Official Investing Thread

Discussion in 'The Mainboard' started by Joe Louis, Jul 12, 2010.

  1. Arliden

    Arliden Well-Known Member

    Best option is use normal health coverage through a spouse and the other has an HSA.

    HSA is best if you are like 20-30 and are in good health with no kids (basically just an annual check up and occasional urgent care visit), diminishing returns after that.
     
    kinghill likes this.
  2. stexraider

    stexraider Fire Everybody
    Donor
    Chicago CubsSan Antonio SpursKansas City ChiefsDallas StarsArsenalUnited States Men's National Soccer TeamTexas Tech Red Raiders alt

    full stop on most of this post as I listen to and read two of the most influential economics reports that I consider this morning… post “Bullard moment” on CNBC on Friday it looks like those in the know are now saying that Powell has lost the room in his effort to allow inflation to run above target in order to take on his social/employment effort … and the fact that he is not an economist has submarined his efforts… so …correction incoming… might only be 7% down but could be 10-12% down… it should not interrupt the full on bull market but might be good to grab your seat for a few months
     
  3. Frankie Carbone

    Frankie Carbone eh che se dice
    Florida State SeminolesNew York YankeesNew York KnicksTampa Bay BuccaneersOrlando CityLazio

    https://apple.news/A803bU0VyQOqUBLRAKj3SdQ
     
  4. westcoastbias

    westcoastbias Well-Known Member
    Donor

    Anyone have a good strategy or resource recommendation for setting strike prices?

    I'm on the Burry/inflation/market crash is imminent train and this reddit post contained a lot of DD that has me concerned:

    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.
    [​IMG]

    DD ‍
    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.



    [​IMG]
    Inside Job (2010) Promotional



    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 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.

    [​IMG]
    https://www.hilarispublisher.com/op...nd-unregulateddiversity-2151-6219-1000224.pdf

    The Derivatives Market is big. Insanely big. Look at how it compares to Global Wealth.

    [​IMG]
    https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/

    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.
    [​IMG]
    Inside Job (2010) - Flow Of Money For Mortgage Payments

    [​IMG]
    https://www.investopedia.com/ask/answers/09/bond-rating.asp

    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.

    [​IMG]
    Inside Job (2010) - % Of Subprime Loans

    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.

    [​IMG]
    Inside Job (2010) Wall Street Bonuses

    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.

    [​IMG]
    Inside Job (2010) Leverage Abuse of 2008

    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.

    [​IMG]
    Inside Job (2010) Payment Flow of CDS's

    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.

    [​IMG]
    Inside Job (2010) Payment From AIG To Goldman Sachs If CDO's Failed

    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.

    [​IMG]
    Inside Job (2010) Ratings Agencies Profits

    [​IMG]
    Inside Job (2010) - Insane Increase of AAA Rated CDOs

    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.

    [​IMG]
    https://www.history.com/this-day-in-history/bear-stearns-sold-to-j-p-morgan-chase

    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:

    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

    [​IMG]
    https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/

    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.

    [​IMG]
    https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/

    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 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.

    [​IMG]
    https://www.housingwire.com/articles/mortgage-forbearance-drops-as-expiration-date-nears/

    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

    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

    Here is an exposure of their SLR 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?

    The 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).

    [​IMG]
    https://fred.stlouisfed.org/series/RRPONTSYD

    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

    • ICC-005: Wind-down and auction plan. - Link

    • OCC-004: Auction plan. Allows third parties to join in. - Link

    • OCC-003: Shielding plan. Protects the OCC. - Link
    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. 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.

    [​IMG]
    ICC-014 Proposed Discounts On Credit Default Index Swaptions

    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.

    [​IMG]
    Summary of Recent Warnings Re Intermediate Trend In Equities







    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.

    [​IMG]
    https://www.thebharatexpressnews.com/short-squeeze-could-save-gamestop-investors-a-third-time/

    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.

