Stocks and Trading Thread - Channeling your inner Mono

Started by MadImmortalMan, December 21, 2009, 04:32:41 AM

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MadImmortalMan

Quote from: Admiral Yi on May 08, 2012, 06:52:08 PM
Learned a new term today.  A "Texas hedge" is when a farmer goes long on his own commodity in the futures market.

My father in law does that with hog futures and pork bellies. It evens out the ups and downs, making their income more predictable too.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Admiral Yi

Quote from: MadImmortalMan on May 08, 2012, 07:03:19 PM
My father in law does that with hog futures and pork bellies. It evens out the ups and downs, making their income more predictable too.

You might not be getting it.  Farmers should sell positions to hedge.  A farmer who buys a position is doubling his exposure.

Ed Anger

Stay Alive...Let the Man Drive


MadImmortalMan

So...they put a Greek in charge of the part of the company that's supposed to be protecting the bank from risk.  :P
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

PJL

Does anyone think that Facebook is worth a short when it goes onto the market? Probably not the first few days, but when the initial hype dies down?

DGuller

Quote from: MadImmortalMan on May 04, 2012, 05:20:32 PM
But they provide liquidity!!!1111
I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

MadImmortalMan

Quote from: DGuller on May 11, 2012, 12:43:30 PM
Quote from: MadImmortalMan on May 04, 2012, 05:20:32 PM
But they provide liquidity!!!1111
I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

Yeah, I think you're right to wonder. There are times when they actually suck all the liquidity out rather than facilitating trades. Particularly when the majority of trading is going one direction. We've seen the HFTs actually drive the spreads out of control, rather than keep it tight.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

MadImmortalMan

So the big stink at Green Mountain is that the Chairman (now ex-) Robert Stiller took out loans against his stock to buy a yacht and some other stuff. Then when the recent price drop happened, he got a margin call on those loans. That triggered the broker to sell all his stock. You can imagine how the market reacts to the chairman of the company dumping all his stock at once of course. So he's been fired as chairman for inappropriate behavior or someshit.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

DGuller

Quote from: MadImmortalMan on May 11, 2012, 01:50:11 PM
So the big stink at Green Mountain is that the Chairman (now ex-) Robert Stiller took out loans against his stock to buy a yacht and some other stuff. Then when the recent price drop happened, he got a margin call on those loans. That triggered the broker to sell all his stock. You can imagine how the market reacts to the chairman of the company dumping all his stock at once of course. So he's been fired as chairman for inappropriate behavior or someshit.
:lmfao:  I thought that only happened in Railroad Tycoon 3.

MadImmortalMan

Quote from: MadImmortalMan on May 11, 2012, 01:29:21 PM
Quote from: DGuller on May 11, 2012, 12:43:30 PM
Quote from: MadImmortalMan on May 04, 2012, 05:20:32 PM
But they provide liquidity!!!1111
I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

Yeah, I think you're right to wonder. There are times when they actually suck all the liquidity out rather than facilitating trades. Particularly when the majority of trading is going one direction. We've seen the HFTs actually drive the spreads out of control, rather than keep it tight.


Speaking of which:

http://premarketinfo.wordpress.com/2012/05/07/two-years-after-the-flash-crash-spreads-are-narrower-and-liquidity-deeper-than-ever-before-guess-again/

"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

MadImmortalMan

Anybody know what company is likely to get the contract to print drachmas? Is De La Rue a good guess? Isn't there another big one in Germany?
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

alfred russel

Can somebody explain why I should care or be concerned about the "flash crash"?

There are high frequency computer algorithms driving trades and there are people that try to take into account the value of the underlying asset (company, index, etc). I'm in the latter category. If a program (or cascade of programs) completely jumps the shark, in the unlikely event I'm paying attention I get to either buy at a steep discount or sell at a windfall. Winnings for me.
They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

There's a fine line between salvation and drinking poison in the jungle.

I'm embarrassed. I've been making the mistake of associating with you. It won't happen again. :)
-garbon, February 23, 2014

citizen k

Quote from: alfred russel on May 14, 2012, 06:34:44 PM
Can somebody explain why I should care or be concerned about the "flash crash"?

No need for concern, just don't use stop loss orders.


DGuller

Quote from: alfred russel on May 14, 2012, 06:34:44 PM
Can somebody explain why I should care or be concerned about the "flash crash"?

There are high frequency computer algorithms driving trades and there are people that try to take into account the value of the underlying asset (company, index, etc). I'm in the latter category. If a program (or cascade of programs) completely jumps the shark, in the unlikely event I'm paying attention I get to either buy at a steep discount or sell at a windfall. Winnings for me.
If you're trading in options, and your position is unprotected on one side, you should be very concerned.  If the flash crash causes a liquidity crisis because every trader gets an instant margin call, you should be concerned as well.