way.
Congrats to the holders and feel free to add info to people new to the concept of decentralized systems. Also, ask away if you need more info to grasp these idea's. This community is very helpful. One can also visit https://www.reddit.com/r/ethereumnoobies/ to start your path in the digital rabithole. | 0.502116 | 1.502116 |
sr16d8 | I tried to post in the Ontario Reddit that inflation was under reported and I got downvoted through the floor | I recently posted something saying that Canadian inflation was likely closer to 8–10% rather than the number they gave of 4.8% and I just got downvoted like crazy.
I tried to explain they don’t report many increases, and referenced used cars and I think I had one person agreeing and 20 downvoting me and sending me every stupid ctv news article saying it was only 4.8%.
I tried to use basic logic also, like how is it possibly that US is 7.5% and ours is only 4.8%. And eventually they removed my post for misinformation. | 13.679145 | 0.499085 | CanadianInvestor | The reason you got downvoted is that you made up your own basket of goods which showed higher numbers and then compared it to the official calculation. As another person pointed out, that doesn’t mean inflation is under reported but it may not be representative of what specific individuals are spending money on. It is not under reported in relation to the previous levels of inflation as it uses the same methodology. I mean, you could use a loblaw’s sales flier and compare the items to the previous month’s prices and say inflation is down. Your approach is simply meaningless as a comparison to the official numbers. All the government calculations are readily available if you want to see how the individual sub items that you’re interested in are increasing. | 1 | 1.499085 |
vbk3m2 | My thoughts on the organized smear campaign being waged against me | EDIT: I've spoken with u/Blanderson_Snooper and we've had a good conversation. I believe their post about me was authentic, though flawed, and they've edited it significantly to remove the inaccuracies, which I appreciate. I still believe that there is some group working on various "hit" pieces, and which is clearly trolling my comments and automatically downvoting them. But I respect Blanderson for being intellectually honest when I cleared up various misconceptions and misunderstandings, and I'd much rather just move on from all of this and continue to focus on market structure reforms. I've unblocked them and will continue to engage constructively to answer any questions.
Hi - over the past few months there has been an organized smear campaign being run against me. While there have always been people questioning my motives (despite a decade of actions to the contrary), since forming We The Investors, this movement has become more organized. I noticed a significant uptick following my meeting with the SEC Chair. I'm happy to answer any questions from this sub - I'm as transparent as I possibly can be. I haven't responded to the ridiculous and absurd allegations though because I do not believe that this smear campaign cares about the truth - it has one goal, and that goal is make you question my motives and actions. I invite you to judge everything for yourself - my track record is perfectly clear and consistent.
This is flowing through a user I had blocked a couple of months ago for their repeated trolling of me, and accusations that had no basis in truth. The so-called "DD into Urvin LLC" which is nothing but a stream of random google search results strung together to paint a narrative. This is confirmation bias at its best - look for a series of dots, and connect them in such a way to strengthen whatever argument it was that you wanted to make. For example - there are not 2 CEOs of Urvin. There are actually 3 Urvin entities, and Urvin LLC has absolutely nothing to do with Urvin Finance Inc.! This is the kind of thing that is very easy to clear up when someone is interested in the truth, but ignored or dismissed when they have a different motive. I've never scrubbed my social media, and never disguised or hidden the truth of the entities I'm involved with. It's all been on LinkedIn this entire time!
The very idea that I would be in any way associated with Citadel at any time since I left in 2009 is so absurd that I don't even know how to respond. It's been a constant accusation against me, including in the halls of Congress in 2012, and on this sub repeatedly since I began engaging. If I were motivated by money, I can assure you I would have never left HFT, let alone chosen the path that I did. But all of these claims are from people who have clearly no idea what they're talking about, and clearly have never even read a privacy policy before. They call me out for things that are in both GME's and Computershare's privacy policies (in fact ours is much stronger than theirs), and are standard in any privacy policy you can find on the internet. They said that a relationship with S3 or Apex is not in question - but there are absolutely no relationships whatsoever with either of those companies. They are mis-reading, misunderstanding, or most likely purposefully misrepresenting innocuous connections or statements. There are so many instances of this in the so-called DD, that it's impossible to address them all. Nearly everything in that post is factually incorrect.