    I'm not financially literate enough to fully understand this but I am trying to put myself in a spot to make a bet that profits in a 12 month horizon from this type of outcome while still holding all my long term investments.
     
  5. Arrec Bardwin

    Arrec Bardwin He ain’t me, he can’t be me
    Donor
    Auburn TigersAtlanta BravesAtlanta FalconsChelseaAtlanta United

    If you want to short the whole market, just buy long dated puts on SPY with strike around the current price, maybe a little lower.
     
  6. Bo Pelinis

    Bo Pelinis You did it! Congratulations!
    Donor TMB OG
    Nebraska CornhuskersBig 8 Conference

    westcoastbias that post is filled with tons of horseshit imo
     
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  7. Bo Pelinis

    Bo Pelinis You did it! Congratulations!
    Donor TMB OG
    Nebraska CornhuskersBig 8 Conference

    I'm no economist but I did take an entire MBA finance course on the financial crisis and that poster downplaying the leverage issues, really the whole mortgage origination chain, and the derivative market compared to today is comical.
     
    Tug likes this.
  8. Bo Pelinis

    Bo Pelinis You did it! Congratulations!
    Donor TMB OG
    Nebraska CornhuskersBig 8 Conference

    And you can bet on the shit hitting the fan and I'm not going to tell anyone to do anything but if you know anyone in really any type of loan origination, they're not going to tell you they're worried about the market in the near term. Default rates are way way way lower than a year ago because of all the market liquidity and business is just getting back to booming most places in the U.S.
     
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  9. Arliden

    Arliden Well-Known Member

    Plus banks are ridiculously well capitalized because they were expecting massive defaults with 15% unemployment that never materialized.
     
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  10. Bo Pelinis

    Bo Pelinis You did it! Congratulations!
    Donor TMB OG
    Nebraska CornhuskersBig 8 Conference

    Weren't we seeing articles about banks having way too much cash on hand as recently as like last month?
     
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  11. The Hebrew Husker

    Donor
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    Banks have been releasing tons of their loss reserves in 2021
     
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  12. Paddy Murphy

    Paddy Murphy Well-Known Member
    Atlanta BravesCarolina PanthersWofford TerriersUnited States Men's National Soccer TeamLiverpoolCharlotte FC

    Just keep in mind that Burry was wrong for something like 2 years pre 2008 and ran through a huge amount of liquidity in his 9 figure large sophisticated hedge fund before he was right. I don’t think he was close to sinking his fund, but he had to invoke lock up provisions to prevent investors from getting their money back when they ask for it because so many were pissed.

    being right too soon or too late isn’t much better than being wrong in most all trading environments.
     
  13. DuffandMuff

    DuffandMuff Well-Known Member
    Tampa Bay Lightning

    “Will I forgo medical visits because they’re too expensive?”

    Yes- welcome to America.
     
  14. westcoastbias

    westcoastbias Well-Known Member
    Donor

    Yep, I realize that. I'm not shifting my entire portfolio to line up with Burry being right. Just considering making a bet to profit short term in case he is while I hold everything else for the long term.

    I can afford to lose a position with a 12 month expiration if the payout is worth it but I don't really know what to bet on. Trying to figure it out, appreciate the insights.
     
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  15. Frankie Carbone

    Frankie Carbone eh che se dice
    Florida State SeminolesNew York YankeesNew York KnicksTampa Bay BuccaneersOrlando CityLazio


    John Nephew thought he had a winner with a new tabletop game called Dice Miner. Importing the games from China turned out to be its own roll of the dice.

    Nephew, founder of Atlas Games in Duluth, Minn., ordered a 40-foot cargo container full of games from Shanghai in December, anticipating delivery in about six weeks.

    Instead, the games took nearly six months to arrive — an increasingly common example of the supply chain bottlenecks pushing inflation to its highest level in more than a dozen years.

    "We were booked on something like eight different shipping voyages in a row, and had them canceled from under us," Nephew says.


