[HN Gopher] Andy Bechtolsheim charged with insider trading
___________________________________________________________________
Andy Bechtolsheim charged with insider trading
Author : Brajeshwar
Score : 154 points
Date : 2024-03-27 12:48 UTC (10 hours ago)
(HTM) web link (www.theregister.com)
(TXT) w3m dump (www.theregister.com)
| hi wrote:
| > "Bechtolsheim has agreed to pay a civil penalty of $923,740 for
| earning slightly more than half that for his illegal trades, and
| has also agreed to be barred from serving as an officer or
| director of a public company for five years.
|
| Forbes lists Bechtolsheim's net worth at somewhere north of $16
| billion. The SEC fine is less than 0.006 percent of his
| holdings."
| hluska wrote:
| Or twice the illegal earnings? I'm having some trouble parsing
| that quote.
| auntienomen wrote:
| The fine seems reasonable. He disgorges the profits, and then
| gets fined twice what he earned and banned from serving on
| boards (worth far more than $1m over 5 years).
|
| Big question for me is why was he doing crimes for such low
| stakes. It's like seeing a faang engineer rob a 7-11.
| LastTrain wrote:
| Should we go with a similar approach for shoplifting? Give
| back the merch and pay a fine + no criminal charges?
| zabzonk wrote:
| ah, no. that's a working-class crime.
| gspencley wrote:
| To be fair, the punishment for shoplifting is often a slap
| on the wrist. I say this as someone who had a troubled
| youth and was caught shoplifting as a teenager. I got
| banned from the premises and no criminal charges even
| though the police did get involved.
|
| If I had been an adult it undoubtedly would have been a tad
| harsher but unless the theft amounts to many thousands of
| dollars I don't think prison time is ever on the table.
| Even then I'd be surprised. We're not talking about grand
| theft auto, we're talking about shoplifting. So it's
| usually misdemeanour. If the merchandise is retrieved then
| it is returned to the store and the store can sue the
| guilty party recover to damages if it's worth it.
|
| So I'm not really sure what kind of point you're trying to
| make. I think it's about inequality. I'm just not really
| sure how you get there by using shoplifting as your
| example.
| LastTrain wrote:
| Hey I think we both agree children should not be thrown
| in jail for shoplifting, or for insider trading.
|
| If you shoplift anything of significance you might be
| looking at least a night in jail, but more importantly a
| criminal record. If you shoplift over the threshold of
| grand larceny you will absolutely be spending a bit of
| time in jail and will have a criminal record. These are
| virtually non-existent outcomes for insider trading, even
| though people "guilty" of insider trading are also
| thieves. Guilty in quotes because WTF knows, they are
| rarely criminally prosecuted.
|
| So yeah, my point is generally about equality, but I was
| responding specifically to the casual "yeah that seems
| right" attitude about it.
| ghaff wrote:
| I suspect that much of the time it's pretty ambiguous.
| It's widely known that a company is ripe for sale and you
| hear from someone you know "confidentially" that they're
| in pretty serious talks with $X. Maybe they're a lawyer
| or a banker or...
|
| And, in general, non-execs are not prohibited from
| unscheduled trading in their own company's stock (though
| company rules may prohibit trading in options) but _lots_
| of people have a pretty good sense of how the quarter is
| going.
| kortilla wrote:
| Shoplifting wasn't a great choice since some cities are
| now pretty famously not enforcing the laws against it.
| LastTrain wrote:
| Shoplifting laws are occasionally not enforced. Financial
| crimes are only occasionally enforced. These things are
| asymmetric, and that is the whole gist of the argument.
| burutthrow1234 wrote:
| If the penalty for a crime is a fine, it's only illegal for
| poor people.
|
| I think it's pretty clear that the law works differently
| for a man with 16 billion dollars. I don't mean that in a
| positive way.
| blackhawkC17 wrote:
| The SEC files civil cases; they have no authority to
| imprison. Only the DOJ can do that.
| not2b wrote:
| I like Finland's approach to this problem: traffic fines
| are proportional to income.
|
| https://www.theguardian.com/world/2023/jun/06/finnish-
| busine...
| kortilla wrote:
| When people get a parking ticket they don't face criminal
| charges.
|
| The SEC is a civil authority discouraging behavior. A fine
| much larger than the upside is a perfectly fine way to
| handle that.
| monkeydust wrote:
| I think its well documented that people are not necessarily
| rationale when making risk/reward payoffs. Also perhaps he is
| just bored! Hopefully lesson learnt for him.
| ooterness wrote:
| Twice the illegal earnings _that they know about_.
