Ingenious Day Trader Scam

This is a crime where you have to think for a bit to figure out who the “victim” is…

A day trading firm who also ran a “virtual trading” platform where folks could practice trade on a market that mirrored the real thing, must have gone through the following thought process:

“Hmmm, we know that greater than 90% of all day traders fail and lose their money. Therefore if we trick them into trading in our virtual account and make them think it’s the real one- we will also have a greater than 90% chance to make money- as in 100% of the losses the traders make will be ours”.

Of course this breaks all kinds of security and ethics laws, but on the surface, it sounds like it could work as long as they didn’t get good traders on board who actually made money. However, they had a plan for this possibility too- any trader that turned out to be good, they then moved them over to the real account to continue.

So their goal was to recruit inexperienced traders with the lure of “getting rich quick”, and have them lose their money, never realizing that they were in a simulated account.

They wound up making over a million dollars in gains before the SEC caught up with them and put an end to their virtual gravy train.

Here’s the story link:  http://dealbreaker.com/2016/12/day-trading-ponzi-adventure/

 

So who is the true victim here?

The easy guess is the trader who is on the virtual account, but the virtual account mirrors the real market so their losses would have been real regardless. A true victim would have been a trader who made a profit and then tried to withdraw their money from a fake account- but so far there’s no report of any such victims, as the firm moved the few “winners” to real accounts and payed them with the money from those losing.

The actual victims turn out to be the exchanges and market makers that buy and sell the actual stocks and investment products. They make money on the difference between the bid and asking price.

A trading firm typically makes money on order flow and trading commissions per transaction. Since the firm wasn’t actually buying the stock, they were at risk and having to pay out any profits out of pocket- but they were counting on the high probability of traders losing to minimize that risk.

If not for the SEC, this could have gone on indefinitely as long as they didn’t wind up with a bunch of good traders to break the bank.

 

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Why I Live in San Diego

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I’ve never been a big fan of cold weather, having grown up and attended school in cold/snow zones. There has been some unseasonably cold temps in California the last couple of weeks thanks to the jet stream bringing arctic air so far south, but this week has seen a nice pay back with So Cal having some unseasonably warm temps of 75+ degrees these last two days. Today it hit 80 in San Diego. Sure, it’s an anomaly that will fade fast just like those freak warmer temps in the northeast and we’ll be headed back to the 50’s/60’s and lower, but it was a great break from the colder temps that invaded last week.

 

 

Life Imitating Art – Simpsons Prophecy about 3 AM Twittering Trump Tirade Comes True

On July 30th, The Simpsons Cartoon show released a video on YouTube depicting a commercial showing Trump going on a Twitter rant at 3 AM:

 

On Sept 30, exactly 2 months to the day later, Trump fulfills the comedic prediction by actually going on a Twitter rant escapade around 3 AM!!!

 

 

We are in the MATRIX……

 

Critical Analysis of the Presidential Candidates: Clinton, Trump

Politics are a “fun” part of American tradition where each side tires to paint their opponent in a negative light and the back and forth attacks can cloud out the main issues worth considering in making a choice.

It also reveals that no matter what is said, some people will stick with a person/party regardless of the attacks brought against them, which is also a bad thing. It’s important to make a decision based on critical thought rather than emotion if you want both the most effective leadership in power while having them know they will be judged on their actions and past history rather than just charisma or slick advertising. Emotional voting is one main reason why we never seem to nominate the most qualified deserving candidates.

This election cycle is one that will go down in history books as having two of the most polarizing people in recent history. It has been joked that each candidate has enough flaws that they should be thankful they have each other to run against. There is a huge segment of the population that will be voting against one of the candidates more so than voting for one.

While both Clinton and Trump elicit high emotion from people, it’s still rather straight forward to break down the true pros/cons of each to make a true logical and non emotional choice.

 

Clinton:

Pros:

  1. 1st female candidate to be nominated for Prez in a major party.
  2. Extensive political background experience covering domestic and foreign relations.
  3. In favor of overturning “Citizens United” and getting big money out of politics

It’s a historical moment for a woman to be nominated in a major party, but of course one’s gender shouldn’t be ranked over one’s abilities. The capacity to handle the job should be the top concern.

