[HN Gopher] Insider trader had all the answers
___________________________________________________________________
Insider trader had all the answers
Author : ioblomov
Score : 140 points
Date : 2024-10-01 20:03 UTC (4 days ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| ioblomov wrote:
| https://archive.ph/uMNA7
| sfblah wrote:
| Unpopular opinion, but I suspect this is actually how a lot of
| hedge funds have historically outperformed the markets. The
| amount of nonpublic data needed to get an edge is surprisingly
| small.
| genocidicbunny wrote:
| I recall learning this lesson pretty early on. In high school,
| the econ teacher ran a stock trading game - you get some
| starting capital, you make trades, at the end of the quarter
| whoever had the most got some kind of reward.
|
| At the time we had a family friend that was working for a
| company about to announce a stock split along with a very good
| earnings report. He told me when to go all in on that stock,
| and i did exactly that. The day after that split my portfolio
| had more than doubled, beating the class record by a
| significant margin. Said record stood until the teacher
| retired.
|
| Not sure if it was the lesson he meant to impart though since I
| think most took away from it that to win you need to lie, cheat
| and steal.
| OrigamiPastrami wrote:
| > Not sure if it was the lesson he meant to impart though
| since I think most took away from it that to win you need to
| lie, cheat and steal.
|
| Better to teach reality than ideology, assuming you want to
| be a practitioner instead of a theorist.
| Scene_Cast2 wrote:
| I like Margin Call's quote - "be first, be smarter, or
| cheat".
| paulryanrogers wrote:
| Nothing ever bad happened when societies trade high trust
| for low trust. No sir. All roses and sunshine. Certainly
| worthwhile for me to bend or break any rule keeping me from
| my best life.
| OrigamiPastrami wrote:
| Hating cheaters does nothing to change the reality of it
| being an effective method for getting ahead.
| paulryanrogers wrote:
| Only in narrow circumstances and only to a point. Or at
| least that's my (limited) understanding of game theory.
| OrigamiPastrami wrote:
| You're a caricature of my original point and you don't
| even realize it.
| paulryanrogers wrote:
| IME the reality is that trust erodes as cheating becomes
| widespread. The consequences of less trust are
| significantly higher costs and more stress and fear.
|
| FWIW, I don't advocate blind trust.
|
| Perhaps you meant to say we should teach the reality that
| cheating exists and is bad; not to pretend it doesn't
| exist? Or that it's hopeless to be honest and trustworthy
| because some others may not be? Which leads to ... apathy
| or more cheating and less trust.
| OrigamiPastrami wrote:
| I never said cheating is moral. I said cheating is
| advantageous. You think cheaters care that they're
| hurting society? You can't be a cheater without being
| selfish.
| keiferski wrote:
| It would if said cheaters were socially ostracized.
| Instead we make big budget movies about them, they get
| famous, and then earn money from the newfound attention.
| lazide wrote:
| And who's fault is that exactky
| keiferski wrote:
| Presumably people that break the rules in a high-trust
| society, or at least those that enable the rule-breaking.
| lazide wrote:
| So.... everyone?
| keiferski wrote:
| Do you have a particular answer in mind, or a point to
| your question? Yes, societal rules in some sense depend
| on everyone enforcing them. But there are also
| people/organizations/etc. with more power to fund or
| support these violations of social rules, so presumably
| they're more at fault too.
| OrigamiPastrami wrote:
| So your point is that if we fundamentally change society,
| ignoring the fact that this is integral to human nature
| itself, then we can fix this problem? That's about as
| helpful as saying we can have peace in the Middle East if
| we all just got along. It's comical how disconnected from
| reality it is, and yet you seem to think people should
| take it seriously.
| keiferski wrote:
| No, I'm saying that people have stopped enforcing social
| rules and therefore cheating is increasingly a valid way
| to succeed. That's what the point of the thread was
| about. Lots of things are fundamental to human nature;
| society is the process of controlling and channeling
| them.
| OrigamiPastrami wrote:
| Fair enough.
| mordymoop wrote:
| I won a similar contest by being the only student who never
| bothered to log into my trading account, thus keeping all my
| assets in cash by default. The market had a down week, so
| everybody except me was in the red.
|
| I think the lesson, which has served me well, is to not make
| short-term trades.
| im3w1l wrote:
| The lesson is that in a win/not win contest, you want to do
| something no one else is doing. Maybe things go your way or
| maybe they don't. But you avoid the risk of being narrowly
| beat.
| m3kw9 wrote:
| short term trade is gambling unless you really have data
| and speed that you know how to use. Most trader uses charts
| and whats hot, the profits then runs on the greater fool
| theory.
| datavirtue wrote:
| You can go long and sell if there is a significant
| breakout. Then you hunt down the next value stock. A
| return is a return.
|
| If you got into Nvidia ten years ago you would have to be
| dumb not to pull it now. There is market timing foolery,
| and then there is just being realistic.
| cael450 wrote:
| When I studied abroad, I lost my debit card and had to get
| it mailed to me internationally. I was down to nothing and
| spent a week living off of rice and furikake.