| mannykannot wrote:
| We should not be punishing people for what we think they
| might have done.
|
| I suspect the SEC may now be taking a deeper look for other
| surprising trades that might be linked to him, and if it
| finds anything he did not disclose in the course of
| reaching the current agreement, it will not go down well.
| ChadNauseam wrote:
| I think the purpose of the fine is to disincentivize the
| behavior, not to sting necessarily. And to properly
| disincentivize the behavior it just has to make the behavior
| have negative expected value.
| bryanlarsen wrote:
| A fine of 2X profit is only negative expected value if the
| chance of getting caught is at least 50%. I'm very confident
| that the chance of getting caught is far less than 50%.
| freeopinion wrote:
| So you're saying that for a VC, where a common approach is
| to invest $1 million each in 100 different startups and if
| just two of them turn into $50 million then you break even,
| a fine like this is already factored into the game?
|
| I wonder what the ROI difference is between the two
| gambles. 100 $1 million dollar bets returns $120 million?
| 20 $100000 insider trades returns $5 million - $1 million
| fines?
|
| A 20% return is pretty good. But if it takes 2-3 years per
| startup, it's not as good. And it ties up $100 million.
|
| A $2 million investment that pays out $4 million within a
| year is much more spectacular.
|
| Edit: I am not accusing anybody of having made 20 insider
| trades. I am just musing about potential business models.
| not2b wrote:
| In some businesses, yes, fines are just considered part
| of the cost of doing business.
| kortilla wrote:
| Why are you confident of that?
| fourseventy wrote:
| As a billionaire, why commit insider trading for a few hundred
| grand in profit?
| bcrosby95 wrote:
| Because they're trying to get the high score.
| datavirtue wrote:
| This. Do not underestimate the power of bordem to ruin lives.
| When people get bored enough rationality fades quickly.
| isodev wrote:
| Apparently it's only a problem if you get caught. How else is
| one supposed to become a "billionaire".
| zabzonk wrote:
| the greedy can never have enough
| ActionHank wrote:
| Need to get all that money so one day when they grow up they
| can buy twitter.
| arcticbull wrote:
| That's best done with someone else's money haha.
| sgift wrote:
| > The complaint alleges that Bechtolsheim "knew or was reckless
| in not knowing" that the information he was given was non-
| public
|
| There is a (small) possibility that he really didn't know (the
| second part of the complaint), but decided it's not worth a
| fight with the SEC cause it's such a small amount to him (and
| he has no interest in serving as an officer of a public company
| in the next few years anyway).
|
| Though, the version others have said is still more probable:
| Reach people wanna get more rich, no matter the method.
| LastTrain wrote:
| Because the law rarely gets exercised and when it does the
| punishment is negligible, so I doubt it even factored into his
| decision. He's probably as surprised as anyone this happened.
| toyg wrote:
| Indeed. This was one occasion in which he was caught, but
| what's the chance he's already done it in other situations?
| Was this the first time he was privvy to market-sensitive
| information? Unlikely.
| lenerdenator wrote:
| Because the system rewards it.
|
| Well, at least it did.
| danw1979 wrote:
| Andy is acused of buying "options in Acacia using the accounts of
| a close relative and associate."
|
| Is it possible he passed on information to these other
| individuals, and lent them the money to make the trades, but he
| wasn't intending on profiting himself ? And he's taking the rap
| because, yes he's actually guilty of crimes.
|
| I admit this is a generous and perhaps far fetched reading of the
| situation, but it's bizarre that he'd risk the wrath of the SEC
| for a tiny gain in his individual fortunes.
| burutthrow1234 wrote:
| Tipping is still illegal if you know the recipient intends to
| trade. The person who asked him for advice trusted him with
| material non-public information, if he shares it and it gets
| traded on he's liable either way.
|
| To be clear the person who asked for advice was not tipping
| because they had a reasonable expectation that he would obey
| securities law and not trade based on the information. They
| were asking for actual business advice.
| ChrisArchitect wrote:
| Official release: https://www.sec.gov/news/press-release/2024-40
| zokier wrote:
| I'm sure SEC has done their homework and knows what they are
| doing, but to me this is not that clear-cut case. Bechtolsheim
| heard a rumour that Acacia had gotten offer and traded based on
| that. But my reading is that to him it was just a rumour, he
| didn't know for certain that the deal was happening or what the
| terms of the deal were. Of course as a senior executive he should
| have known better, but still to me this is not the most heinous
| crime and closer to just a lapse of judgement.
| not2b wrote:
| Read it again. He didn't hear a "rumor". He got it direct from
| a manager involved in the acquisition. Nothing in business is
| certain, but he knew that the acquisition was highly likely.