Once again, it is not surprising that this smear campaign has accelerated since our meetings with the SEC. I am happy to answer any question in this thread in terms of my business practices - I'm an open book, and there is absolutely no data or benefit flowing to any other company, and especially not to Citadel, S3, Apex or anyone else. But I'm only interested in engaging in good faith - not with those who are simply out to smear me - because there is no amount of truth or fact that will change their minds. If there was, they would have answered their questions with some simple google searches and been on their way. There's nothing hidden or insidious happening here at all. | 15.335752 | 0.491487 | Superstonk | That post reminded me of when DRS was first trying to gain traction. I weeded through so many comments and posts that were concluding that "Computershare is Evil" because "Computershare has connections to Citadel/Virtu/Wells Fargo"
Same thing seems to be happening here. I didn't find anything concrete - just leaps in logic. It felt like a post that only served to shake the beehive. Which is annoying, given how much you have dedicated and given to retail. While most of us have just been sitting here typing posts, you've been active and helping push for change for longer than superstonk has been around. Thanks for being open Dave. | 1 | 1.491487 |
p1jb09 | My grandparents have given me 20 lakh rupees, How should I invest? | So my grandparents gave me 20 lakhs FD and told me to do what I want with it. I know most kids would just spend it, but my thought was to invest like in Reliance, Infosys or something.
Can anyone tell me should I go all stocks or some mutual funds as well.
I am 18 if you are wondering.
I have a Zerodha account.
Edit : Thanks for your opinions. | 7.439163 | 0.47732 | IndiaInvestments | Ten Lakhs in a Nifty tracking index fund. 5 year average annualised returns of 14.5%.
Five lakhs in an S&P500 tracking index fund. Annualised returns of 10%.
Two lakhs in the latest issue of Sovereign gold bonds. Always good to have some gold in your portfolio.
One lakh as playing in the stock market money. Use this to buy and sell shares. Start with blue chips like Reliance, Infosys, Tata etc..
One lakh and fifty thousand in an FD as a liquid fund for emergencies.
Fifty thousand as pocket money. Buy a good phone (though if you are the kind whose grandparents gifted 20 lakhs to, you'd already have a great phone), or invest in a good library. You are 18 years old and you are already wealthy beyond most people's dreams in India. For reference, the ransom amount in the film *Hera Pheri* was Rs 20 Lakhs.
Use the money to improve yourself. Eat healthy, do not smoke or drink and exercise everyday. Within 20 years, you will realise the benefit of all three. When you are in the late 30s and start hearing news of your friends being diagnosed with diabetes and other lifestyle diseases, you will thank your 18 year old self. | 1 | 1.47732 |
fk7ncs | Why don’t we just let major airlines collapse? |
Hear me out. The airline industry has asked for $50bn in support to avoid bankrupty. Meanwhile these same companies have spend 80-98% of their free cash buying back their own company stock over the last 10 years. American Airlines alone has spent $12.5bn to buy back stocks. This of course is done to reduce overall divident costs and increase the share price.
On top of that, under the new US corporate tax code all of these companies have lowered their tax bills by billions of dollars. The idea of the tax bill was that this money would be used for investment in technology/R&D and go to employees. Again a lot of this money ended up being used to buy back stocks.
Individuals are expected to save up 3-6 months of emergency funds but yet these giant corporations can’t whether any storm. Let them fold and in a free market the void left in supply will be filled by somebody else. | 9.536611 | 0.653563 | AskEconomics | It is cheaper for the government to give them the bankruptcy security than it is to deal with the crippling effects that the unemployment of their employees would cause.
It's important to remember that when we talk about large corporations, we are talking about profit margins of 1-2% per year for the extremely successful ones. Their billions of dollars is not sitting in a vault where dudes in top hats and monocles are bathing in it; ita tied up in assets, investments, and people.
That is to say, the company is one of the tools through which money is distributed into the economy, and this tool works as a value multiplier. Losing a 50bn chunk of the economy by allowing the companies to collapse would possibly 500bn or more in damage to the public.
We'd have to pay unemployment to their employees, we'd have to wash all debt for them, meaning lenders have less money and wont invest as confidently elsewhere, we'd have to store or destroy their fleets (who's gonna buy all the planes?), regional government will lose income from property tax on office buildings, etc. The list goes on.
So its not as simple as "well they're gonna go out of business, sucks for them". The collateral damage would be extensive. | 0.786842 | 1.440405 |
lghevq | First Time Investors - If you don't know what to do -- READ This | Hi all beginners, I was once like you, had no idea what I was doing, no idea what an option was, and had no idea how to even buy a stock. Now, you could say I'm an "experienced" trader (Whatever the f%&\* that means), and I see a decent amount of posts "totally new - what should I invest in". From all the smooth brains that have been doing this for awhile - that's really annoying and no one wants to help you for the most part.