|
| What saved me is one of these trading contests for my
| school's business club. I signed up for it and dumped all
| of my "money" into playboy and forgot about it. Turns out
| they won some big lawsuit and the stock spiked just in
| time. First place was a $200 dollar fine. I had to have the
| club president spot me the train ticket to go pick it up.
| CalRobert wrote:
| Just to be clear... It was a prize, not a fine right?
| genocidicbunny wrote:
| 3rd place in our class was a student who dropped out two
| days into the stock game and never logged in.
| koolba wrote:
| > At the time we had a family friend that was working for a
| company about to announce a stock split along with a very
| good earnings report. He told me when to go all in on that
| stock, and i did exactly that. The day after that split my
| portfolio had more than doubled, beating the class record by
| a significant margin. Said record stood until the teacher
| retired.
|
| That family friend seems like a complete idiot for passing on
| that information.
|
| Plus a stock split on its own has no change to the value of a
| stock. There's no reason for it to double overnight. In fact
| the direct effect on the price is the opposite as you have
| twice (or K times) as many shares and each is worth half (or
| 1/K). So the net effect is zero.
| MassPikeMike wrote:
| In theory you are right that stock splits have no bearing
| on returns, but in practice it is well documented (see e.g.
| [1]) that "stock splits and reverse splits often result in
| short-term abnormal returns even though such split events
| do not change any fundamental factors affecting the
| valuation of a firm's stock."
|
| [1] https://www.sciencedirect.com/science/article/pii/S0167
| 26812...
| senkora wrote:
| > We provide evidence that the incomplete adjustment of
| share prices to splits or reverse splits can be
| attributed to _heterogeneity in traders ' cognitive
| abilities_.
|
| What a colorful turn of phrase.
| genocidicbunny wrote:
| The split was followed by the stock very quickly regaining
| it's previous per share value over the course of the
| trading day, though maybe it was over the next week; this
| was a few decades ago.
|
| And i agree that he shouldn't have told me. A few years
| later i actually told him something along those lines. I
| appreciated it but he exposed himself to a lot of legal
| risk.
| randerson wrote:
| I knew someone who won a similar stock trading contest held
| by a radio station about 30 years ago. He put all his pretend
| money into a low volume penny stock. Then in real life he
| bought enough of that same penny stock to raise the stock
| price substantially. He'd somehow calculated that the cash
| prize would exceed the cost of manipulating the stock. IIRC
| the stock price got another boost when they announced his
| winning trade on the radio, enabling him to make a tidy
| profit.
| rjrdi38dbbdb wrote:
| That's exactly how clients beat bucket shops as well. If
| they don't set their risk limits low enough and fees high
| enough, you can profit by manipulating the underlying
| markets.
| insidstwr wrote:
| Is what he did there illegal?
| avidiax wrote:
| My mostly uninformed hunch is that much of the fancy "public
| information" analysis that hedge funds claim to do to have
| their edge is actually parallel construction for insider tips.
| I've heard it claimed that some funds have flown helicopters
| over oil storage fields to measure the shadows in the tanks to
| know how much oil is stored, or bought satellite photos to
| analyze the parking lot use of major retailers during the
| Christmas season.
|
| These things sound way too specific to just perform on a hunch,
| and even then, you might get the analysis wrong if you don't
| have the insider tip to check your math.
|
| But it's probably enough to keep the SEC investigator from
| having a case unless they find the insider link directly.
| throwup238 wrote:
| _> I 've heard it claimed that some funds have flown
| helicopters over oil storage fields to measure the shadows in
| the tanks to know how much oil is stored, or bought satellite
| photos to analyze the parking lot use of major retailers
| during the Christmas season._
|
| This is really common and basically table stakes for
| sophisticated firms now (those that invest in relevant
| sectors). They track everything from parking lots to
| freighters and oil tankers to crop yields via satellite
| imagery and flyovers.
|
| It's gotten cheaper with drones so more important areas like
| major ports might get daily fly bys to track containers and
| boat traffic. Some have static cameras pointed at these
| things
| Loughla wrote:
| The only thing I can speak to is crop yields. Satellite
| imagery S flyovers won't really teach you a lot outside of
| a binary yes/no r field is alive.
|
| The technology farmers use teams yields to the square foot.
| I'm betting you can buy that from John Deere and others.
| That's probably where they get that?
| throwup238 wrote:
| I don't know how effective the project was because I left
| before it finished but we were working on using the
| normalized difference vegetation index, normalized
| difference water index, and a bunch of other data points
| to try to predict crop yields.
|
| Farmers might get that kind of stuff from flyovers for
| the extra resolution but that was cost prohibitive for
| our purposes except when validating data from the
| satellites.
| greenavocado wrote:
| Yeah good luck getting accurate NDVI measurements down to
| the square foot from satellites.
| throwup238 wrote:
| Luckily corn fields go on for miles so we didn't need
| that resolution.
| amarcheschi wrote:
| This year in university I took a course where I had to
| imagine creating a startup and we ended up mocking up an
| agritech business that dealt with drones and satellites
| data. We discovered that Sentinel 2, a European
| satellite, has a resolution for ndvi that goes as low as
| 10/20m. This improves nasa's modis sitting at a
| resolution of ~250m.