One big plus is she is in favor of getting big money out of politics that is destroying our political system. Most of our politicians are bought out by corporate interests, which is why things seem to be getting worse over time no matter which party wins.

Cons:

  1. Political choices made in conflict with Progressive movement.
  2. Unforced error in email controversy- heavily criticized by FBI in handling classified emails.
  3. Seen as the typical “quid pro quo”,  pro corporate politician.

Years in the political arena has given Clinton that feel of squirmy politician who adjusts according to current public sentiment. Of course, this is no different than over 90% of out current elected candidates, and is the reason why the American public is growing so exasperated.

While she has extensive experience, her choices have not always aligned with Progressives. For example, she voted in favor of the disastrous/needless Iraq War  as well as US involvement in Libya and Syria, all of which has caused compounded problems and more instability in the Middle East. The irony is her choices here have been more in line with Conservative strategy, so these are issues that Conservatives have no moral high ground to attack her on, but Progressives do.

The email server controversy was a ridiculous unforced error on her part because she decided on a private server rather than use the government server. The FBI clearly called her out as being very careless. To make matters worse, she attempted to try to explain that the scathing FBI report was a good thing and showed she was honest when in fact it contradicted several statements she made in the past about sending/receiving marked and unmarked classified documents. Doing things like this only justifies the “Crooked Hillary”  nickname given by Trump.

She was paid for speeches to Goldman Sachs that she is unwilling to release, indicating they must be pro corporation and embarrassing.

I left out the Benghazi controversy because I don’t hold this to be a true issue. Embassies have been attacked and/or lives lost on the watch of both Reps and Dems (Johnson, Nixon, Carter, Reagan, Clinton, Obama), only now we live in such a polarized environment that every tragedy is held under a microscope to find fault.  Past administrations would fare no better if held under the same level of scrutiny.

 

Trump:

Pros:

  1. Lots of business experience
  2. Not afraid to speak his mind
  3. Against Citizens United

Trump steps up to the plate with extensive experience in real estate and name brand recognition. As a businessman, he has direct practical experience on the state of the economy. He also ran a near flawless campaign against his Republican opponents during the primaries.

The fact that he was able to beat seasoned politicians should also be a warning to our elected officials that the American public is growing weary of the same old tired politics where much is promised and little is delivered.

One of the things that stood out about Trump is the fact that he didn’t sound “scripted” like the other seasoned politicians he faced. His answers sounded off the cuff and wasn’t afraid to call out the faults of his fellow Republicans. Now compare that to the standard political talk we hear, and it sounded refreshing.

He has stated real problems that other Republicans seem to ignore like the loss of manufacturing jobs to outsourcing- a populist stance more associated with Progressives.

He has also taken a stand against big money in politics, but not to the same level as Progressives. Big money corruption is mutually hated by base Dems and Reps.

 

Cons:

  1. Has seriously insulted or threatened numerous demographics of ethnicities/religions.
  2. Won’t release his Tax returns – breaking ranks with all other Pres nominees in modern history.
  3. Trump has his own set of legal problems with lying/fraud with Trump University.
  4. There is no “Trump 2.0” for the general election.
  5. Wants to repeal “Obamacare” without showing/offering a superior replacement.

 

I could clearly see Trump winning the primary race because he was willing to be more extreme than all his rivals. He moved to the far right- more so than his opponents were willing to go because they had enough experience to know that to win a general election, you have to appeal to more than just your base. His opponents failed to call out his extremist viewpoints in the beginning and it then became silent approval from which they couldn’t recover from.

The key moment in the primary was when Trump labeled the majority of illegal Mexican immigrants as drug users/pushers,  criminals, and rapists. That should have been immediately called out and condemned by all candidates, but they stayed silent for the most part.