Instead, do you own research first - I mean, you literally have Google, it is so simple. Im really not trying to bash on anyone, but Google is amazing and if you just take the 15 minutes to read an article or watch the ENTIRE youtube video, you will be so much further ahead. people are so obsessed with the known and dont want to work. It has taken me about 3-4 years to finally understand the market, charts, DD, and more about stocks and I still lose money on trades, and if u see someone saying they never loss money its a scam and stay away. Anyways, what im trying to preface this with is stocks take time to understand do you DD.
For those complete beginners that dont even have brokerage app installed yet, here are some good places to start:
[https://www.investopedia.com/articles/basics/06/invest1000.asp](https://www.investopedia.com/articles/basics/06/invest1000.asp) (investopedia in general is amazing for learning)
[https://www.thebalance.com/stock-trading-101-358115](https://www.thebalance.com/stock-trading-101-358115)
Those are two good articles to start reading, giving you a basic understanding. I know most of you wont read that so for complete beginners here is the TL;DR: FIND A BROKEAGE LIKE ROBINHOOD,WEBULL ETC, DEPOSIT MONEY, THEN ONCE THE MONEY HITS START RESEARCHING STOCKS YOU WANT TO BUY.
So now that you have a brokerage app installed on your phone, or you can access it via your laptop, doesnt matter, and you have some money in there, you can actually start buying the stocks. Depending on what brokerage you are using all the UIs look different so buying and selling will look different but buying and selling is the same. If you buy a stock you get shares, and when you sell the stock you lose those shares and "collect" your money, whether thats a profit or loss.
Anyways, you have a brokerage now with some money in it, how do you find stocks to buy. There are a million difference ways you can decide. The first way I recommend you find stocks to buy is through create a "stock screener". [Finviz.com](https://finviz.com/) has a great free tool that alot of people use for this, and there are a ton of youtube videos on how to create your own screener..here are some of my favorite screeners:
[https://www.youtube.com/watch?v=M8sNMhPJINU&t=2s](https://www.youtube.com/watch?v=M8sNMhPJINU&t=2s)
[https://www.youtube.com/watch?v=bWpe30R2VnM](https://www.youtube.com/watch?v=bWpe30R2VnM)
[https://www.youtube.com/watch?v=7xKOo6vNaq8](https://www.youtube.com/watch?v=7xKOo6vNaq8)
Each morning, you can run these scans premarket and have some stock ideas on what you want to trade. But don't just base your screener off of the stocks you are going to buy, you have to make sure they are a good stock with potential because just because its in your screener doesn't mean it is a stock you want to trade. So go through technical chart analysis (will cover that further down), read up on the stock, look at the price target, with analysts think it is a good buy or if you should sell, you can look at the fundamentals, and much more. The good news is all of that can be found on Finviz as well.
Before we get into the meat of breaking down your pre-market screener stocks, there are some other ways you can check out stocks to buy. There are way to many accounts to count on twitter that provide great advise and tweet about what stocks they are watching and buying into - this is complete free. Another great place you can go is right here - REDDIT. People are always posting stock ideas, so instead of posting "what should I buy" take that time to look through subreddits of what people are buying, what they are looking at or some of the DDs, those can be super helpful.
Now that you have an idea on how to find the stocks, the next part is determining if you should actually buy the stock or not. The first step I like is the technical chart analysis. If this is a swing trade, a stock you plan on holding for more than a day but less than a year, technical analysis is super important in my opinion. If you are LONG on a stock and are going to hold it for more than a year or even 10+ years then it is more about the company and the direction you think they will be going which is more fundamental trading, but I focus on more of the swing trading, and sometimes day trading but I dont really do that. Here are some good videos to understand technical analysis of a stock chart:
[https://www.youtube.com/watch?v=rlZRtQkfK04](https://www.youtube.com/watch?v=rlZRtQkfK04)
[https://www.youtube.com/watch?v=o6hZma0bajE](https://www.youtube.com/watch?v=o6hZma0bajE)
[https://www.youtube.com/watch?v=ItacPNRujiU](https://www.youtube.com/watch?v=ItacPNRujiU)
Those are some great videos that should get you started and really will teach you what all the stuff on the charts mean so you can start to break down charts on your own and know if those stocks from your screener are worth buying or not.