|
| Furthermore, this is free. There are companies providing
| paid images with higher resolution from their own
| satellites (Constellr comes to mind). I'm sure the
| resolution isn't going to be exact to the square foot,
| but for some cases you probably don't need such a high
| resolution
| FireBeyond wrote:
| > major ports might get daily fly bys to track containers
| and boat traffic
|
| Shipping traffic has transponders these days, no different
| to air. Don't even need drones.
| nostromo wrote:
| Don't forget the easiest dataset to use: they buy consumer
| transaction data directly from Visa and Mastercard.
|
| With that in hand it'd be pretty easy to know if, say,
| Apple will beat or miss revenue for a given quarter.
| irjustin wrote:
| > With that in hand it'd be pretty easy to know if, say,
| Apple will beat or miss revenue for a given quarter.
|
| Wow, seems so easy! That's not how the market works
| though. You've got to know if Apple's going to beat the
| analysts' expectations of how Apple is going to do. All
| the analysts have access to that data and that's table
| stakes.
|
| Apple's guidance on revenue is only like 30% of the
| equation.
| cherryteastain wrote:
| Typically, because they make so many bets, a hedge fund
| needs to be only 53-54% accurate with their predictions
| to make money.
|
| The stock of every company will move a decently large
| amount on the day quarterly revenues are published,
| whether it's Apple or a smaller firm. You can make a lot
| of money via options maturing on such days. When you need
| to be right only 53% of the time, these signals _really_
| add up.
| NickC25 wrote:
| >Typically, because they make so many bets, a hedge fund
| needs to be only 53-54% accurate with their predictions
| to make money.
|
| Wouldn't that imply that every bet the fund makes is
| roughly of the same $$ value? I would figure more senior
| traders or more successful ones would vary the size of
| their bets relative to certainty or uncertainty of an
| event outcome (could be quarterly earnings, a
| political/geopolitical event, etc)?
| cherryteastain wrote:
| Don't think of it like buying a stock on the spot market
| like retail investors typically do. Many hedge funds
| place their bets by using the options market, which
| limits the downside on a bad bet (see e.g. the butterfly
| strategy [1]).
|
| The size of the bet also depends on a lot of factors.
| Many hedge funds don't work like monolithic entities,
| rather they have a bunch of portfolio managers (PMs) who
| have their own allocated pools of assets from investors.
| These PMs decide on placing their bets based on lots of
| different things like their liquidity position (e.g. you
| don't want to lock up your cash in one position even if
| you're sure it'll make money when there's a risk of being
| margin called because of another trade) in addition to
| signals such as the one dicussed above.
|
| [1] https://en.m.wikipedia.org/wiki/Butterfly_(options)
| bostik wrote:
| The use of aerial imagery for institutional asset tracking
| is older and much more widespread than we'd think.
|
| Back in 2005/2006 my university maths professor (in
| Finland) had an established side gig in the US. He had
| polished a process to manufacture aerial drones - still
| called UAVs at the time - and had put together a fairly
| slick software pipeline to combine GPS tracking with
| digital imagery. One of his longer-term clients at the time
| was Harvard University; they had contracted his firm to get
| routine data on how their land endowments were doing.
|
| An associate professor at the CS department has had a
| similar thing going on since ~2005. His company does drone
| imagery for land owners in Finland. Rather surprisingly a
| notable fraction of his business at the time was coming in
| from families and corporate offices wanting "just" nice
| looking shots of their various farm buildings.
|
| At the time the university in question was rather well
| known for their computer vision unit.
| jnordwick wrote:
| Try 1910's. Reminiscences of a Stock Operator describes
| Jesse Livermore collecting unique public data on shops
| and use for trading. The founder at my first trading job
| gave me this book to read, and I am eternally grateful.
| 46Bit wrote:
| Ordering satellite imagery and counting cars is just a
| weekend project. The last time I looked at ordering imagery,
| the main obstacle was the minimum order size, so it'd
| actually scale better for monitoring every store car park
| than for looking at a single car park.
| avidiax wrote:
| So if Macy's parking lots have 11% more cars than the same
| time last year, is that a buy or a sell? Are people
| actually buying more, or are they more cash strapped and
| spending more time looking for value?
| aurareturn wrote:
| You'd have to have historical data to see if more cars
| mean more spending.
| baxtr wrote:
| What if Macy's parking lots have fewer cars but they're
| selling more and more online now?
| fragmede wrote:
| you buy data flow data from ISPs at all tiers, so even
| though they're encrypted, knowing how much traffic is
| going to Macy's.com vs JCPenney.com gives you information
| you can act on.
|
| We know this is being done, because of reports that say
| Netflix is X% of Internet traffic. The undredacted
| reports from those same data sources have much more
| detail. It's also why some apps that don't appear to have
| any business model are actually quite valuable.
| helsinkiandrew wrote:
| How busy are the car parks by their dispatch center? are
| the cars staying longer because people are working
| overtime? how many UPS trucks are visiting?