| Then he used the account of a relative (doesn't say he tipped
| off the relative, says he used the account), to hide his
| involvement most likely. If the SEC didn't have a strong case
| he wouldn't have settled so quickly.
| rKarpinski wrote:
| > If the SEC didn't have a strong case he wouldn't have
| settled so quickly.
|
| No one wants to fight the federal government wether they are
| guilty or not.
|
| "Forbes lists Bechtolsheim's net worth at somewhere north of
| $16 billion. The SEC fine is less than 0.006 percent of his
| holdings."
|
| I'd settle immediately too. 900k fine or 400k illicit gains
| means nothing if you are worth 16B.
| kirubakaran wrote:
| "I'd settle immediately too. 900k fine or 400k illicit
| gains means nothing if you are worth 16B."
|
| > [Andy] has also agreed to be barred from serving as an
| officer or director of a public company for five years
|
| Do you think that means nothing?
| StefanBatory wrote:
| For five years that feels like nothing major, in fact. He
| can still use his connections and return after that time,
| not there but somewhere for sure.
| toyg wrote:
| You don't need to be a director to make money. He's not
| barred from being an investor.
| rKarpinski wrote:
| > Do you think that means nothing?
|
| It means nothing. He's 68 years old and worth 16B.
|
| The book "Den Of Thieves" (also about insider trading)
| makes a good case for why you don't want to fight the
| federal government, even when you can.
| godelski wrote:
| > Do you think that means nothing?
|
| Yes.
|
| Even as other commenters have pointed out his age, let's
| be realistic at what $1B is (let alone 16!)
|
| Suppose you have an interest rate of 5% over the year.
| That's a pretty safe level and I'm sure he gets more.
| That means you're getting $50m for doing nothing (passive
| income), or just under $137k/day (overly simplified
| calculation based on yearly return divided by 365. No
| compounding, so consider lower bound). Try spending that
| much money a day! Then consider trying to spend that much
| money AFTER you've already bought a few nice homes, cars,
| and hell throw in a private jet (cheap is a few million,
| most are 10-20, and Elon's is $78M[0]). (At 16B, you're
| closer to $800m/yr or $2.19m/day!!!! $900k in fines isn't
| even half a day's "sitting on his ass doing nothing" for
| him, let alone work. [1])
|
| The thing that often baffles me is why these people still
| work. You can do almost anything you want with that kind
| of money. But I think this also says something about
| money, power, and how these people think. It also makes
| me wonder why people get mad at tech workers with our
| high salaries (definitely not complaining!).
|
| Maybe I just don't understand business (I'm a researcher,
| not a MBA, so assume this is correct). But I just don't
| see how these salaries do anything for these people other
| than be a high score. The only way I can personally think
| of spending $10m in a year is by buying a house and I
| can't imagine wanting more than 2 (and even a $10m house
| is often too big! In most locations. Yes, I'm aware SF
| exists).
|
| I just wonder, can't you undercut everyone by taking a
| lower salary? Which would increase the company value? Or
| stop pushing deadlines so fast so there's higher quality?
| Or many other things because there's a ton of C-suit
| execs getting these salaries. I just don't understand,
| why work? I have to imagine, a key part must be
| addiction. Which I can get, I like a fair amount of work,
| but would rather take money to work as I see fit (but I
| guess they get this. But you're not at the technical
| level and personally (thus, highly biased) I find it is
| far less fun managing people).
|
| I think there's a real disconnect. In how we see
| billionaires, how they see us, and how they see
| themselves. That money is just an insane level. fwiw, I'm
| not even against billionaires. I just don't understand
| why once people have $100m they don't pull a Anderson or
| John Bogle. Because money isn't real anymore.
|
| Edit:
|
| let's add some nice numbers at this 5% rate. If you have
| $20m invested (earning that 5%) you're going to make
| $1m/yr for life. $100m gets you $5m/yr and $500m gets you
| $25m/yr. 10B gets you 500M, and $20B means you're a
| forever billionaire.
|
| Looking at Forbe's list, we got Bernard Arnault, Bezos,
| Musk, Zuckerberg, and Ellison (in order). That's
| $11.3B/yr ($31m/day), $9.9B/yr ($27.1M/day), $9.9B/yr
| ($27.1M/day (nearly tied)), $8.6B/yr ($23.7M/day), and
| $7.75B/yr ($21.2M/day) respectively.
|
| With $7.3B you make the $1M/day, which makes you the
| 367th richest person in the world.