The next analysis that is popular is called funamental, I dont do this style but here are 2 videos that cover it in good detail:
[https://www.youtube.com/watch?v=a63yvv4vjDE](https://www.youtube.com/watch?v=a63yvv4vjDE)
[https://www.youtube.com/watch?v=baAzH5ZfNbs](https://www.youtube.com/watch?v=baAzH5ZfNbs)
There you have it. Now you can sign up for a broker to get money into an account, deposit money in, start screening for stocks that you may want to buy, and then review their chart to see if you want to buy the stock.
If it still seems confusing go back to what confuses you and re-read the article or find another video that may explain it better than the videos I found. Its all about just doing the process over and over again and you will see what works and what doesnt. That is the honest truth, like i said it took me about 3 years to find what works for me and what doesnt. And what works for me may not work for you, the biggest part of understanding a stock or the market in general is having your own way so you are confident when you invest in a stock.
Pro-tip, when you buy your stocks, set a stop loss order for the stock. This means that if the stock doesnt go up and starts falling, once it hits a certain price it will automatically sell. This is very important for managing your risk, especially as a beginner.
check out this video on stop losses: [https://www.youtube.com/watch?v=VW7P22B\_99A](https://www.youtube.com/watch?v=VW7P22B_99A)
I hope you beginners learned something from this, if not no problem. drop your questions below I will try to answer, but again im now financal advisor or millionaire. | 41.177617 | 1 | StocksAndTrading | Hey great article! I heard a fast blurb on the radio that Reddit itself is looking for some trader like you to be scouring these stock subs for potential gains makers.. I won't swear it was them, but it was a blurb on my local radio station. At any rate.. that could be YOU. You may have other great employment, but.. look into it if you want. | 0.431818 | 1.431818 |
6clkan | [ETH Daily Discussion] - 22/May/2017 | Welcome to the **/r/EthTrader** Daily Discussion thread.
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| 32.624437 | 1 | ethtrader | I hope this doesn't get lost in the middle of all the moon comments and excitement, but here's a slightly more serious post. Food for thought:
- Stop being so greedy.
Remember that this is a fairly risky investment (it doesn't feel like it because we are in a super bull market). Are you okay with losing 50% of your investment? Are you okay with losing 80% of it? Even if you think so, know that people vastly overestimate their ability to handle downturns.
No matter what you do, make sure that there will still be food on the table if eth goes to 0.
- Stop watching the damn charts and hold
Get out there and enjoy life. I'm a hypocrite because I spent more time on this sub than I've spent at work today, but the price will swing up or down whether you watch the charts or not. I bet most of you aren't actually trading - but you're glued to the charts due to all the excitement from eth taking off--but hey, you and I both knew it would take off.
LASTLY, and by far the most important...
- Family, friends, loved ones should be the top priority in your life.
If you're neglecting them and prioritizing staring at the price of ether, your priorities are should be recalibrated. Nothing matters more than those who give meaning to your life. Sob story saved for another daily.
Thanks for reading. | 0.425952 | 1.425952 |
slp0q1 | How do I make a million dollars? | Hey is anyone in here a millionaire or ever made a million dollars? What’s your advice on how to make a million dollars? Obviously I could just save my money for a long time and have a million in like 25 years or longer but what’s advice on how to make a million dollars in like 10 years? I’m 25 years old and am 6 months in to electrician apprentice | 4.698155 | 0.42268 | Money | Start with a billion, and invest it poorly.
Seriously though, just invest as much as you can into total market index funds. Start with tax advantaged accounts, and work your way up from there. I started investing about 8 years ago, when my wife and I made a combine maybe $60k a year. We've worked our way up to to around $150k a year. Current net worth is around $400k and growing. Compound interest is the most powerful force on earth. | 1 | 1.42268 |
nfgk3e | Buffett on Stop Losses | It “has always struck me as like having a house that you like, and you’re living in, and, you know, it’s worth $100,000 and you tell your broker, ‘You know, if anybody ever comes along and offers $90 \[thousand\], you want to sell it,’” Buffett joked to the audience at the 1994 meeting. “It doesn’t make any sense to me.” | 6.141622 | 0.414634 | ValueInvesting | Stop losses are more for trading in the short term and buffet practices investing in the long term through market cycles.
Comparing apples to oranges a bit here, stop losses have their place in specific strategies. | 1 | 1.414634 |
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reddit_finance_43_250k is a collection of 250k post/comment pairs from 43 financial, investing and crypto subreddits. Post must have all been text, with a length of 250chars, and a positive score. Each subreddit is narrowed down to the 70th qunatile before being mergered with their top 3 comments and than the other subs. Further score based methods are used to select the top 250k post/comment pairs.
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