| jgtrosh wrote:
| 2024 answer: just train a predictive AI with that rarely
| measured data and avoid thinking about the innards of the
| black box.
| ttyprintk wrote:
| In terms of parallel construction, can you tell the
| difference between insider trading and confident-sounding
| tips from WallStreetBetsLM?
| lazide wrote:
| It's an indicator they're getting more traffic. Which you
| can then feed into your model to decide if it's a buy or
| a sell, based on all other data.
|
| For instance, is the stock and/or expected earnings >
| 11%, while traffic seems to be only 11% - or vice versa.
| supportengineer wrote:
| >> parallel construction for insider tips
|
| That is almost certainly the case.
| underlipton wrote:
| The SEC could still have a case - timeline, corroborating
| intrigue, etc. - but as an underfunded revolving door,
| there's little pushing them to even try to hold these firms
| accountable. The exchange between a congressperson/senator
| and an SEC rep a few years ago - "How many cases do you take
| to trial?" "It's more efficient for us to settle," or
| something along those lines - was pretty damning. (I
| apologize, the exact details escape me and every single
| search function on the internet has apparently been degraded
| into uselessness.)
| quietbritishjim wrote:
| > I've heard it claimed that some funds have flown
| helicopters over oil storage fields to measure the shadows in
| the tanks to know how much oil is stored, or bought satellite
| photos to analyze the parking lot use of major retailers
| during the Christmas season.
|
| That actually _is_ public information. I know it 's hard for
| your typical member of the public to obtain, but the key
| thing is that it didn't wasn't communicated directly by
| someone working at the company. That's legitimate and no
| parallel construction is needed (except to mislead your
| competitors - maybe that's the real motivation).
| rawling wrote:
| > These things sound way too specific to just perform on a
| hunch, and even then, you might get the analysis wrong if
| you don't have the insider tip to check your math.
|
| This is suggested as the parallel construction for the
| actual insider info.
| fph wrote:
| The helicopter and satellite tricks though are legal, right?
| They do not involve any leaks from insiders.
| uoaei wrote:
| I know a guy who's been making and winning steep-odds bets on
| baseball games based on wind patterns at stadiums on game
| days.
| interroboink wrote:
| There is the fun example of a trade that was made before that
| information should have been physically able to arrive, based
| on speed-of-light limits. [1] (2013)
|
| The article says "Presumably there will be a hard look into
| what exactly happened..." but I wonder how hard that look was,
| and how often that stuff still happens.
|
| [1]
| https://www.washingtonpost.com/news/wonk/wp/2013/09/24/trade...
| ttyprintk wrote:
| The regulators looking at gold futures would have been
| contending with manipulators placing massive orders in bad
| faith, trying to trigger stop loss. That all led up to the
| flash crash.
| halfcat wrote:
| I would take the idea further, that profitable retail traders
| are profitable, in large part, because corruption exists.
|
| Not that they are engaged in corruption, but that any patterns
| they find primarily exist only as a result of the corruption of
| others.
|
| It's a working hypothesis at least.
| datavirtue wrote:
| I think it's the market makers and algorithmic traders. Not
| sure if they are corrupt. When things get famous the retail
| traders come in and the algos drop off and then the market
| makers start futzing over the arbitrage.
| m3kw9 wrote:
| in the form of nudge nudge wink wink
| blackeyeblitzar wrote:
| My guess is they also make use of "expert networks" to access
| confidential information.
| datavirtue wrote:
| Anyone can pay for that. The problem is being able to read
| and digest it all.
| lumost wrote:
| Also pretty easy to hide in the noise of a trading algorithm.
| Eg. Make bets that hold a collection of biotech firms on the
| day that the fda approves their treatment.
|
| You could also up the exposure by choosing to hold N small
| market segments, that all overlap with the stock that's being
| insider traded.
| ants_everywhere wrote:
| One thing I rarely hear people talk about is how many
| libertarians believe insider trading shouldn't be a crime.
| There are lots of libertarians in the financial industry, so
| there are likely lots of people in the financial industry who
| believe that laws against insider trading are evil.
|
| So when I picture insider traders, I don't picture shady
| organized criminals doing things they know are bad. I picture
| cowbows believing themselves to be the good guys for
| freedomizing the market.
|
| And when you think about all the people who believe that
| insider trading is a positive good, you kind of have to
| conclude that it's rampant. It's financially lucrative, hard to
| detect, harder to prove, relatively easy to hide, relatively
| easy to pin on someone below you in the org, and people think
| they're good for doing it. What force is keeping it in check?
| toss1 wrote:
| Different POV: Insider trading should be legal because is
| fundamentally impossible to police fairly or effectively. The
| one caveat is _ALL_ trades must be public in real-time (and
| not via shell corps, but showing the real beneficial owner).
| This way, insider trading can do public good by providing
| good market signals. Transparency would also reduce the
| advantages of insider trading.
| ants_everywhere wrote:
| Someone can correct me if I'm wrong (which I probably am),
| but my understanding is that legally the harm of insider
| trading is to the shareholders not to the fairness of the
| market.