|
| [0] https://www.scmp.com/magazines/style/celebrity/articl
| e/31983...
|
| [1] (edit add) Let's say that's half a day's work for you
| and you're a L4 at Google. Using Levels.fyi data, you got
| a base salary around $178k/yr and so this is equivalent
| to you dropping $200 ($320 if you include equity) if
| compared to his passive income alone (which again, is
| probably >5%). Let that sink in. Technically it is even
| less than you should value that $200 because he doesn't
| need to save anything.
|
| [2] If some billionaire wants to drop $50m on me, I'll go
| live my life reading math books, buy a B200 node (maybe
| even 2! Or a few more!), and research AGI for the rest of
| my life. I mean I'll also do that for a lot less too, but
| hey, that's 2 days of nothing for you Elon or Bezos. I'm
| sure it is worth more than that in publicity alone. ;)
| rqtwteye wrote:
| "The thing that often baffles me is why these people
| still work. You can do almost anything you want with that
| kind of money."
|
| Simple. They love the work. That's what they want to do.
| To become a billionaire you usually have to put in an
| enormous effort. Not many people are willing to do that.
| purpleblue wrote:
| Why didn't he get jail time like other insider traders?
| ghaff wrote:
| It probably crossed a line given the amount, the person
| involved, and the timing. (And the fact that he tried to hide
| the transaction.) But lots of people get tips from friends or
| people at parties about things that aren't actually true or
| that fall through.
| helsinkiandrew wrote:
| This wasn't a rumour overheard at a party though. Someone in
| a company (presumably Cisco) consulted with him about their
| pending purchase of the company.
|
| If you buy options on a company just before some kind of deal
| (particularly if you haven't bought them before) your
| relationship with anyone that knew of the deal is likely to
| be investigated.
| wk_end wrote:
| For someone as wealthy as he is ("Forbes lists Bechtolsheim's
| net worth at somewhere north of $16 billion"), a (less than)
| $1M fine seems more than gentle enough for "a lapse of
| judgement" and "not the most heinous crime".
| bookofjoe wrote:
| $1M is 0.00625 percent of $16B. For reference, 0.00625
| percent of 100k = $6.25
| wil421 wrote:
| Basically for someone with $1,000,000 it's a $6,250 fine.
| Or a $1,232 with $197,000 (average net worth in US
| according to Google).
| valleyer wrote:
| No, you're off by a couple orders of magnitude.
| pera wrote:
| > Median net worth $192,900
|
| https://www.federalreserve.gov/publications/files/scf23.p
| df
|
| > [Bechtolsheim] net worth at $16.3 billion
|
| https://en.wikipedia.org/wiki/Andy_Bechtolsheim
|
| So then (923_740 / 16_300_000_000) * 192200 = ~$10.89
|
| Just for comparison, the fine for jaywalking in Seattle
| is $68.
| foobiekr wrote:
| Why do you think wealthy people should be treated more
| leniently for the same crime?
| wk_end wrote:
| That's the exact opposite of what I'm saying.
| seanhunter wrote:
| > Bechtolsheim heard a rumour that Acacia had gotten offer and
| traded based on that.
|
| That is pretty much the text-book definition of misuse of
| material non-public information (ie that's 100% insider
| trading).
|
| Whether or not you think it's the most heinous crime is up to
| you but there's no question it's illegal.
| acegopher wrote:
| It doesn't matter if it is a rumor or not. The fact is it was
| non-public and material information. And that's the definition
| of insider trading.
| mgdev wrote:
| Reading the actual case document, it's hard to chalk this up to
| anything but gross incompetence.
|
| Dude gets off the phone after learning the information, and
| immediately calls the brokerage to write puts that expire 11 days
| later (strike 1).
|
| He nails the strike price (keeping below 70; strike 2), and when
| the brokerage calls later he openly admits on the call that he
| traded on a nonpublic rumor (strike 3).
|
| Absolutely zero subterfuge. He either has a blatant disregard for
| the law, or is an extremely high-functioning idiot, or both.
| riku_iki wrote:
| He could be doing it for many-many times in the past, and
| thought this is something not catchable.
| usrusr wrote:
| Or a long history of remaining under the radar with similar
| things. People addicted to the tingle of risk-seeking can be
| surprisingly unaware of it.
| blackhawkC17 wrote:
| This case seems weird...if he's guilty of what the SEC accuses
| him of, then it's also a clear-cut criminal case the Department
| of Justice can pursue.
|
| That the DOJ didn't file charges makes it seem like the SEC's
| case is weak.