The anti illegal Mexican statement was bad enough, but he proceeded to make even more extremist statements such as:

  1. Banning all Muslims from entering the US
  2. Did not disavow FDR’s use of Japanese-American internment camps.
  3. Bringing back globally defined torture such as water boarding.
  4. Killing the families of known terrorists.
  5. Claiming a Mexican-American judge can’t do his job because of his ethnic background.

Making statements like these may be well received as red meat to a Conservative base, but it makes it very hard to pivot towards the center in a general election to win over moderates and Independents. This is where we get to another critical problem of his campaign- he has continued making extremist statements since being nominated and hasn’t pivoted at all. There doesn’t appear to be a polished, more refined and “presidential” Trump able to appeal to a wider audience than his initial primary base. This is bad news for Republicans in general because without building a consensus vote, the odds of winning an election drop like a rock.

Some current examples of Trumps continued offensive/outrageous statements:

  1. Attacking Muslim gold star family whose son died defending our country.
  2. Calling Obama/Clinton the founders of ISIS.
  3. Making statements that can be construed as threatening the life of his opponent Clinton.

You simply can’t act in this manner if the main goal is be the adult in the room and build a working consensus among all groups. Worse yet, he’s now making statements of the “system being rigged” so that if he loses, the election must be illegitimate. This is a direct danger to our Republic since he is priming his group of followers to consider the election to be a fraud if he doesn’t win. This will only further fracture our political system and make the polarization that much worse. Trump is attacking the very legitimacy of our democratic process on baseless claims.

As a result of his continued bombastic statements, more and more prominent Republicans have started coming out denouncing him. These are interesting times people when members of a party are now publicly campaigning against their Prez nominee. Interesting times indeed! What they fear is the outrage against Trump will result in down ballot losses for all Republicans in general.

Lastly, he can’t claim to be “transparent” or more honest than Clinton if he refuses to disclose his tax returns. Trump claims he can’t because he is currently being audited. However Warren Buffet has given him a challenge that he is also being audited but wants Trump to join him in showing their returns.

 

Common Sense takes a Powder as Britain Votes to Leave the EU

brexit

“Brexit”, the media created cutesy lingo for the British referendum on whether to stay with or leave the European Union. I’ve heard it discussed backwards and forwards and sideways throughout the days, weeks, and months leading up to the vote that just took place.

Despite all the fear mongering and artificially induced drama by the media, I never actually considered the possibility of Britain actually leaving the EU. It seemed so absurd that there would be enough people that would want to turn the clock back with actions that will surely spawn negative unintended consequences.

Well, I was proven wrong tonight as polling states that the vote for Britain to leave is expected to be the winning consensus.

I’m not the only one caught by surprise, as the futures markets are roiling with a nice big fat after hours crash that will translate into crashed markets on the open Friday. The value of the Pound has plummeted. The majority of businesses were counting on a “stay” vote winning, and this just adds a boatload of uncertainty for both Britain and the EU going forward.

I truly believed Britons had more common sense than this. Color me wrong.

There will be lots of analysis on how this wound up happening, but it’s likely due to the same old things that breed surprise outcomes:

  1. Voter apathy – which favors those who have more motivation, typically the conservative vote. People love to complain about government and politics and then find other things to do when it comes down to taking the time to cast a vote.
  2. Low information votes- people voting on something without doing their due diligence to figure out the true pros/cons of their choices. What are the odds that the majority of people who voted YES on leaving did so out of xenophobia and border control without thinking through the economic consequences of their actions.
  3. Media stupidity of focusing mostly on ratings rather than trying to educate people on the actual facts rather than false arguments and hyperbole.

The irony is the first unintended consequence of this action besides crashing global markets will likely be layoffs as British companies retrench over fears that current trade agreements are now in flux.

 

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Voting Day in Cali – Sample Ballot Blues

Kodos

 

I dreaded looking over the sample ballot book for California- there are so many pages! It’s like a mini book! The numerous pages led to me continuing to put off completing by ballot until time was about to run out.

I wonder how many folks got scared off from voting seeing that huge sample ballot book… =:-0

It boiled down to just facing the music and going over it this past weekend. Fortunately a big chunk of the propositions were just city charter updates with no changes to ponder.