|
| So if I have insider knowledge of some earnings at BigCo
| and I trade on that, I've breached my fiduciary duty and in
| some sense stolen that info from BigCo.
|
| I don't see how your scheme would address that.
|
| Or, less abstractly, if you're preparing the earnings
| announcement for BigCo and you trade knowing earnings are
| bad, then you've leaked the announcement. And that gets
| worse, not better, if all trades are public and real time.
|
| So I think total transparency in trading and insider
| trading interact in non-obvious ways.
| chii wrote:
| > harm of insider trading is to the shareholders not to
| the fairness of the market.
|
| no, insider trading doesn't harm the shareholders, except
| the ones who sold (or bought) without using said
| information (compared to someone who did have it).
|
| The harm is indeed to the market - information assymetry
| means the other market participants, like the above
| shareholder, is not buying/selling as "correctly" as the
| ones doing insider trading.
|
| This also leads to mis-pricing - something that decreases
| market efficiency.
|
| But being so difficult to enforce, insider trading can't
| be fixed tbh. The best we can do, imho, is to make the
| signal go faster (which is what transparency aims to do).
| By making the signal go faster, insiders actually have
| very little time to actually "inside trade".
|
| > leaked the announcement
|
| the market _should_ know the earnings are bad. In fact,
| the market _should_ be making a prediction about the
| earnings in the aggregate. The information from an
| insider trader, if it were fully transparent, means that
| a company's shares will accurately reflect their earnings
| even if they didnt annouce it, and this makes the market
| more efficient.
| Spooky23 wrote:
| Noooo. The presumption of fairness in the market makes
| the market... without trust, you'll have less capital,
| which hurts the shareholders.
| daemin wrote:
| If the market had all information then there would be no
| trading as the price would be correct and nobody would
| want to buy or sell, as doing so would be money-losing.
|
| The market works because of different information,
| opinions, ideas that are available to different
| participants.
|
| Trading on insider information is like doing a pump and
| dump, and should be illegal.
| chii wrote:
| > there would be no trading as the price would be correct
|
| the trading would happen when your personal risk is
| different from another trader. Future events (that have
| not yet happened) will also make each individual trader
| do trading based on their predictions.
|
| It's absolutely not true that there's not going to be any
| trading. After all, unless every trader's internal risk
| rating and funding are _exactly_ the same, trading must
| happen, especially if information is very transparent.
|
| > should be illegal.
|
| just because it's declared illegal, doesn't mean it
| doesn't happen, nor people don't get away with it. It's
| why i claim that the next best thing is to _make_ it
| legal, but force the trade to be revealed instantly
| rather than have a 1 month time gap.
|
| In the event that an insider (or potential insider)
| starts making large trades, there will be people
| observing and making similar trades, and thus the insider
| information (despite being obscured) is transmitted out
| via this trade signal. The faster this signal gets
| transmitted, the less insiders will have an opportunity
| to profit unfairly.
| toss1 wrote:
| >>nobody would want to buy or sell, as doing so would be
| money-losing.
|
| Somewhat related, there is a saying that caused me great
| hesitation for many years: "Remember, whatever trade you
| make, someone else is making the exact opposite bet; what
| is the likelihood which of you is wrong?". Now, in large,
| this hesitation is largely good, but not to excess.
|
| I then realized that on the exact same trade people can
| have very different legitimate perspectives that do NOT
| invalidate yours, i.e., many situations where you can
| both be right, for your goals. E.g., a trader may have a
| great reason to sell a stock this minute while a long-
| term investor has an equally great reason to buy and
| accumulate the stock. Or, stocks can go in/out of
| specific investing criteria such as for growth, value,
| momentum, etc., and different portfolio managers will be
| selling and buying the same stock at the same minute and
| both be completely correct about the stock meeting their
| goals.
| noitpmeder wrote:
| My understanding was that insider trading is illegal
| because you are stealing (ideas, plans, news) from the
| company.
| Spooky23 wrote:
| That's pretty much the same as making it illegal. It's a
| system of honest graft that requires for work and
| enforcement.
|
| The public metadata would be immensely valuable, and nobody
| would want to comply. You'd be prosecuting people for
| concealing ownership.
| toss1 wrote:
| >>You'd be prosecuting people for concealing ownership.
|
| Yes, and concealing ownership over the long term is more
| difficult (in many cases, impossible, e.g., for
| executives with stock packages -- exactly the set of most
| likely insider traders) and investigating and prosecuting
| it is far easier vs insider trading.
|
| Seems like a win.
| maga_2020 wrote:
| Not just hedge funds.
|
| Congressional democrats, and i am sure republicans too can
| outperform S&P 500
|
| --
|
| >" An exchange-traded fund (ETF) that tracks the stock trades
| of Democratic members of Congress has been outperforming the
| S&P 500 since its launch in 2023. "
|
| https://markets.businessinsider.com/news/etf/etf-named-after...
| chewz wrote:
| Hillary Clinton cattle futures controversy - Wikipedia https:
| //en.wikipedia.org/wiki/Hillary_Clinton_cattle_futures...