| dekhn wrote:
| I don't really have any comments about the insider trading (other
| than whyyyyyy?) but I'll never forget Andy driving up in a
| ferarri at the old SUN executive briefing center (now part of the
| Facebook's HQ) in 2007 and giving us a presentation on the Sun
| filesystem hardware they had just released (Sun Fire) and he was
| really, really keen on telling us just how many power you could
| stuff into a single rack (like, kilowatts power, as well as CPU
| heft).
|
| He was absolutely thrilled to geek out on the speeds and feeds
| and we also gave the ZFS author Mike Shapiro a bunch of crap
| about ZFS merging the logically distinct layers of storage
| (volume and FS management) while also strongly suspecting that
| ZFS's model would end up replacing Veritas or whatever it was
| people used in those days.
| jgtrosh wrote:
| Saw Andy at one conf, I confirm he was wayy into minutiae.
| Geekiest presentation technical in a supposedly not-too-
| technical panel. But, not related to the insider trading.
| vundercind wrote:
| > ZFS merging the logically distinct layers of storage (volume
| and FS management)
|
| This really weirded me out at first, but now feels so right.
| doubled112 wrote:
| Once you use ZFS it is hard to go back to anything else
| because of this.
| ansible wrote:
| Back in the day (mid 1990's IIRC), I read one of the NetApp
| whitepapers on their WAFL (write anywhere file layout), and
| that's what sold me on merging the storage layers. The
| Motorola group I was at was transitioning from Auxpex to
| NetApp around that time.
| dekhn wrote:
| At the time of the ZFS presentation we were trying hard to
| move off NetApps- we had never-ending problems with WAFL
| (mainly caused by deleting 5TB from a nearly-full file
| system combined with snapshots). ZFS and Sun Fire were
| fairly early in their life cycles at that point so it
| wasn't "mature" enough for our enterprise use cases.
|
| I still don't like the idea of combinging volume management
| with filesystem, but it's clear that it's worked well for
| many people over the past 15 years
| jdblair wrote:
| Ha! I worked on that hardware, or at least, on the software in
| the service processor (aka, ILOM) in that hardware. I
| transferred out of the Linux group at Sun (which was being
| disbanded) and joined the group formally known as Kealia, still
| in its original office space on Deer Creek Rd in Palo Alto.
|
| Context here: https://www.infoworld.com/article/2665260/sun-
| buys-server-co...
| spxneo wrote:
| I know this is off-topic but may I ask what type of Ferrari was
| it? 360 spider? That's quite the scene you describe, imagine
| all the people who felt inspired/disgusted by the car. It's
| straight out of a movie.
| 1024core wrote:
| > Forbes lists Bechtolsheim's net worth at somewhere north of $16
| billion.
|
| https://images.app.goo.gl/voCX3ST3yPCcnSrAA
| bithavoc wrote:
| I don't get why they need more money.
| e40 wrote:
| Yeah, that was my first thought. I didn't imagine he had that
| much, though, and it makes it even more of a head scratcher.
| tombert wrote:
| I think I get it now.
|
| I did a reasonably good job at timing Nvidia stock. I bought
| three shares in February of last year, and it's more than
| tripled since then. Initially I was really happy to have
| bought when I did, but almost as quickly I started thinking
| "damn, if I had bought ten shares..." or "if I had bought an
| option contract instead..." as if me making two grand wasn't
| objectively a great thing.
|
| It's not rational, but I think it must just be instinct to
| always want "more", no matter how silly it becomes. It seems
| like the first thing people want when they have a billion
| dollars is a second billion dollars.
| toyg wrote:
| This is particularly true for financial matters, where
| everything is just a number; and particularly true for
| someone whose lifestyle won't be materially impacted by
| outcomes. It's just a game.
| bastardoperator wrote:
| Gambling has been known to be addictive.
| tombert wrote:
| It's a little annoying, because the only way to really
| preserve wealth is to push it into the market, and
| investing is always a bit of a gamble. There's reasonably
| low-risk tickers like VOO and SPY and VTI, and that is
| typically what I dump my money into, but it does concern
| me that the economics of the world has kind of forced me
| to embrace gambling.
|
| I'm generally a pretty risk-averse person, I've bought
| two lottery tickets in my life (once when I turned 18,
| once again when the Powerball hit a billion in 2015).
| Unsurprisingly, I didn't win both those times. I would
| much prefer to keep my cash in some kind of government-
| secured savings account, but the interest rates in those
| rarely keep up with inflation, at least not long term.
| The closest I have found to that is treasury-bills, and I
| do use those, but I still put the bulk of my money into
| ETFs, AKA gambling.