    Soaring demand from Americans for everything from iPads to cars is leading to a surge in freight crossing the Pacific, hitting business owners such as Nephew.

    When the cargo with his games finally arrived on the West Coast, the container was immediately emptied so it could be sent back to China for another load.

    The games then continued on to Minnesota by truck, rather than rail, which would have been more economical. The final shipping cost was about $12,000, at least 50% more than the game maker had budgeted.

    Businesses around the country are wrestling with similar challenges in getting their goods.

    The Port of Los Angeles just logged its busiest month in history, handling more than 1 million shipping containers in May, more than half loaded with imports from Asia.

    "We feel the importer and exporter pain," says Gene Seroka, executive director of the country's busiest cargo port. "The impacts that all of this has had is noticeably hurtful to these men and women who are trying to do their jobs in the supply chain."

    Article continues after sponsor message
    raise its forecast for inflation this year to 3.4%. But Powell expressed confidence that the cargo constraints won't last indefinitely.

    Article continues after sponsor message

    "Prices like that, that have moved up really quickly, because of the shortages and bottlenecks and the like — they should stop going up, and at some point they in some cases should actually go down," Powell told reporters last week.

    The Biden administration has created a task force to address the most urgent shortages – such as computer chips – while also looking for ways to build more resilient delivery networks for the future.

    "One of the things the pandemic exposed is just the degree of vulnerability we have across our supply chain," said Brian Deese, director of the president's National Economic Council.

    [​IMG]



    As pandemic fears recede and people are able to spend more of their money on travel and entertainment, demand for goods is expected to decline.

    But it could take months to untangle the traffic jam. With back-to-school and holiday shopping seasons still to come, the Port of Los Angeles is likely to remain extremely busy through the fall. Seroka thinks it will be early next year before cargo volumes shrink back to more normal levels.

    That's bad news for business owners such as Nephew, who is already bracing for even higher shipping costs after he already had to pay 50% more to ship his Dice Miner games.

    "It's just a mess," Nephew says. "That shipping price is going to look like a bargain within the next couple of weeks."
     
  16. Sportfan

    Sportfan From Six to Dumptime

    I can’t help but wonder what Hank does/thinks on a day like this :loldog:
     
  17. Lyrtch

    Lyrtch My second favorite meat is hamburger
    Staff Donor

    burry is an insane moron at this point

    stay away
     
  18. Arliden

    Arliden Well-Known Member

    Bo Pelinis likes this.
  19. westcoastbias

    westcoastbias Well-Known Member
    Donor

    I mean, maybe he is but his 13f proves his conviction at least. Lots of loud morons out there without the receipts for their talking points.

    His Tesla position looks pretty smart and I'm holding alphabet and facebook too. I'm not literate enough to make my own call on timing inflation and a pending market crash but nothing about the bull market makes sense to me right now.

    My company's affected by the global silicon shortage and I *think* there are going to be some serious supply chain issues that are under reported right now. Combine that with labor shortages, money printing, the housing/rental market and overall greed and it *feels* like the market is being propped up until the market makers can get out of their positions before a crash.

    I'm a dumb retail investor with a 15 year retirement horizon so I just buy and hold stocks I like with money I can afford to lose. I hope Burry's an insane moron for all our sakes.
     
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  20. Lyrtch

    Lyrtch My second favorite meat is hamburger
    Staff Donor

    just put everything in index funds and ignore it first off, the rest is net negative decision making, but if you're following Burry I imagine you buy into his passive investing take.

    the bold is WILD squishy, but feels like you fell into a very specific corner of investing twitter/the internet. have at it, but i'm not following a covid conspiracy theorist personally. his tesla position is something people have been talking about for like 7 years as making sense, just almost no one has the capital to outlast the hive mind following.
     
  21. Frankie Carbone

    Frankie Carbone eh che se dice
    Florida State SeminolesNew York YankeesNew York KnicksTampa Bay BuccaneersOrlando CityLazio

    I’m hoping you’re diversified into safer investments (TIPS; especially now/Bonds/CDs) at this stage and not fully aggressive?
     