|
| ETF Named After Nancy Pelosi, Tracking Congressional
| Democrats' Stock Trades, Surpasses S&P 500 with Tech Triumph
| | Markets Insider
| https://markets.businessinsider.com/news/etf/etf-named-
| after...
| bobmcnamara wrote:
| Sssh, we don't speak of the chicken man's chicken monies.
| branko_d wrote:
| > hedge funds have historically outperformed the markets
|
| According to Investopedia:
|
| _" From January 1994 to June 2023--through both bull and bear
| markets--the passive S&P 500 Index outperformed every major
| hedge fund strategy by over 2.8 percentage points in annualized
| return."_
|
| https://www.investopedia.com/articles/03/121003.asp
| ttyprintk wrote:
| Good article. The grandparent comment is about hedge funds
| that outperform. Rather than offering the automatic
| diversification most people seek from hedge funds, his/her
| point is that some which are highly correlated to the market
| are laundering insider info.
| rqtwteye wrote:
| That's what some guys I knew in New York told me. People talk
| to each other and the hedge fund guys don't really compete with
| each other.
| jjallen wrote:
| Like which ones do you suspect have done this?
|
| Many funds do not use these sorts of strategies and the ones
| that do almost always underperform after fees.
|
| So in aggregate there isn't much evidence of outperformance.
| soniman wrote:
| Wouldn't it be easier to get mobile tracking info about M&A
| bankers and figure out which companies and websites they're
| visiting?
| chatmasta wrote:
| What sort of "mobile tracking info" do you have in mind, and
| where could you obtain this information for an individual?
| Maybe (maybe!) you can get their physical location with the
| right access to certain ISP datasets, but the website info? Is
| that something that is available for sale on an individual
| basis?
|
| The article states that the trader obtained his information by
| hacking into poorly secured corporate email accounts and
| configuring auto-forwarding rules to send himself copies of
| incoming emails. Specifically, he triggered password reset
| flows with "security questions" and data mined open sources for
| metadata like family names which helped him guess the answers
| to the security questions. So overall, it wasn't a very
| sophisticated hack, and certainly seems more straight forward
| than "getting the mobile tracking info of M&A bankers."
| soniman wrote:
| Maybe "ad targeting info" is more accurate
|
| https://www.wired.com/story/how-pentagon-learned-targeted-
| ad...
| tgsovlerkhgsel wrote:
| In the US, there are commercial companies selling this data.
| Probably not associated with a name, but you could buy the
| data (I think they sell the whole dataset for a relatively
| affordable price), figure out who is a M&A lawyer by checking
| which IDs show up at their headquarters + some other relevant
| location, then track them from there going forward.
|
| The data is likely collected from ad and analytics SDKs in
| various unrelated apps, so you just need the lawyer to be
| using one of these apps.
|
| Journalists have demonstrated that the data is good enough to
| identify and track e.g. intelligence service employees.
| gruez wrote:
| ...or track SEC agents instead
|
| https://www.bloomberg.com/opinion/articles/2024-09-11/hertz-...
|
| https://archive.is/o/TTQ2A/https://papers.ssrn.com/sol3/pape...
| soniman wrote:
| Wow. I didn't think anyone was actually doing it but now I
| think it must be going on.
| nortlov wrote:
| Tangentially related: https://youtu.be/RM1gfvAsrg8
| ttyprintk wrote:
| The negative of that is quite interesting. Take SEC web server
| logs and look for invest firm subnet addresses. Firms not
| appearing in those logs do 1.5% worse.
|
| https://news.ycombinator.com/item?id=16648323
| tomatocracy wrote:
| Interestingly some M&A banks keep (or used to, at least)
| discreet residential addresses where the crucial meetings
| between senior people can take place over dinner rather than
| them being obviously seen to meet at the banks or their own
| offices.
| fijiaarone wrote:
| Strong scent of bovine effluence.
|
| In order to reset their email password he would've needed access
| to their email.
| wmf wrote:
| No? If you're resetting your email password, it's probably
| because you're locked out of your email and thus the reset
| process shouldn't require email.
| insidstwr wrote:
| It should use 2fa and another email. For corporate just
| internal IT right? Security here seems lapse. Ideally reports
| are links to an internal system not attachments.
| tgsovlerkhgsel wrote:
| _Should have needed_. I recommend listening to (or reading the
| transcript of) https://darknetdiaries.com/transcript/118/ about
| someone doing account hijacking/password reset as a service.
| Even good services sometimes have zero-days.
| andrewaylett wrote:
| Microsoft supports self-service password reset:
| https://learn.microsoft.com/en-us/entra/identity/authenticat...
|
| "Microsoft Entra self-service password reset (SSPR) gives users
| the ability to change or reset their password, with no
| administrator or help desk involvement. If Microsoft Entra ID
| locks a user's account or they forget their password, they can
| follow prompts to unblock themselves and get back to work."
|
| Which isn't actually quite as crazy as it sounds like it should
| be.
| metadat wrote:
| https://archive.today/UqYa9
| jowea wrote:
| I can't remember seeing security questions securing a system in
| the last decade. Are they still used and I just don't see them or
| this was some unusual company config?