| trogdor wrote:
| > the economics of the world has kind of forced me to
| embrace gambling
|
| How so?
| tombert wrote:
| I'm being a bit hyperbolic, but what I was trying to say
| is that the way that you're expected to preserve wealth
| in the US is to put your savings into the market somehow.
| Markets are sort of inherently unstable, or at least
| unpredictable, meaning that there's sort of an inherent
| risk to that, and as such you're "gambling", at least a
| little.
|
| If you compare this to an FDIC-insured bank account, or a
| treasury note, there's effectively zero risk, so I would
| say it's decidedly _not_ gambling, but the problem is
| that generally speaking zero-risk things don 't pay
| enough interest to beat inflation, meaning that your
| money is degrading a bit.
|
| Obviously there's a difference between YOLOing everything
| in GME vs putting a bit of money every month into VOO,
| but the latter still does carry some risk, particularly
| in the short-term.
| spxneo wrote:
| i actually lost a small fortune (now its nothing but back
| then it was a lot) on nvidia options as well as buying
| large amount of puts on a crypto mining company.
|
| the reason im telling you is exactly the mentality you
| described: in Q1 I hit a major home run buying puts on a
| bunch of banks that went under. I experienced 28,300% ROI.
| From then on I was like an addict. Constantly loading up on
| insane amount of FDs until I lost all of what I earned.
|
| Quite an experience and I think its best to just focus on
| building or growing a business. Had I bought stocks and
| held I think that would've been better.
|
| Just realize the winners and pros are writing you the
| options in the long run. Punters like me, as I experienced,
| cannot last.
|
| Also its a zero sum game. When I experienced financial
| ruin, I realized when I hit that 283x bagger, the person
| who wrote me those put options experienced financial ruin.
|
| So now I'm jaded about options and financial markets in
| general. its a double edge sword. its a dangerous societal
| drug.
| tombert wrote:
| I agree with everything you said, except is it actually
| implied they faced financial ruin with your 283x return?
| What if they were doing a covered call? Then they lose
| the stock, that sucks, but they're not going to go into
| debt.
|
| I'm just being pedantic, your broad points are absolutely
| true. I mostly just through cash into VTI.
| spxneo wrote:
| because I talked to the guy who wrote those puts on
| wallstreetbets he was depressed from all the comments
| making fun of him so i sent him some money from the
| winnings
|
| now that i experienced the exact thing he experienced, im
| just done with trying to make a buck from the markets
| because the profits come from others loss. options
| trading is a zero sum game.
|
| maybe you can say same about about stocks or futures who
| knows. options also offer an important tool for managing
| risks like insurance. so again here im trying to attach
| some judgement to numbers which are amoral. I guess I
| just don't want to be part of something that causes so
| much emotional and mental violence anymore. I want to
| build and help create ease for others.
| tombert wrote:
| Ah, that's a sad story. I hope the person is ok; gambling
| debt of any kind can really mess with your head.
|
| I don't think stocks are zero-sum. If I buy a share of
| AAPL and hold onto it for a long time, Apple _wants_ me
| to make a profit because that means that they 're making
| money too. I have completely aligned my incentives, and
| Apple can, at least in theory, keep growing and creating
| value by producing products that people like and are
| willing to trade their time and labor to get. I guess if
| you want to be really pedantic, it's zero-sum in that
| there is technically a finite amount of labor being done
| per-unit-time on planet earth, so I suppose that's the
| ceiling, but I think it's not zero-sum until it reaches
| that ceiling.
| spxneo wrote:
| I guess the intent also matters...like moralism is pretty
| shaky here i see
|
| You can buy AAPL puts months before earnings as
| insurance....if you buy stocks and believe in the
| business fundamentals to help unlock more potential then
| that is a legit use.
|
| i wish i had more positive experiences with the market. i
| feel like its a reflection of your inner world.
| tombert wrote:
| Yeah, I bought Gitlab when it IPO'd because I agreed with
| what they were doing. I felt they were making a product
| that's competitive with Github, and also were allowing me
| to run it myself if I wanted. I thought that was cool, I
| was glad to see they got big enough to IPO, so I bought a
| few shares.
|
| I've lost about half my investment there, which if I'm
| being honest does makes me a little sad, of course I
| would rather have _more_ money than I put in, but at
| least I think I doing the _intent_ of the stock market. I
| think that the initial goal of the market was to enable
| people to invest into companies that they actually
| believed in, not to buy and sell shares a million times a
| second, or to buy and sell speculations at the same rate.