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  22. westcoastbias

    westcoastbias Well-Known Member
    Donor

    It's super squishy which is why I'm using words like feel and think. And yes, I'm absolutely down an internet rabbit hole combined with what I'm seeing first hand that isn't quantitative.

    Burry was long on tesla for awhile and then just put in his short position this year, which is why I'm crediting him for the call when everyone else kept talking. His covid conspiracy might make him crazy but it doesn't disqualify him for potentially being right on something I would call him an expert in.

    I am invested in index funds with my retirement plan and will continue to buy. Just trying to figure out if I should hold extra cash, invest more into the index funds or make a burry type bet on inflation in the next 12 months that would give me extra buying power to move that retirement horizon in a more meaningful way.

    Appreciate the conversation, just talking about it to get more insights and ideas since this thread has guys like you that are more experienced with your approach to the market.
     
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  23. MORBO!

    MORBO! Hello, Tiny Man. I WILL DESTROY YOU!!!!
    Donor
    New York GiantsNew York YankeesAtlanta UnitedUCF Knights

    It’s felt like that to me for the past five years and I keep thinking it’s going to happen sooner or later. Hasn’t yet though.
     
    #25573 MORBO!, Jun 21, 2021
    Last edited: Jun 21, 2021
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  24. Ty Webb

    Ty Webb Living rent free in Jigga's head
    Donor
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    This is very true (and also true towards the end of 2020). 2021 will be another great year for banks.
     
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  25. The Hebrew Husker

    Donor
    Nebraska CornhuskersSeattle MarinersColorado AvalanceWWENebraska Cornhuskers alt

    It never fails, when I buy a stock in my trading/gambling account with whatever free cash is there at the time, it turns into my best stock and I can never decide if I ride it into the ground or cash out.

    Bought a few shares of Peloton (literally a few) the day they recalled the treadmill and now I’m + 41.8% on it. Not enough to where it’s worth selling a portion, so debating if I just take the money and run. DKNG is too fresh in my mind where I was up like 60% and now I’m only +6%.

    Was going to buy PTON in my IRA but didn’t have the guts lol
     
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  26. Doc Louis

    Doc Louis Well-Known Member
    Donor

    You're my hero for reading through all that
     
    westcoastbias likes this.
  27. dukebuckeye

    dukebuckeye P.G.I.T
    Donor TMB OG
    Ohio State BuckeyesCleveland BrownsColumbus Blue JacketsCleveland CavaliersCleveland Indians

    A wise man once said, “you’ll never go broke from taking profits.”

    I got in NUE around $50, sold a bunch at $70. Got back in around $75, sold a bunch around $95. Got back in around $100, and sold out of my positions as soon as it dipped under $100 a week or so back.
     
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  28. The Hebrew Husker

    Donor
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    That’s kind of my thought, the majority of my investment money goes into 401K/IRA, this account is more just to mess around with. I know I’ll never be able to retire on these but I look at it as if I can make a few bucks here and there (after taxes) can’t be mad, better than the minimal interest in my savings account.
     
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  29. dukebuckeye

    dukebuckeye P.G.I.T
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    Ohio State BuckeyesCleveland BrownsColumbus Blue JacketsCleveland CavaliersCleveland Indians

    Exact same thought/strategy over here.
     
  30. NothingIsOT

    NothingIsOT Fuller is a sarcastic asshole
    Donor
    Miami DolphinsFlorida PanthersDetroit TigersMiami Heat

    If I made 40%, I sell 60%. Run with house money. I may kick myself for missing out on the next Amazon, but any parabolic moves on average come back down, so I take my quick gains and run whenever over 25%.
     
  31. stringmusic24

    stringmusic24 Iconoclast, Aspiring Misanthrope

    I put an entire, but small, self-directed IRA in PTON just before COVID hit. Bought at $28, sold at $159.