| throw16180339 wrote:
| USPS uses them. Their customer service rep wasn't amused when I
| told her my favorite food is heroin.
| nkrisc wrote:
| And here I am with all answers to my security questions as
| random strings of letters and numbers stored alongside my
| password in my password manager. I hope I don't have to give
| someone that answer over the phone.
| oefrha wrote:
| I probably raised a fair bit of suspicion last week when I
| told the Wells Fargo rep handling a declined CC transaction
| that I had to look up my mother's maiden name in my
| password manager.
| bee_rider wrote:
| At this point anyone handling passwords must have
| encountered enough of us to know that some family names
| need to be looked up in a password manager, and it isn't
| that suspicious. Isn't that right, my cousin? I can never
| remember how to spell grandma 38!;&,90-@3!;8,'s name.
| SoftTalker wrote:
| I don't remember where now, but I have run into sites
| that disallow numbers and non-alpha characters in the
| "secret" question answers. They were actively trying to
| thwart people from entering random gibberish there. Of
| course that's silly, but so is thinking that a person's
| maiden name is some kind of secret, or that people will
| be able to reliably remember things like "the title of
| their favorite book."
| chgs wrote:
| My uncle is called Robert'); DROP TABLE Students;--
| whaleofatw2022 wrote:
| Duhangit Bobby
| pkaeding wrote:
| Yeah, it is pretty awkward.
|
| My forst car, sure: Capital-double-you, dollar sign, eff,
| nine, you, bee, gee, capital kay...
| accrual wrote:
| My only fear of doing this is that someone could call in
| and say "oh sorry, I just typed in a bunch of random
| numbers and letters" and the rep will go "haha, don't we
| all!" and let them reset the password.
| AnotherGoodName wrote:
| They were pretty much only ever used as a blocker for your
| email being spammed. As in there's very very few sites that
| would reset a password on a security question alone. The
| security questions purpose was just to avoid people triggering
| emails/resets to the wrong second factor. Despite the common
| belief they are worthless security questions they are perfectly
| fine when they don't reset the password directly and merely
| block users from mistakingly triggering a reset to a second
| factor on an incorrect account.
|
| Do you know the common alternative to not using security
| questions in the above step? Doing absolutely nothing and
| allowing randoms to annoy you hitting your second factor with
| password resets. The ultimate place you rely on either way was
| the second factor and the questions were always better than
| nothing at all.
| ptsneves wrote:
| As a ceo, you just call the IT department directly and that
| is that. In the it's just tubes analogy sense, it is all just
| people at the end of those tubes eventually.
| warhorse10_9 wrote:
| What you just described is incredibly prone to social
| engineering.
| ptsneves wrote:
| Have real people go to the office of the CEO and have the
| CEO make the reset request in person. Even by phone a
| reset is harmless if the computer the ceo is using is
| known to be trusted and company managed. The defense is
| in depth not circumstantial to one single phone call or
| method. You can also authenticate the request through
| other channels.
| jowea wrote:
| Oh so I guess the "please fill in your reset email" counts as
| a security question. Makes much more sense thank you.
| ta988 wrote:
| The supreme court, and its now usual right leaning bias neutered
| the SEC a bit more: https://www.whitecase.com/insight-
| alert/supreme-court-rules-...
| verisimi wrote:
| Are SEC the good guys? I can't keep up.
| bboygravity wrote:
| No, they're not.
|
| Should have been quite clear when Madoff ran a 20 billion USD
| ponzi for multiple decades and he got caught because his own
| sons turned him in at the FBI.
|
| The SEC was not involved in Madoff at all (other than to make
| it worse my "auditing" Madoff multiple times and publishing
| that "all is fine nothing to see here").
|
| The SEC is a government marketing agency to keep up the veil
| of US markets being fair and functional.
| Hnrobert42 wrote:
| They can be incompetent without being bad. It is a mistake
| to assume nefarious intent.
| WrongAssumption wrote:
| You don't have to be nefarious to be bad. Being
| incompetent definitely makes an federal agency with
| powers of enforcement bad.
| tbrownaw wrote:
| "Bad" can also apply to results or execution
| (performance, in/competence), not just intent.
| trompetenaccoun wrote:
| Gensler met with FTX fraudster Sam Bankman-Fried and had a
| secret zoom call with him as the press later found out. FTX
| always advertised how they were "regulated". Yet despite not
| even having proper book-keeping1, they were never
| investigated by the SEC, which has been focused on hassling
| legitimate businesses such as Coinbase - a public company
| with proper compliance and actual audits.
|
| 1 https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-
| sl...
| llamaimperative wrote:
| FTX was receiving inquiries from SEC in early 2022, before
| its collapse: https://prospect.org/power/congressmembers-
| tried-to-stop-sec...
|
| Also "doing audits" and "having compliance" and "being
| public" doesn't insulate a company from scrutiny.
| llamaimperative wrote:
| The real world is messier than Disney's "good guys bad guys"
| dichotomy.