| gigaflop wrote:
| I am technically a war profiteer due to stock trading. I
| bought and then kept trickling some money into an oil
| index fund when news was everywhere about negative
| $/barrel, and Russia's invasion of Ukraine made me $500
| when I sold out.
|
| (I don't actually feel like I did anything wrong, though.
| Just bought low and sold high, around oil macro events
| that anyone else could have seen)
| spxneo wrote:
| A trade is a trade. I've come to accept this after
| hanging out with a hedge fund manager. I was trading my
| ego and I was gambling and I placed all these unrealistic
| expectations from the market.
|
| A trade is neither an expression of justice or injustice.
| It's just fucking numbers that we attach so much emotion
| and judgement on. Amoral != immoral.
| gigaflop wrote:
| I ain't rich enough to take a real moral standing in
| investing. The only principled buys I make are for
| ETFs/indices that sound like good ideas, but are
| nonstandard. Copper, Lithium, Uranium for now. The Earth
| isn't making any more of the stuff, and they're base
| resources for other processes.
| tombert wrote:
| I mean, I own lots of ETFs, and I have bought-low-sold-
| high plenty of times. I've almost certainly benefited
| from war profiteering, either through oil fluctuations
| like you described, or publicly traded US defense
| contractors.
|
| I'm not going to sit there and try and correlate VTI's
| price to ensure it's some kind of inverse to Lockheed
| Martin's performance, and I doubt anyone else is either.
| gigaflop wrote:
| I sold my crypto bags one by one this year. I felt
| fantastic for hodling long enough to swing +20% minimums on
| my btc, doge, shib, eth. Doge, I got +39%.
|
| Then crypto kept going up. Whoops. Made money, but not _all
| of the money_. As a consolation prize, profiting any% on
| crypto probably puts me in the 1% of investors.
|
| I _will_ say I missed my best timing on Doge by literally
| sleeping on it another night. I was out at a bar with 2 of
| my brothers, and was joking that my Doge had hit +69%.
| Would have been up a few hundo if I 'd sold then instead of
| day after.
| tombert wrote:
| It's a frustratingly easy mindset to have, and it's kind
| of objectively wrong. If I put down money, and got more
| money back without any real effort (outside of clicking a
| button or two on ETRADE) then _that 's a win_. I got
| _free_ money!
|
| But that's just not how my brain works. Instead of being
| extremely happy that I got extra cash for nearly-zero
| effort, I'm sad that I didn't get _more_ cash for nearly-
| zero effort.
|
| I try and fight that mentality and focus on the good, but
| sometimes that's easier said than done.
| gigaflop wrote:
| My way of fighting the mentality is to be lazy. No joke.
|
| I'm either Accumulating, Holding, or Looking to Sell. For
| stocks, I generally stick to #1 and #2. Buy if
| numbers/velocity looks good, hold if I don't like how
| they were doing.
|
| When doing my taxes for FY23, my Robinhood showed zero
| crypto sales. Having seen a few winters, I am willing to
| wait 6 to 8 months before considering getting back in.
| Musk might tweet about Doge on the shitter again, and
| spike its price by +69%, but I don't have the patience to
| follow such micro movements. Show me the 1yr graphs.
| vladms wrote:
| Can't say I understand this case (and don't know the
| details), but generally once you "train" yourself to do
| something and like it (basically, anything, like develop
| programs, run, watch movies, etc.) it is not that easy to
| just give up because you don't "need it". Making money or
| making startups can be addictive (the startup part I know
| from experience) and because the successful people might be
| the ones that are most addicted, that means they can't just
| stop even if they succeed.
| msie wrote:
| Why stop at your first billion?
| mmcdermott wrote:
| Beyond a certain point, the money is a scoreboard not a
| resource. It's like watching someone spend hundreds of hours
| on a video game for a speed run. You played to win and this
| is the metric.
| exabrial wrote:
| Honestly I could care less what a few rich guys do when the get
| tips over golf games, as ultimately doesn't really affect me.
| Couple of light fines for the amount profited seems reasonable.
|
| However, the people that need to be jailed are in congress and
| public policy makers using their positions to enrich themselves.
| Pelosi has an astounding ability to absolutely nail her really
| really deep options picks.
| https://www.reddit.com/r/unusual_whales/comments/l42l9w/nanc...
| colechristensen wrote:
| Insider trading takes a lot out of the pockets of literally
| everybody else, there's barely any punishment when you get
| caught, and you're really quite unlikely to get caught at all.
| It is a problem you should care about.
| arcticbull wrote:
| Yep, it takes money out of the pocket of whoever's on the
| other end of that options trade.
| TuringNYC wrote:
| It also manipulates the stock underlyer, which the average
| person owns, either directly or via retirement plans.