    I also put the majority of my much larger investment account in PTON by dollar cost averaging in throughout 2020. Up more than 60%, but I sure wish I had have taken more profits off the table 6 months ago. I’m hoping to sell a portion of the position into strength as gains become long-term and keep the rest for 5-10 years as I think this company has a long runway.
     
  32. westcoastbias

    westcoastbias Well-Known Member
    Donor

    It had pictures
     
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  33. Ty Webb

    Ty Webb Living rent free in Jigga's head
    Donor
    Nebraska CornhuskersChicago CubsChicago BullsDetroit LionsChicago BlackhawksTiger Woods

  34. FelipeG

    FelipeG Well-Known Member

  35. Ty Webb

    Ty Webb Living rent free in Jigga's head
    Donor
    Nebraska CornhuskersChicago CubsChicago BullsDetroit LionsChicago BlackhawksTiger Woods

    It's literally discussed at length in the article
     
  36. burnttatertot

    burnttatertot Well-Known Member
    Donor
    Washington State CougarsSeattle MarinersHartford WhalersSeattle SupersonicsMetal

  37. burnttatertot

    burnttatertot Well-Known Member
    Donor
    Washington State CougarsSeattle MarinersHartford WhalersSeattle SupersonicsMetal

    I did hit my goal today though. Totally cheated to get there by adding cash. Was only up 10k today, added 15k cash, now have about 75 cash I need to spend. Could really use some stock picks from you guys, gets tiring having to pick all these winners by myself :peekaboo:


    [​IMG]
     
  38. Houndster

    Houndster $25 Standard Unit
    Staff Donor TMB OG

    Buy a million shares of DRNG for $1k and double your account when it hits a dollar next year
     
    burnttatertot likes this.
  39. burnttatertot

    burnttatertot Well-Known Member
    Donor
    Washington State CougarsSeattle MarinersHartford WhalersSeattle SupersonicsMetal

    I like it! Anything is better than that garbage the people in wallstreetbets are buying (AHT). Ashford is so poorly ran.

    "Drone Guarder, Inc., an early stage security and surveillance company, focuses on commercializing a drone enhanced home security system as a turnkey solution in the United States, Canada, Europe, South Africa, and the Asia-Pacific region. The company's DroneGuarder app-based solution includes a drone, infrared camera, and Android mobile app component that takes off from a wireless charging pad once an alarm has been triggered, records video for a few seconds, processes it, and sends an alert if a threat is found, which the DroneGuarder app sends in the form of a text, image, or short recorded video if supported by the GSM network. It intends to sell its solution directly to the clients, including homes, business, or security resellers. The company was formerly known as Vopia, Inc. and changed its name to Drone Guarder, Inc. in March 2017. The company was founded in 2012 and is based in London, the United Kingdom. Drone Guarder, Inc. is a subsidiary of Gimwork Project LP."
     
  40. fish

    fish Impossible, Germany
    Los Angeles DodgersLos Angeles RamsLos Angeles KingsSouthern California Trojans

    Nice. How about sharing your winners?
     
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  41. Lyrtch

    Lyrtch My second favorite meat is hamburger
    Staff Donor

    i like that the post itself admits the investing aspect is irrelevant its just a wealth brag
     
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  42. pacey

    pacey Well-Known Member
    Donor

    you read Hank too?
     
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  43. burnttatertot

    burnttatertot Well-Known Member
    Donor
    Washington State CougarsSeattle MarinersHartford WhalersSeattle SupersonicsMetal

    I like that you care enough to dissect my posts.
     
  44. Lyrtch

    Lyrtch My second favorite meat is hamburger
    Staff Donor

    if by dissect you mean read

    you're...welcome?
     
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  45. FelipeG

    FelipeG Well-Known Member

    These are the parts I'm referring to.