Normally I mail my ballot off ahead of time, but this time around, I just took it to my polling center and dropped it off there.

Better late than never!

While driving there I heard an ad on the radio asking people how would they like to make easy money working just a couple hours a day. They were talking about trading!

I’m not going to call the company out who was advertising, but to portray trading as something easy to excel in and with just a couple of hours per day of effort is grossly misleading at best, fraud at worst.

They may as well advertise making a living being a pro sports star with just a couple hours a day of effort. It’s been my constant observation that outside of inheritance and lotteries, lots of effort is required to achieve most worthwhile things.

 

Trump All but Completes His Hostile Takeover of the GOP Pres Nomination: RIP Conventional Wisdom

Danger Shock Hazard

Trump’s win in Indiana coupled with Ted Cruz dropping out of the race all but ensures Trump’s eventual clinching of the GOP’s Republican Presidential nomination, leaving all the pundits who never fathomed such a scenario in their wildest dreams stunned, and scratching their heads.

This election cycle has been a perfect case study of why you shouldn’t trust the “experts” when it comes to making assessments/predictions. We’ve seen in the 2008/2009 market crash that the vast majority of political and economic “insiders” had no idea of that approaching crisis and certainly gave no warning to investors.

This time just about all the so called political guru’s completely missed the rise of Trump and his ability to stay afloat regardless of what he says no matter how inflammatory. They are flummoxed about his ability to withstand increased scrutiny and a biased assault of press related articles against him, attempting to write him off in hopes that the polling numbers would follow, which they didn’t.

Even worse, having missed the boat on predicting the ascendancy of Trump’s campaign, they have the audacity of now writing articles on explaining how this came to pass- like anyone should pay attention to the same folks that were completely oblivious  to his sustainability in the first place.

Simply psychology can explain the Trump phenomenon.  People are angry at Washington and the constant failure of their elected officials to live up to their promises. In their frustration they seek someone not yet “tainted” by the system that constantly overpromises and underdelivers. They are now ready to pick an outsider over the political insiders.

Trump remains on top due to his public persona of brashness/arrogance towards the establishment. The more he is attacked, the more he fits the role as the “rebel” of politics to all his supporters, which increases his appeal. It’s very similar to the daughter who is dating a “bad boy” and the more the parents admonish and scold her to let him go, the more attractive he becomes to her.

The “experts” ask, how can Trump supporters be so oblivious to all the negative things he has said as well as his past flip flops on opinions? Why doesn’t this exposure change their mind? The answer is they have made an emotional choice based on their resentment of their elected politicians as well as his positive message on better times ahead with bringing back outsourced jobs and good times in general, and are ignoring/rejecting anything else said, period. Back to the daughter/bad boy example- how many times will she be “persuaded” with a list of rational cogent reasons why the guy she is dating is a bad match? How many times have your parents persuaded you to change your mind after you became passionate/excited about something or someone?

The “experts” asked, why did Marco Rubio fail to beat Trump at his own game of childish attacks/insults? The answer is you can’t imitate someone’s “brand” and expect to beat them with it. It’s the equivalent to the school valedictorian/nerd taking off his suit/tie, and putting on a leather jacket to try to woo the daughter away from the bad boy. All that does is make you look like a “wannabe” as well as corrupts the “brand” you stood for.  Notice how Cruz and Kasich didn’t take the bait to go into the mud, and how they continued to poll higher than Rubio before he dropped out.

Now these “experts” are saying in 20-20 hindsight Rubio made a mistake in fighting Trump in the mud when they were the ones who suggested he should do it! The lesson here is to be true to yourself, or at least “appear” that way. =)

Tonight we know that not even the behind the scenes 3D Chess Level strategy of Ted Cruz or his team up with Kasich was enough to stop Trump’s growing momentum.

This election season is one for the history books – that a non political outsider could take out a field of seasoned elected professionals that were way more funded and entrenched in the system than he ever was, and ride a populist wave to the Republican nomination turns all conventional wisdom and expert analysis on its ear. We live in interesting times!