| amadeuspagel wrote:
| Manipulates it to make it more accurate and predictable?
| nextworddev wrote:
| Unrelated - does crypto even have SEC enforced insider trading
| rules?
| tombert wrote:
| Not quite insider trading, but John McAfee was charged with
| pump and dumping schemes with cryptocurrency. He killed himself
| before he was convicted, but there appears to be at least
| _some_ kind of enforcement.
| miohtama wrote:
| It is debated and debatable whether CFTC, SEC or neither has
| authority.
|
| However insider trade is crime regardless, and and a criminal
| investigation can be done by police. See:
|
| https://www.justice.gov/usao-sdny/pr/former-coinbase-insider...
| the_panopticon wrote:
| At least it was just a fine and he avoided having to visit "Club
| Fed" https://en.wikipedia.org/wiki/ImClone_stock_trading_case
| tombert wrote:
| You know, if you're going to insider trade, I really think it's a
| bad idea to buy options.
|
| If he had just bought shares, he might have some plausible
| deniability to say that "I really believed in the company and I
| wanted to invest in it". It might still alert the authorities,
| but I feel it's less likely and I don't think they'd necessarily
| have enough to charge him.
|
| With options, it is decidedly _not_ an investment, just a gamble.
| Gambling is way easier if you are able to cheat.
| gimmeThaBeet wrote:
| At this point it borders on cliche, but he broke at least like
| 4 of Matt Levine's (Not Legal Advice) Insider Trading Laws:
|
| - Don't do it
|
| - Don't do it by buying short-dated out-of-the-money call
| options on merger targets.
|
| - Don't email or text about it.
|
| - Don't do it in your [mother's] account.
| tombert wrote:
| I hadn't heard of those, but that's brilliant.
|
| The second one in particular just seems so obvious to me.
| Options are a case where you either "win or you lose
| everything", and even more you have to "win by a certain
| time". Options are kind of fun to gamble with, I've done it
| once, but the advantage of vanilla shares is that you can
| wait as long as you need to to "win". It doesn't provoke
| nearly as many red flags.
| smallmancontrov wrote:
| Yes, lower leverage means fewer red flags... but more
| leverage means more money ;)
| tlogan wrote:
| It's important to note that when large option trades aren't
| part of a hedging strategy, they almost certainly attract
| scrutiny from the SEC.
| TuringNYC wrote:
| Wonder how the SEC sees the 99% of times people lose
| money on them, a la WSB
| toomuchtodo wrote:
| https://lawsofinsidertrading.com/
|
| (Matt Levin's Laws of Insider Trading from Bloomberg's Money
| Stuff)
| jiveturkey wrote:
| > Bechtolsheim has agreed to pay a civil penalty of $923,740 for
| earning slightly more than half that for his illegal trades, and
| has also agreed to be barred from serving as an officer or
| director of a public company for five years.
|
| sadly, no deterrent effect here
|
| the fine is adequate. but he should have a done a year at Club
| Fed and a lifetime ban on public boards.
| Osiris wrote:
| Why do people that have more money than they can spend in a
| lifetime engage in such high risk activities to acquire even more
| money that they also cannot spend in a lifetime?
|
| It seems like it's more about the emotional connection to
| "winning", having more than others?
|
| What's the risk/reward tradeoff look like here? It looks heavily
| skewed toward the risk side of the equation.
| chihuahua wrote:
| Yes, I do not understand this mindset:
|
| "I have $16 billion dollars, and I'm going to do something
| risky/illegal so I can have $16.0005 billion dollars"
| missedthecue wrote:
| Sample bias too. A lot of poor people would insider trade if
| they 1. had brokerage accounts and capital 2. had material non-
| disclosed information coming across their desk.
|
| Turns out only moneyed people are likely to have the
| combination, and we only see the ones that chose to act on it
| in the news, even if 99% wouldn't.
| eggy wrote:
| I wish the SEC would clean house of all the congress members and
| senators, Democrat and Republican, around 75 to 97 at last count,
| who had bought or sold stock or bonds, or other financial assets
| related to their congressional work. It's always the corporate
| boogeyman is always target number one in America. Pelosi and her
| ilk, including her husband, should have to live by the same laws
| as the people they supposedly represent.
|
| https://www.nytimes.com/interactive/2022/09/13/us/politics/c...
| tompetry wrote:
| If he's earning just 5% a year on that $16B net worth, that's
| about ~$2.2m per day. Yet he used this info to gain $500k?
___________________________________________________________________
(page generated 2024-03-27 23:01 UTC)