| twoodfin wrote:
| Another way to see that would be the Supreme Court affirming
| that if the SEC accuses you of what is clearly common law
| fraud, and wants to penalize you millions of dollars, they are
| required by the Constitution to bring those charges to Article
| III courts where you can exercise all the rights of the accused
| recognized by the Constitution (most specifically in this case,
| trial by jury).
| walrushunter wrote:
| There's no other way to see it.
|
| I'm not sure why the parent comment decided to bring politics
| into it. You'd think the idea that the government shouldn't
| be able to accuse you of a crime and take your money without
| a trial would be bipartisan.
| cheschire wrote:
| There was a recent video by John Oliver going deep into the
| politics of the supreme court, so it's in the public
| discourse enough recently that the two concepts of justice
| and politics are probably linked for some folks.
|
| It's one of those annoying things that tends to happen a
| month out from presidential elections I guess.
| wpietri wrote:
| > I'm not sure why the parent comment decided to bring
| politics into it.
|
| The Federalist Society and their fellow travelers have been
| politicizing the Supreme Court for literal decades. To talk
| about the Supreme Court while avoiding any mention of
| politics is a itself a stridently political act.
| skybrian wrote:
| Further back then that. Supreme Court has been a
| political institution all along. (The Marbury vs. Madison
| decision was an interesting political maneuver.)
| tbrownaw wrote:
| > _I 'm not sure why the parent comment decided to bring
| politics into it._
|
| It's the standard way to denounce decisions you don't like.
| adrr wrote:
| So you request a jury trial. I don't get what your point is.
| Its a civil penality because the SEC isn't a law enforcement
| agency and it enforces regulations. Regulations have been
| around since George Washington was president when the Whiskey
| Act was passed allowing the government to form regulations on
| taxing whiskey including levying fines on people.
| twoodfin wrote:
| You couldn't "request a jury trial". That was the point of
| the suit.
|
| Yes, civil penalties are a thing. But the argument that
| prevailed was that this was not a penalty for speeding or
| not paying enough tax, this was a penalty for alleged
| actions that amounted to common law fraud & Congress can't
| delegate the adjudication of common law--civil or criminal
| --to an administrative agency.
| WrongAssumption wrote:
| And regulations are still enforceable. What is not
| enforceable is to make a regulation that parallels an
| existing law, and deny a federal trial because it's now a
| "regulation".
| silexia wrote:
| Anyone else read all the way down and see the bit about
| "everything is securities fraud"? Great ongoing bit by Matt on
| another way attorneys in the US bilk the public.
| wpietri wrote:
| I don't think that's bilking at all. In the US we generally
| favor private enforcement over public regulation. E.g., the SEC
| doesn't go after every small bit of fraud and dubious corporate
| behavior. They're the big guns, and the small stuff is dealt
| with via private lawsuit from investors who think they've been
| harmed.
|
| If we got rid of both private and public enforcement, fraud
| costs would balloon massively, costing the public wildly more.
| First for retail investors they were ever more often the
| suckers in the fraud, and then for everybody as we lose the
| robust public markets that are a major driver of business
| investment.
|
| Somebody's got to keep the greedy, amoral people in line. I'm
| not sure doing it via predatory lawyers is more efficient than
| skilled bureaucrats, but it's definitely more in line with the
| free market principles that tend to win out in the US.
| michaelteter wrote:
| If you're clever enough you to do something like this, then you
| must realize that getting caught is an obvious eventuality.
|
| So... why?
| wpietri wrote:
| I don't think it's a question of raw intelligence so much as
| where the smarts are applied. Doing the crime and stepping back
| to put the crime in context and analyze the paths are two
| different topics and two different sets of behaviors.
|
| As an analogy, as a developer I think it's pretty easy to write
| code that's bad in some way that you don't notice at the time.
| And that's even true if you are able to spot the same code as
| bad when, say, joining a new job.
| jezzamon wrote:
| Can't dig up the source but I remember hearing that it's often
| people that have an overly high value on having things
| immediately. E.g. thinking about the lifestyle they could live
| now with the money. They're acting irrationally from a long
| term perspective.
| djfbnddn wrote:
| Well technically any website which has a ticker watchlist has
| valuable data because they can correlate it with the data about
| ticker detail page access patterns and infer something. Whether
| that is valuable is something else. But if you have the data on
| people in the industry then it might be valuable.
| 9cb14c1ec0 wrote:
| Proof that security questions on websites are one of the most
| garbage "security" practices out there.
| pcurve wrote:
| I'm probably sure everyone knows my first pet's name by now.
| phs318u wrote:
| My first dog t7xW6q+WX-i9$G4*&^sY was a beautiful creature. I
| remember her fondly.
| homarp wrote:
| only if you tell the truth
| phs318u wrote:
| When forced to provide answers to dumb "security questions", I
| will typically use a password manager to both generate a random
| "answer" and to store the question-answer pairs. I generate new
| strings for each site that asks the same dumb question.
|
| For sites that demand to know my birthday when all they really
| need is a boolean declaration of adulthood I use 1 January
| 1901. (I'll admit that when I first started this practice I
| used 1 April 1901).
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