    >Get a sweetheart deal to buy a stake in a startup that has a good chance of one day exploding in value. Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares.<

    Also...
    >
    At the end of 2019, it hit the $5 billion mark, jumping more than $3 billion in just three years’ time — all of it tax-free.

    Thiel, a fan of J.R.R. Tolkien, by then had brought his Roth under the auspices of a family trust company called Rivendell Trust. In “The Lord of the Rings,” Rivendell is a secret valley populated by elves, a misty sanctuary against forces of darkness. Thiel’s earthly version resides in a suburban Las Vegas office complex, across from a Cheesecake Factory, and is staffed by a small group of corporate lawyers.<

    I'm just wondering if this is available to everyone or do you have to be a big money investor to get these types of opportunities?
     
  46. ohhaithur

    ohhaithur e-Batman
    Donor

    How hard are you going to wonder about this?
     
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  47. BP

    BP Bout to Regulate.
    Donor
    Atlanta BravesGeorgia BulldogsAtlanta Falcons

    Thiel paid $0.001 per share — yes, just a tenth of a penny — for 1.7 million shares. At that price, he was able to buy a large stake for just $1,700.
    Investors aren’t allowed to buy assets for less than their true value through an IRA.
    The filing reveals that Thiel’s founders’ shares were among those the company sold to employees at “below fair value.”


    At the time Thiel bought his founders’ shares, his own hedge fund had already loaned the new startup $100,000, California and SEC records show.
    And soon after the company sold him the shares, millions of dollars poured in from investors, securities filings show. In just a month’s time, the company sold a slice of itself to investors for $500,000. That June and August, another $4.5 million poured in from the venture fund arm of telecom giant Nokia and other investors, those records show.

    He bought shares that were vastly discounted with his IRA, which is illegal. And also did the same thing with FB and Palantir while they were still private. Later goes on to say Romney did the same thing. Congress knows about, chose to cut the IRS budget instead.

    In just a year’s time, the value of his Roth jumped from $1,664 to $3.8 million — a 227,490% increase.

    Assuming a modest 6% annual return and no withdrawals, his tax-free golden egg could be worth about $263 billion in 2087.

    Everything in this country is set up to benefit the rich
     
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  48. Ty Webb

    Ty Webb Living rent free in Jigga's head
    Donor
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    Thank you
     
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  49. Chumbolone

    Chumbolone Well-Known Member
    Notre Dame Fighting IrishChicago CubsChicago BullsChicago BearsChicago BlackhawksChicago Fire

    Friend who runs a hedge fund…


    There are so many scary things about this market. Bond market is more distorted than ever (crappiest companies in the world borrowing money for 6-8%, best ones 0%). Valuations for broad market are high with pockets of pure insanity.

    I’m not really a macro guy and I don’t think the right move is to bet on a crash tmrw. But the prudent thing to do right now is to have a plan if we get a real meltdown. Be ready to go on offense if that happens and not defense.

    For most people this means buy real estate and things you feel comfortable can hold value or cash flow regardless of the stock market. If I didn’t run a hedge fund I’d be taking money out of the market and buying real estate with predictable cash flows. Lock up low rate LT debt.

    If I had to touch stocks I’d go with the big tech monopolies, banks, and more boring stuff that is less rate sensitive (careful in utilities, telecom, and other bond like equities). Maybe some commodity exposure. If we get a big crack you can rotate into riskier stuff.

    The risk reward of owning pretty much any bond right now is so bad you really shouldn’t own any of them now. I’d rather be in a checking account. The 60/40 model is busted IMO. If you buy bonds stay really short term.

    Crypto is not a hedge against a market crack either IMO. But I would also really derisk there. Most alts are probably worth zero. Stop going leveraged long an insane asset class…

    Market was flat from 1999 to 2010 including dividends. It’s not impossible we get an 11 year stretch like that. Plan for the worst and don’t be upset if you miss some upside.



    Large private equity buying up SFR in the strongest markets is as clear a bellwether as there is. Hold long enough you can offset buying at the top. This is financial advice.
     
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